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Setting up your own business doesn't have to break the bank!
Anyone running a small business can find themselves constricted by minimal finances yet so many people learn to live with what they've got, which can be a very effective tool, not just for running a business with minimal finances, but actually in life.
This is where something like bootstrapping can be incredibly useful. Bootstrapping describes a situation where an entrepreneur can start a business with little capital and operate as lean as possible. Using existing resources like personal savings, personal equipment, and available space, rather than relying on investors or loans, can seem to be an incredibly complex, if not impossible, endeavour, but here's how you can use bootstrapping to set up a small business with a limited budget.
Prioritise the Essentials
If there is one common mistake business owners, and indeed organisations in general, make, it's not understanding where the efforts should be focused. This is where something like the 80/20 rule, commonly known as Pareto's principle, can be invaluable. Lots of people don't look at where they should be concentrating and it's all unique to the individual. When you make a list of the necessary supplies ranked in terms of importance and urgency, you will understand what you can best focus on.
If you are a business owner that absolutely needs business cards as a way to build bridges between potential clients or customers, having access to a quality printer should be one of the most important options. When selecting suppliers, be sure to pick the ones with good return policies, meaning that if something doesn't turn out as expected, it can go back, meaning you are able to pocket a little bit more in the process.
People seldom focus on the things that are important, which means a greater loss of productivity because they believe they should be doing something when they’ve got their priorities all wrong. Have a proper understanding of what is actually essential and you can then list out what you should focus on.
If you're still struggling to determine what is essential, an excellent tool is the Eisenhower decision matrix, a 2 by 2 grid that divides tasks into four quadrants:
Urgent and important, which is a task that requires immediate action.
Important but not urgent, which is a task that can be planned for later.
Urgent but not important, which is a task that can be delegated.
Not urgent and not important, which can be eliminated.
Start Smaller Than You Think
If there's one major mistake business owners make, it's thinking they need to grow a huge amount within the first year because they believe they need to make a massive impact at the outset. This is very short-sighted because it embeds the notion that the business won't last very long. Businesses need to embrace starting small.
Those who are looking at setting up something like a side hustle to make money in addition to their current working situation can benefit from the small and organic approach to growth and in terms of bootstrapping, this reduces financial risk. Many business leaders think they have to invest a lot of money into something but it's a major gamble. We should always embrace starting smaller than we think we should. One quality customer who stays with you is far better than 10 precarious ones.
Focusing on what you can offer and gradually expanding with reinvested profits is a far more sensible approach to boosting your business. It's an excellent lesson in how to develop a business anyway because lots of entrepreneurs try to run before they can walk when, in fact, it should be about understanding that quality is far more beneficial than quantity.
Utilise Free or Low-Cost Learning Resources
One of the most essential components of running a business is the lessons you learn. Bootstrapping your business is effectively making you a one-man band, and this is why there are so many different free online courses, templates, and marketing strategies that can help you bootstrap your business. Those people earning under a certain threshold in the UK (approximately £30,000 per year) will be eligible for what's called a Personal Learning Account, and this allows you to study for free on a part-time basis a wide variety of skills that can help you diversify in your sector or plug existing skills gaps. This could be incredibly useful because there's a wide range of resources that can be pretty cost-effective.
While it's always worth looking for flash sales on websites like Udemy, a Personal Learning Account is incredibly useful to people in the UK because of a guaranteed level of quality education. We can certainly find online resources to help our knowledge, but it's not always going to give us the results we truly need and merely provides surface-level education.
Should You Start a Service-Based Business?
A service-based business is an excellent opportunity to utilise bootstrapping and all of its capabilities. Many people are looking to leverage existing skills because this means minimal startup costs.
Service-based opportunities like baking or pet care are excellent solutions, particularly the former because if you already have a passion for baking, you are going to have all of your tools readily available. Therefore, you can bootstrap this business incredibly effectively, especially as you can advertise your services without necessarily setting up a website.
Many cake makers showcase their abilities through Instagram and social media and get most of their custom from these resources. However, it's important to remember that you need to double down on your promotional abilities through social media. You can always check engagement with your service page on Facebook and see if there's a particular time of day when the ideal customer looks at your webpage. You should also think about regular social media posts, search engine optimisation, and countless other free ways to market yourself.
Offer Your Services in Other Ways
Supplementing what you already provide can be an excellent way to earn extra money to reinvest back into the business. It ultimately depends on what skills you already have, but if you have learned invaluable techniques like first aid, you could teach these resources even if it's not relevant to your business.
Many people are now opting for a portfolio career, which means doing multiple jobs that could keep the expenses low but also maximise your potential earnings, especially if you want to stick to your bootstrapping ethos. Additionally, this can build your reputation and your professional network, which is not a bad thing!
Scrutinise Your Expenses
Many people fall down in this area because they're not truly able to understand what they are spending on any given day. You don't need to necessarily access an accountant as long as you have the skills to understand your incomings and outgoings.
Bootstrapping effectively means working by yourself for the most part and it's always worth getting into the habit of checking your current financial position. You can then start to address what is bloating your business. For example, if you need to find somewhere to work that's not your home office, a co-working space is one of the more cost-effective approaches that you can use without necessarily having to pay for a lengthy contract.
If you are looking at selling a range of products, take the time to test which ones are more viable because if you had, for example, 10 products and only two are bringing the vast majority of the profit, it makes sense to opt for these. There are other things you could do to add a little extra finance into your business, for example, crowdfunding which has been incredibly popular. Additionally, you could offer a free basic version of your product and monetise it through premium upgrades or additional paid features.
Build Strong Relationships
The final point has nothing to do with the financial side of the equation. If you really want to bootstrap a business, you can't just rely on the fiscal components; you need to cultivate strong and solid relationships with customers, suppliers, and peers because this is what will bring repeat custom as well as support and invaluable advice.
When we learn how to build a brilliant business, we can often focus on things like brand or marketing when in fact, it always boils down to relationships. If a customer trusts in your ability to deliver a service or a product, this means they will keep coming back to you.
Bootstrapping is not just an excellent way for you to prepare your business, but it encourages discipline. Discipline is one of those things that can get away from us if we let it because starting a small business can be an incredibly exciting time with a world of possibilities. This is why bootstrapping is an excellent mindset because it requires resourcefulness, frugality, patience, and ultimately a willingness to play different roles in your business. When you implement these strategies, you can build a solid customer base that lays the groundwork for a successful business. If we want to build up something strong that lasts many years, the right mindset is pivotal at the very outset, and this is why bootstrapping can help you go the distance.