by Guest Author on November 15, 2012
The most important question facing any Entrepreneur is simply – “How am I going to finance my startup?” Self-financing, or “bootstrapping,” is often overlooked in favor of loans or VC. As a successful entrepreneur myself, I was recently invited to participate in a panel discussion on financing options for entrepreneurial ventures. I am definitely a proponent of bootstrapping (when it is done well), and here are five of the points to which I attribute my success.
• Fire now, aim later. Listen, it’s easy to find excuses to put off starting your own business. It is like standing at the edge of a cliff, talking yourself into taking that leap into the water below. “It’s too cold. I’ve never done this before.” Allowing yourself to get too caught up in the details of starting a business can serve as an easy out. You will never fully overcome your startup fears – but that is a good thing. If you truly believe in your startup, take the leap; the details will work themselves out as you go along.
• Don’t staff for the “best-case” scenario. Chances are, it won’t happen. When it comes to forecasting, it is best to be as conservative as possible. If you optimistically predict your sales are going to be 20,000 units, and hire accordingly, you are going to be SOL when it turns out you only meet 50% of that projection. Chances are, for the first couple years you will have to survive on a lean harvest. Prepare accordingly. You are better off hiring a few good startup employees and hiring temporary help when needed than overstaffing.
• Reinvest everything. Do you truly believe in your company? If you do, find another means of supporting yourself during the initial startup phase. For you, this could mean working a part time job, living off your savings, doing someone’s chores, or maybe taking advantage of that friend you can always crash with who is too nice to kick you out (okay, maybe not that last one). Simply put, if you have the self-discipline to refrain from enjoying the spoils of your success, you can reinvest your profits, accelerating your growth potential.
• Focus on keeping costs as low as possible. Want to have something in common with some of the biggest names in business? Start in a garage. Amazon, Apple, and Google are just three examples of powerhouse companies that all started small. There is no shame in this! When it comes to outfitting your space, think about function over form. When my company was first diving into the startup scene, the packing peanuts in every incoming shipment were saved for reuse. Restraint fosters creativity, for you and your employees. Pinching pennies now will help you reap the benefits down the road.
• Hire some interns! Want some free or low-cost help? Interns are a must! Currently, we have two interns that were recruited through college career offices. Interns offer a low-cost way to get high-energy additions to your business. Students are excited about the opportunity to apply their classroom knowledge in a real-world scenario, and are good for much more than just making coffee runs. In addition to this, it is a great way for startups to shop for potential employees. Get in touch with local colleges and advertise some internship opportunities in areas of need, post on niche job board sites such as internjobs.com and internmatch.com, or if you want to go the sketchier route, vaguely advertise on Craigslist, being sure not to provide any details of any sort.
About the Author
Adam Boeselager started Southtree.com in High School. While attending Lee University, he partnered with his roommate Nick Macco, and they have since grown the company from their dorm room into a nearly $1 million company. They were recently featured in Chattanooga, Tennessee’s “30 under 30” list. When Adam isn’t at the office, he can be found working to finish his MBA.