3 Ways to Bootstrap Your Business
Karl R. LaPan President & CEO, The NIIC
Bootstrapping is a fancy word for “self-funding” your venture. Self-funding can take many different flavors – credit cards, friends & family, customer billable projects and the like. While a small percentage of all ventures are able to secure thirdy party investment from angel investors, the average US startup launched today requires upwards of $117,000 to start a company (Census Bureau estimates escalated into 2017 dollars). By being well capitalized, it is less likely that these ventures will close. The stresses of starting and growing a company are daunting – making payroll, purchasing materials, buying equipment, finding talent and making sales calls to potential customers – it is now wonder why so few people consider entrepreneurship a viable career option. While some startup costs are inevitable, there are ways to smartly rein in expenses.
1. Conduct field work.
A well thought out strategy allows for flexibility, change and a pivot if necessary. Planning means zeroing in on your goals, rather than simply running with a concept you hope will succeed. It’s an aim first then fire scenario.
Do your due diligence. That means reaching out to your intended audience and getting feedback on the product before you (or an investor) make a considerable investment. You want to make sure there’s a viable market before you put all your eggs in the proverbial basket. It’s far too common for entrepreneurs to try to convince investors that their product will succeed when they haven’t put in the time on the front end to discover and validate potential customer’s pains and problems. When you do your research, you are doing two things – building your credibility and building your business case.
2. Save where and when you can.
Can you leverage the contingent workforce or partner with more established companies in supporting roles like marketing, accounting and HR? When you hire an independent contractor, you don’t incur the usual expenses related to employee benefits and other employee related expenses There are many talented individuals willing to perform in the new “gig economy.”
Can’t afford to rent or purchase a brick and mortar for office space? Look into other options like The NIIC’s Professional FlexSpace for a coworking arrangement. By doing so, you get the flexibility of a time share arrangements with the added benefit of flexibility in length of your membership agreement. On a daily basis, the area is bustling with motivated entrepreneurs and small business owners–eager to connect, engage and bounce ideas off of like-minded entrepreneurs.
3. Have the ‘right’ people on the bus.
If you plan to launch a venture with a co-founder, it’s key that you share the same vision. The beauty of having a compatible business partner is that you can divide up the workload while still maintaining control over the strategic direction. There’s also a certain level of emotional support you won’t find from family or friends. Remember, if you are contemplating taking on one or more partners, you might work with The NIIC’s side by side affiliate coaching program. We have a strong cadre of assessment tools (e.g. Predictive Index and Gallup BP-10) to help you and your team grow together – both personally and professionally. Remember, as Martin S. Feldstein opined, in an article entitled, Why The US is Still Richer Than Every Other Large Country,”Individuals in the U.S. demonstrate a desire to start businesses and grow them, as well as a willingness to take risks. There is less penalty in the U.S. culture for failing and starting again. ” Why not start today, contact The NIIC. Dream Big. Get Real.
If you have recently launched a start-up, how did you curb or mitgate your startup costs? Share your tips in the comments below.