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22 Bootstrapping Tips

Created by: infozooms | Last Updated: 03/24/2011

If you are thinking of starting a company but have limited money and no outside funding, you should consider these bootstrapping business tips. Millions of entrepreneurs around the world employ bootstrapping practices when they launch a business to keep their expenses low, grow organically and minimize outside interference. Here are some ideas on how you can do more with less when it comes to managing your new venture.
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1. Start on a small scale

Figure out exactly how much materials or labor you will need to launch business and get off the ground. You can try to minimize your costs by starting with a bare-bones version/operation. This will give you the opportunity to test the waters before investing in a full-blown offering.
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Points: 30

2. Do it yourself

The more you can do yourself, the more you will be able to save. There is no need to consider outside vendors if you have the skills and the time to do something internally.
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Points: 28

3. Practice Just-In-Time

This is a key bootstrapping business tip to keep in mind. Do not buy anything until the time you need it. This will help you exercise better cash flow management.
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Points: 25

4. Figure out your revenue model

Have a clear understanding of how and when you can start bringing in the money. Decide what the most viable sources of revenue are and focus your efforts on those. If there are easier projects or opportunities to get you started, get those low-hanging fruit first.
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Points: 22

5. Hire cheap labor

Find interns or freelancers who can do the job for a fraction of the price. Utilize freelancing platforms like Elance to post your project (design, content generation, legal, etc.) and get multiple competitive bids from providers from around the world.
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Points: 20

6. Hire part-time

Find someone to do the administrative work for your business on a part-time basis, even if it is just for a few hours a week. Even some bigger companies that can afford full-time employees prefer the part-time model as they are not required by law to offer benefits.
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Points: 17

7. Work from home

Forget about leasing an office when you launch business. Unless you need a professional space for client meetings and conferences, you should consider working from your bedroom, basement or garage.
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Points: 16

8. Leverage the media

Utilize the power of free marketing through engaging the media. Think of an interesting story about your business or its founders that you can share with your audience and always be open to providing interviews and information on your venture.
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Points: 15

9. Lease

Consider leasing your equipment instead of buying brand new things. This approach can save you a lot of money, even if this is just a temporary state until you build your cash reserves.
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Points: 15

10. Save on supplies

If you are looking for a good deal, there are a ton of promotions, rebates and coupons out there to take advantage of. It may not make much sense to drive around or browse the internet for printing paper, but if you are in the market for some computer equipment, you can save yourself hundreds and even thousands by being a savvy shopper.
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Points: 14

11. Keep track of your financials

A fundamental bootstrapping business tip is to review your financials on a monthly basis. Check if any of your expenses have gone up and if so, find out why.
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Points: 11

12. Get a downpayment

Consider getting a downpayment for your products and services before you start the job. This will help you cover your expenses for completing the work.
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Points: 11

13. Lower your communication costs

Shop around for telephone and internet providers to make sure that you get the best deals. You can even spare yourself some of the charges by using e-mail, VOIP or Skype.
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Points: 10

14. Go open source

Consider using open source software products as you will not have to pay upscale software licensing fees.
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Points: 9

15. Get it for free

Some providers are willing to offer free trial offers in the hope that you may become their customer in the long run. For example, Microsoft has a program for new companies developing solutions on their platforms.
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Points: 8

16. Barter

Leverage your network to trade products or services with someone who can use your help or expertise and can offer something valuable in exchange.
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Points: 7

17. Don’t quit your job

Don’t leave your day job, until you have proven the concept and started to generate some measurable results. If you quit your job, you may run out of cash before you have even given your new venture the chance to take off.
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Points: 6

18. Form partnerships

Hook up with other businesses to get more publicity, generate customer referrals, split advertising costs or simply exchange products and services.
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Points: 5

19. Be cash-flow smart

Try to get in your payments from customers as soon as you can. At the same time, if you are strapped for funds, you can try to extend payment terms with your suppliers. Bring in the money quickly but pay it out slowly.
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Points: 5

20. Focus on selling not just on cost-cutting

Most businesses fail not because they can’t control costs when they launch business, but because they don’t get enough sales. When you evaluate your budget, make sure that you have adequate resources dedicated to bringing in paying customers. If needed boost up your marketing budget to achieve the needed results.
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Points: 4

21. Consider starting a low-cost business

When bootstrapping a business, consider the operating costs. For example, a service business can bring in the money right away and usually does not require big capital layouts.
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Points: 4

22. Leverage your personal network

Friends, family, neighbors, customers, suppliers, etc. can be a great source of publicity for you. Some may even have the connections or potential to refer business your way. Let them know that you are looking for new customers and how appreciative you are of their help.
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Points: 3
3 MORE USER SUGGESTIONS

1. Launch early and iterate (by visokas)

Don’t be afraid to ship your product or launch your site with minimum testing. You do not want to go into a situation where you work forever to develop the absolutely perfect product and eventually run out of cash. Once the cash starts coming in, you can fix your product based on customer feedback.
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Points: 2

2. Go direct (by williamG)

The best way to maximize your margins is to go direct to the customer. The more parties in your “supply chain” (e.g. stores, wholesalers, marketers, etc.), the lower your bottom line. The internet is a great platform for reaching out directly to your target customers.
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Points: 1

3. Use SEO (by higgins)

If you understand and utilize the concept of Search Engine Optimization, you can easily and cost-effectively advertise your business online. The key thing to do is create helpful and highly-relevant content for your target audience and rank high in the search engines.
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Points: 1
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COMMENTS
Great list! Also - deferring expenses is not the best way to make friends, but in tough situations it can do the trick and buy you some extra time.
Added by: maggio | On: 04/11/2010
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