Bootstrapping Your Startup: Here Are 5 Things Worth Keeping In Mind

However, bootstrapping a startup is rarely easy, and there are plenty of hurdles to overcome when using your own funds to establish your business. When you’re investing only your own money into your endeavor, it’s extremely important to fend off complacency and maintain a laser focus on your processes and expenses, especially when considering the fact that the second most common reason for startup failure is lack of cash.

There’s plenty to keep in mind, and lots to do to ensure that your startup builds momentum – but when it all comes together you’ll be able to enjoy operating debt free with no loans to pay back or outside influence. To help you counter some of the challenges you may face, we’ve created a list of five key things worth keeping in mind when bootstrapping your startup.

#1 Think Twice About The Office Space

Fools rush in where angels fear to tread. It may be tempting to show the world that your startup’s hit the ground running with a big office space filled with a range of mod cons, but take a moment to stop and assess whether the working environment you’re planning on utilizing is actually worth it.

If the circumstances are suitable, there’s potentially no need to set up an office space at all. However, if your startup requires taking on employees, liaising with clients or building a shop floor then it’s advisable to do your homework on what type of workspace is right for you. You could even cut costs by renting a coworking space that’s shared with other businesses.

It’s worth finding an office space that’s scalable and accommodating, but remember that it shouldn’t leave you hamstrung for finances before you even begin your operations.

#2 Finding The Right Payment Processors For You

It’s transactions that’ll keep your business ticking over, so it’s vital that you’re capable of processing payments in ways that suit both you and your customers.

If you’ll be setting up a storefront for customers to make purchases in, then you’ll need to think about which card readers to utilize, as well as their associated transaction and rental fees. Whereas if your startup is more of an eCommerce endeavor then you need to consider payment gateways and their usage contracts, chargeback fees and transaction costs.

According to Merchant Savvy, depending on the payment processor “businesses could be paying between 2% – 4% in fees just for processing, leading to an overpayment of up to 40%”.

There’s no right or wrong answer when it comes to considering which payment processors to use for your startup, so it pays to have a shop around and weigh up the individual pros and cons for each option you have.

#3 Keep Away From Credit

It may seem like a great option for escaping some unexpected expenditure, but try your best to resist the temptation of taking on a credit card to help pay for your startup. Credit card debt can compound your financial problems and cause your personal wealth to spiral – they should only be considered in extremely adverse situations where you have enough assurance that you’ll be able to recover your debts efficiently and within a short timeframe.

You’re bound to hit some bumps in the road when bootstrapping your startup, but remember that taking on credit card debt for short-term relief will only negatively impact your budgets long term. Bootstrapping is most effective when it’s organic – if you get trapped by mounting credit fees, the chances are you’ll have to abandon your bootstrapping plan and seek investment to survive.

#4 Generate Your Own Buzz

There was once a time where a business would be hard pushed to spread awareness about their goods or services without the help of an expensive PR agency or marketing department. But in this age of interconnectivity, you can reach the screens of millions of people online – just so long as you’re cunning enough to know how to engage with your target audiences.

Spare some time to think about your intended customers, and the sorts of social platforms they may be using. By directly engaging with people who may be interested in your business as well as the topics that they’re likely to follow, you have the potential to generate a buzz about your business before it even officially launches.

Remember to leverage the likes of Instagram and Twitter and appropriately hashtag your content for ease of reference.

#5 Put Every Expense Under The Microscope

Fundamentally, every expense your business has will come out of your pocket as part of your bootstrapping endeavor. This approach may well encourage you to be more frugal with your purchases and investments in turning your ideas and reality, but it still pays to put every outgoing under the microscope to see if there are any costs that can be cut.

Everything, from your internet service provider to the software you use needs to be assessed and their markets researched for cheaper effective solutions when bootstrapping – it may be time-consuming and seem unnecessary when looking at smaller outgoings, but you’ll soon see the benefit when conducting your cashflow forecasts.

 

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