This article originally appeared in WAH Adventures and was so popular that I was asked to post it here as well. With permission from WAH Adventures, of course. Enjoy!
Are you good at networking and trading services with others?
Are you able to come up with creative solutions to save money?
Are you able to find free services that actually work well for your business?
Then you must be practicing the age-old practice of bootstrapping. Learning to bootstrap in your life and business will start you off on the right path to keeping your expenses under control while building your business.
What Exactly is Bootstrapping?
When someone is “bootstrapping a business”, this means that the entrepreneur or owner has started the business without any startup capital and very little assistance from others.
Usually when this happens, the entrepreneur or the owner is funding the business with his/her savings, credit cards or money cashed in from an investment. Occasionally out of desperation, money is borrowed from a 401(k) or TSP (Thrift Savings Plan) fund but rarely this happen. The main reason is obvious. The money will have to be paid back, and there is no guarantee the business will become profitable in the near future.
Bootstrapping consists of one or several of these practices:
- cutting expenses
- networking for a good discount/product
- bartering or trading services
- being resourceful enough to track free products and their availability
- streamlining your business and bundling services together for savings
How Did Bootstrapping Get Its Name?
Bootstrapping got its name from a 19th Century fashion trend when boots had straps at the ankles. Everyone has probably heard the expression: “Pull yourself up by the bootstraps.” Well, this is where the saying originated.
Is Bootstrapping Only About Saving Money?
Bootstrapping is a lot more than just getting a discount or saving money. Bootstrapping is looking for ways to save and economize while also adding creativity and bartering. Bootstrapping refers to the times when an entrepreneur starts a company with very little capital and is still able to build the business and then turn a profit. Naturally, the entrepreneur is going to have to depend upon the help of others somewhere down the line to advertise or get referrals. As the English writer John Donne once said, “No man is an island unto himself.”
Will My Clients or Customers Think That I Am a “Tightwad”?
While you cannot 100% prevent your WAH colleagues from thinking what they want, they will probably not consider you a tightwad. Instead, they will probably want to hear how you were able to start a business or begin working in a business with very little money, because most of them have probably been in that situation or know someone who has been.
In addition, anyone who has been in business will know that part of being in business is knowing when and where to cut expenses. It has nothing to do with talent. It has nothing to do with ability. It’s simply the way business is done and done successfully. We’ve all heard about how businesses of all sizes want to be “lean and mean.” Wasn’t it Benjamin Franklin who said, “A penny saved is a penny earned?”
Do Bootstrapping and Creativity Go Together?
While it does take a certain amount of “think-out-of-the-box” type of thinking to bootstrap, bootstrapping is really something anyone can do. Even those people, who consider themselves not very creative, can still learn to network and find free resources.
How Can I Begin Bootstrapping to Begin My Own Business?
Begin looking at your current household expenses and see where you can begin scaling back. Make a list of all of the items you will need for your business. Then after each one ask where you can get this for free or almost free?
If you need a website, there are free templates at WordPress; you only need to Google them. There are plenty of free email accounts such as gmail or yahoo. If you are in need of an online newsletter service, MailChimp will allow you free service as long as you have fewer than 2,000 subscribers across all lists in your account. MailChimp will allow you to send up to 12,000 emails per month without paying. Aweber will also give you your first month of online email marketing for $1.
Then you can also find other fellow entrepreneurs and bootstrappers to begin bartering your services. Maybe you could trade your proofreading skills for a free logo. Decide which skills you can do well in a short amount of time and be ready to trade those skills for what you do not do well.
Is It Really Time Consuming to Search the Internet for Ways to Bootstrap?
Not really. While it can and does take some research, sometimes the easiest ways to bootstrap your business are via online networking. These days there is never a shortage of forums to ask questions, trade or barter your services.
You can also mention what you are looking for in your Facebook groups and have the interested parties send you a private message. Just be sure you do it in a way that does not appear to be spamming. You can also ask for someone’s opinion on a product or service by sharing a link with your contacts.
For example, you could ask what everyone else is using as his/her bookkeeping software. Be prepared to receive a wide range of opinions, which is a good thing. The more options you have, the better to choose one, but have a backup if it doesn’t work for you and your situation.
When Can I Begin Bootstrapping?
You can begin anytime, really. However, the best time would be while you are planning your business. In addition, you’ve heard the saying that knowledge is power. Have your options ready and see what you can find. Just beware of sales professionals who will try to sell you the most deluxe of everything when you can get by with just the basic. This is why networks and forums are a valuable resource. You can also learn from other’s mistakes.
When Should I Stop Bootstrapping?
That will depend on several factors: you, your business, your revenue and expenses, and your target market. For a more affluent clientele or market, you may have to start spending more to win their business. However, that still does not mean that you have to go “hog wild” and spend excessively. Sometimes, just going from a brochure you designed in Microsoft Publisher for free to one you designed on Vistaprint.com and spent the extra $40.
When Can I Justify Going From Bootstrapping to Not Having to Bootstrap?
While there certainly isn’t any calendar date for when this can happen, it will again depend. We’ve all heard stories about those business owners who have priced themselves out of business! Try to use wisdom.
The good news is that business expenses that can be proven to the IRS as “ordinary and necessary to the profitability of a business” are also tax write-offs.
So, then ask yourself with each business expense that you have:
- Is it an ordinary business expense that similar businesses have?
- Is it a necessary business expense that leads to more or repeat business?
- Is this something my business would not be profitable without?
- Is this something that I am required to have to serve my customers, clients or target market?
After a few months of bootstrapping and living your dream of working for yourself, you might be able to not only make money, but also help others pull themselves up by the bootstraps!