Bootstrapping means keeping your business costs as low as you can, while still being able invest to attract customers. It comes from the phrase, “pulling yourself up by the bootstraps.”
Businesses that use a bootstrapping approach have often not got a lot of cash to invest, and have to use some clever and creative ways of marketing to survive and promote themselves. They can be the most interesting companies that you’ll come across. Bootstrapping means planning carefully and prudently about how much money you have coming in and going out, and making sure that you won’t run out of money.
Bootstrapping is about an attitude. It means getting used to putting off paying for things, until you’ve got the money in the bank and you know for certain that you don’t need it to pay any other bills. Bootstrapping means spending money in the right areas, and keeping your credit card to yourself unless you know that this is an investment for your business.
Bootstrapping while starting up
Businesses need different amounts of money to get going. If you’re going to start a consultancy type business, such as training, acting, designing, programming, you might think you need:
- A small serviced office
- Brochures about your services
- A website
- Business stationery
- PC, laptop, laser printers, scanner…
All of this can add up to £5000 plus in initial costs, as well as saddling you with ongoing costs of £500+ per month, before you’ve even got your first paying client.
The big news is that you don’t need all of this. What you do need is your first paying customer, and buying all of this stuff takes time and gives you a great excuse to delay what you really need to do, which is to get on the phone and start networking. You can start a very respectable consultancy business with:
- A cheap computer
- Some professional looking business cards
- A well designed logo for the cards which can be used to make your proposals look as if they came from a big company (they all use Word to do their proposals as well.)
Total cost? About £600. More importantly it gives you very limited overheads at the start, making sure that you don’t have to feed the business before it starts feeding you.
Some cash saving tips
- Don’t pay out for office space until you’re sure the business has enough money to pay the office rent as well as giving you enough money to live on. If you need to see clients, you can rent an office for a day, use a hotel, or borrow premises from a friend’s company.
- If you need to go and see prospective clients, travel after 9.30am and use a Network card to save on rail fare. I probably saved £500 last year by using this little card.
- Keep away from the Viking catalogue. It’s very tempting to feel that you should get lots of stationery and equipment, especially if you’ve come from a corporate environment, but you don’t need all that stuff.
Where the bootstrapping approach can go too far
The idea of bootstrapping is to invest appropriately in your business, rather than go all out spending lots of money before any comes in.
It’s not about turning into Ebenezer Scrooge. You still need to spend money on the things that will mean that you will be taken seriously. You need to persuade people that you can provide a high quality product.
If you’re selling online, either with an online shop or just a website that describes your services, don’t be tempted to do it yourself. Unless you are a web designer, of course.
Don’t rely on a friend to do a website for you, you’ll either end up with something so horrible that you’ll have to find an excuse not to use it, or more likely, you’ll have to wait for ever. I’ve seen many start-ups in this position and it always works out the same way.
Under no circumstances, even if a gun is held to your head,print your name on a pieces of paper, and use these as business cards. People will think that you’re sloppy, poor, or insane. You can get a temporary business card for almost nothing online, just don’t make the mistake of thinking that this will be good enough in the long run. See the article on business cards for some more advice in this area.