Five Tips For Bootstrapping Success By Akhil Shahani At Isnare.com Ezine Articles

Starting a business with next to nothing might seem an ideal - an impossible dream, but people have been there and done it successfully. No one said bootstrapping was easy, but with a few prudent measures and heaps of smartness, you can build a business with very little funding.

We’ve got five tips for you – more like classic wisdom actually, on how to bootstrap your business.

Draft friends and family. Charity starts at home, and never more so than when you’re starting a business. Enlist the support of your well wishers in as many ways as possible. Do you have a relative who is an experienced finance manager? Why not take some advice on how to keep your books, rather than hire an expensive accounting firm upfront? Request your friends to recommend your services whenever possible – that’s valuable word-of-mouth advertising at no cost!

Of course, there’s a strong possibility that you will need to borrow money from family or friends, in addition to taking their help in other ways. Borrowing from such sources is a good idea, but fraught with certain risks. While people may lend to you purely on the basis of your personal relationship with them, the same relationships are at stake. Take care not to over-leverage or spend irresponsibly.

Stay within your means. Continuing from the last point, we’d like to emphasise the importance of restricting your expenditure to sustainable levels. Don’t give in to the urge to splurge just because you’ve had a good quarter. As long as finance and cash flow is at a premium (and in the case of bootstrapping, it will be for a while), manage your outflow very carefully.

Successful bootstrapped firms continue to follow this policy well after they’ve got past the initial stage. Perhaps financial prudence is part of the bootstrapper’s DNA!

If cash is king, cash flow is the queen mother! And keeping working capital on a tight leash is the answer to it all. Consciously work towards lowering your average outstanding days, while securing better terms of credit from suppliers. If capacity is tight, service the orders of the better paying clients first.

If you’ve got a few troublesome paymasters in your client list, force the issue when you feel you have the upper hand – for example during the closing stages of a large order.

Grab freebies by the horns! Think of ways in which you can cut costs. For example, could you make use of waste materials generated by other companies to your advantage? As an example, offer to clear up waste packaging material from a warehouse nearby – they get their place cleaned up free of cost, and you save precious dollars by not having to buy fresh material.

Opportunity does not knock. And bootstrappers better make their peace with that if they want to survive. As the owner of a small, cash strapped business, you don’t have the luxury of expensive advertising or even a sales force. Keep your eyes and ears open for any opportunity you could seize. Be prepared to walk that extra mile. In the final analysis, this is what will make the difference between success and failure.

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