The Essentials of Bootstrapping Your New Business

Webster’s defines ‘bootstrap’ as: "To promote or
develop by individual initiative and effort with a
minimum of outside assistance."

Often, bootstrapping your way to business success
implies using your own efforts in place of money
during the start-up phase of a new company. It’s true
that the most common cause of new-business failure is
lack of funding, but if a company can get over the hump
and become profitable, it doesn’t matter how much money
the owner had in the beginning.

The essentials of bootstrapping include:

1. Belief that you can establish a successful business
in your chosen field. Optimism is an important aspect
to any business success, but when you’re starting with
little or no money, optimism is critical.

2. Expertise in your field. The more skill and
experience you bring to bear during your start-up
phase, the better chance you have of reaching the
plateau of success.

But even expertise is not entirely necessary. As an
example, several years ago a young woman right out of
art school decided that she could make more money as a
graphic designer than she could as a fine artist. She
understood the rudiments of page-design software, but
she was perceptive enough to know that she had much to
learn when it came to actually producing finished
material for clients.

That didn’t stop her. She approached several small,
local companies and secured a job to produce a 10-page
brochure. After consulting about pricing for the
brochure with a friend who was in the graphic design
business, she bid a slightly higher amount than her
friend recommended. She received the job, then promptly
turned around and hired her friend to do the work, on
the condition that she could watch and learn at every
step of the process.

By the end of the project, she had made a small profit
but more importantly, felt comfortable bidding and
completing similar projects. That was the start of her
graphics-design career. Her number of clients grew
steadily, and three years later she was offered a
position as partner in a new graphics firm starting in
her area.

3. Taking on debt with great care. Many entrepreneurs
feel compelled to take out loans when starting, but too
much debt can saddle a new company with ongoing fixed
expenses that must be paid even when cash flows are
down.

4. Working out of your home to keep expenses down until
cash flow warrants leasing an office. Most successful
"bootstrappers" enter a field in which it’s not
necessary to have an office or retail place of
business.

5. Keeping on track. When you start with one type of
service, keep at it until it either proves successful
or is hopelessly dead. Don’t branch out into different
fields just for the sake of trying something new.
Entrepreneurs often get bored easily, so fight the
temptation to spread yourself too thin.

6. Accepting that you will likely have to work long
hours in the beginning. This means evenings, weekends
and even some holidays.

7. Accepting that your customers will determine
your schedule, not you. When a client calls you Friday
afternoon and wants a job done by first thing Monday
morning, don’t say that you never work on weekends. Do
what it takes during your first several years, and
after you’re more established you’ll be able to name
your own hours — to a point! Service providers always
need to finish projects when clients want them
finished.

8. Always striving to be better than your competition
in quality of service and customer care. When you’re
starting a new company — and especially when you have
very little funding to back you up — creating repeat
customers is vital. The best way to achieve this is to
provide quality in every phase of your business.

Note: When starting a company without financing, it’s
usually best to focus on bread-and-butter accounts that
will bring in a regular, if unspectacular, cash flow.
Once monthly cash flows have been stabilized,
then you can target larger, more lucrative accounts.

9. Allowing yourself time for rest and rejuvenation. Long
hours are stressful and fatiguing, both of which can
lead to health problems. The last thing a start-up
company needs is for the owner to be down with illness.
Also, looking at R&R from another standpoint, you
should take time to enjoy the process of starting your
own business. Once you’re successful, you’ll look back
at your beginning days in business as some of the most
demanding, rewarding and exciting times of your life.
Savor them, work hard, but don’t fatigue yourself
unnecessarily.

by Jeffrey Moses

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