Bootstrapping can be the simplest, and oftentimes best, way to start a new business.
It can also be the hardest way to start a new business. Without money, resources could be in short supply, which means time can also be in short supply. Generally speaking, the more money you have, the more time you are afforded to get your business going.
Bootstrapping a startup is also great in terms of authority and control. When you don’t have investors, or lenders to pay back, you get to call all the shots. It’s truly yours.
But it’s also possible to take bootstrapping too far. Many entrepreneurs are penny wise and startup success foolish, not because they scrimp on small items and blow large sums on needless expenses, but because they fail to spend money where it counts, and where it can pay off for a long time to come.
1.The Right Tools
If you own a restaurant or a bakery you obviously need the right equipment, stoves, utensils, etc. Not only because the quality of your product matters, but also because productivity, efficiency, and waste reduction are also critical.
The same is true if your startup requires some form of manufacturing; while a lack of capital may mean that early on some processes must be performed a fairly labor-intensive way, once you prove there is a market (and customers) some of the best investments you can make are on equipment that increases quality and throughput.
Even if your “product” is a service, the right tools are critical. The quality of your idea – and your intellectual property and market differentiation – certainly matters, but the speed and efficiency with which you execute matters, too. Make sure you have the right computer for your needs. Make sure you have the right mobile devices for your needs.
Of course, be smart about those purchases. Don’t buy the latest and greatest unless you truly need the latest and greatest. Every purchase is an investment; makes sure the items you purchase provide a return on that investment.
2.The Right Workspace
Small business owners typically spend a lot more time at work than their corporate counterparts. There’s always too much to do… and too little time to get it all done.
Make sure your office or workspace is comfortable and inviting. Your work area doesn’t have to be opulent or in some way reflect the greater glory of you but it must be a place you’re excited to work in. A comfortable, ergonomically correct chair can make a huge difference. So can a large desk or work table that provides plenty of room to spread out. So can the right lighting, a small refrigerator for drinks, and healthy snacks.
Just don’t make the mistake of spending money to create a workspace that will impress other people (unless your business involves meeting and impressing clients). In most cases, the only person whose opinion matters is you.
Make sure whatever money you spend on your workspace makes it more comfortable, more productive, and more appealing to you.
3.Items That Touch The Customer
Here’s a simple rule of thumb. Spend money if the expense makes you or your employees more productive. Spend money if the expense makes you or your employees more enthusiastic and more eager to keep pushing through all the startup challenges.
Otherwise, when your resources are limited, only spend money where it touches the customer.
In fact, you can apply that question to apply to just about any expense: “Does this touch the customer?”
If it does, the next step is easy: Determine the return on that investment. Once you’ve reached the minimum viable product stage, refinements and enhancements should always benefit the customer – which, of course, will eventually benefit your bottom line.
Otherwise, you’re just spending money to spend money and no startup can afford that.
4.The Right Team
No matter how dedicated, committed, and hard-charging you are, someday you will need help.
Maybe, early on, that help will come in the form of freelancers. Or maybe you’ll hire part-time or full-time employees. When that time comes, here is the first employee you should hire.
Ask most entrepreneurs and they’ll say they waited too long to get help — and that while waiting too long might have saved money, it also slowed the growth of their companies.
How will you know when it’s time to hire an employee? Not when you feel too busy – because trust me, as an entrepreneur you’ll always feel too busy – but when there are things that need to be accomplished that you have insufficient skills and experience to accomplish.
Maybe you’ll need a great salesperson. Or a great programmer. Or a great customer rep. Or a great operations manager. Or…
What will you need? Only you can answer that question – just make sure that you don’t wait too long.
Great employees can be the best investment you will ever make.