Cash strapped entrepreneurs use bootstrapping to get a startup underway. Growing the business is far slower using this strategy, so it’s not an entrepreneur’s first choice. Borrowing funds from external providers like banks and investors to quickly build the business is much faster and easier. For example, with funds, staff can be hired.
Bootstrapping a business usually relies solely on the skills and resources of the owner who needs to be ‘everything to everybody’ until revenue provides the funds to invest in staff and other resources. Until this happens; marketing, sales, operations, delivery, account management, financial control, you name it, the owner must be a jack of all trades and do it all.
Bootstrapping a business edges it forward at a snail’s pace. Hence, it’s understandable this approach to starting a business doesn’t suit everyone, especially entrepreneurs, who want big success in as little time as possible. Their focus is on finding ways to self-fund quick growth to show strong sales revenue to external financiers like banks and investors who can inject funds to take the business to the next level.
Self Fund A Start Up
Self-funding strategies for the keen entrepreneur may start with taking advantage of leveraged trading and then trade with more funds to significantly expand their profit margin. This strategy can also ameliorate the risk factor, which begs an investor to carefully assess the market. Easily tracking and speculating price changes of leading financial instruments and having a broader understanding of the market can provide greater success and profit. The entrepreneur would feed into the business.
How To Manage Expenses
For those business owners happy with the bootstrapping approach, here’s a summary of what’s required to generate some funds for the business from an article on entrepreneur.com:
Be frugal and always spend within your means.
This action will take a lot of discipline. In fact, all these tips require a paradigm shift in mindset. No longer can you be focused on instant gratification. The goal now is firmly on building a foundation for future success.
Be a saver, not a spender.
Saving does not come naturally to most of us. We spend more than we earn, and most of us live from pay-packet to pay-packet without a second thought to how we’d cope for six weeks or more without a wage coming in.
Don’t get into debt.
Or, more importantly, don’t confuse good debt with bad debt and don’t get into bad debt, especially with credit cards. An example of bad debt is borrowing to buy a TV or car versus good debt, which is getting a home loan for an investment property which, when rented out, provides rental income. Also, when done well, leveraged trading is an example of good debt when it provides a healthy return on investment.
Hone Your Marketing Skills
Now you’ve good personal financial management skills, reduce business expenses by co-sharing office space, watching every expense and hone your marketing and sales skills.
Social media marketing can also broaden your reach, but watch how much time you spend on social media platforms.
Aim to become a subject matter expert and blog about it and topics that interest your intended audience. You will need to reach out to your customers by posting on your business social profiles and in your email marketing to find out what they want from you.
Plus, once you’ve created a name for yourself, you can secure free PR for your business with websites inviting you to contribute to their articles.