Starting A New Business? Here Are Some Important Tips
You have a brilliant idea for an app, software platform, or e-commerce business. There’s just one problem: You don’t have any money. You could turn to venture capital to finance your tech startup, but that means giving up equity and decision-making power in your business. While that works for some, it’s not the right move for every entrepreneur.
Fortunately, there’s another option for founders who don’t want to relinquish stake in their startup: bootstrapping. This three-step guide will explain how to bootstrap your startup to keep costs low while scaling quickly.
Focus on Generating Cash Flow ASAP
Getting a product on the market takes a fair amount of time. Meanwhile, you need cash flow to fund your business. That’s why it’s important that bootstrapped startups have a business plan that generates cash flow quickly.
Low-cost business ideas to generate revenue early in startup development include:
- E-commerce: Even if you don’t have a product to sell, you can start an e-commerce business by pre-selling orders or dropshipping merchandise related to your product. E-commerce platforms like Shopify make it possible to start an online store on a shoestring budget, but keep in mind that not every platform is right for every product. It’s worth comparing e-commerce options to find the best one for your niche instead of simply opting for the lowest bidder.
- Selling services: Selling services aligned with your startup is another way to generate revenue and build your name early in a startup’s development. Before you have the name recognition to attract clients, use freelancing platforms to find work.
- Side jobs: Alternatively, some founders opt to find outside work to keep their perspective fresh and prevent entrepreneurial burnout. If working a side job while building your company, look for a gig that offers maximum flexibility. Freelancing, service industry jobs, or working in the gig economy are good options for entrepreneurs who can’t juggle the startup grind with a traditional nine-to-five job.
Build Your Business from Home
Even with money coming in, founders need to watch every cent. Overhead costs can quickly eat up any revenue a startup produces in the early stages of development.
Building your startup from home is an easy way to avoid spending money on commercial office space or coworking rent. It’s more scalable than you think, too. With most of their work online, tech entrepreneurs can spend the bulk of their time in a home office and rent meeting space as needed. As your business scales, hire remote employees and independent contractors to fulfill staffing needs. While building a fully remote company requires tech and software investments, it’s a fraction of what businesses spend leasing and outfitting commercial office space.
There are some investments that are necessary for working from home. While new startups may be able to get by without certain office equipment, a high-speed internet connection, VoIP phone line, and ergonomic workstation are a must for any home-based business.
Staffing isn’t the only thing you can move out-house. Startups can outsource a wide range of business functions to keep their operations lean and save money on overhead.
Business functions to outsource include:
- Human resources
- IT management
- Shipping and logistics
Outsourcing allows founders to focus on their startup’s core functions instead of all the operational concerns that go into running a business. In many cases, outsourcing is also less expensive than doing it in-house. That doesn’t mean founders can cheap out, however. Especially when it comes to customer-facing roles like marketing and shipping, it’s worth investing in high-quality services that will enhance your startup’s reputation.
Bootstrapping doesn’t have to mean slow growth. By cutting costs where you can and spending money on the investments that matter — like good help and a solid business plan — you can build a startup that saves money and scales quickly. And at the end of the day, you’ll know you built your company on your own terms.