Business Bootstrapping Rule Number 12: Start as Service Business

If you really can’t afford to start a business, then forget your products. Start as a service business. Check what services you can offer and earn out of it. Starting as a service business only requires your time and effort. You may need a little working capital to start the operation, maybe for a classified ads or leaflets just to let your market know that you are offering this kind of service.

Example, you are dreaming of building a software company. This kind of business may require a big working capital. If you are a bootstrapper, do not turn your back from this dream. You may not have enough money to start selling software products, but you have the skill needed to start with this kind of business. You can provide consulting and services based on your work-in-progress software. You will not only get immediate revenue for this but will also experience true customer testing.

Once you have established services to the customer, start selling the products. It might not be an instant profit but gradually, you can sail your bootstrap business towards success.

Business Bootstrapping Rule Number 11: Do Not Aspire for a Proven Team

Manpower is expensive especially if you hired experienced and skilled workers. They will of course demand a high pay for their service. With your bootstrap business, you must forget the “proven” team. Creating a team with high standard people will cost you. After all, you are running a bootstrap business which doesn’t need proven team to run it. They are simply overrated. It’s a quality of output that matters and not the resume of the people.

What you need to have to build a team for your bootstrap business are young and inexpensive people. Select and hire young people which you know is good enough to run your business. They are not necessarily expensive. Hire hungry people with fast chips, you don’t need a fully functional instruction set to keep your business going. As long as you have a manpower which is determined and willing to run the business with you, it is good to go.

Business Bootstrapping Rule Number 10: Pay Attention to Cash Flow and Not Profitability

What you learned from school or from what you have read from the theories in the book is that the bootstrap business solely relies on the profit. According to the theory that you might have incurred in your mind, the profit of your business is your key to survival. If theories can only pay your bills, then this may be true. However, you must be aware of the reality. Reality is- bills can be paid by cash. So this may require you to focus more on cash flow instead of your profits.

Cash flow may include a small upfront capital requirement, short sales cycles, short payment terms and recurring revenue. Focus on the things where your money goes so that you can have the full control over the exit of money from your pocket. It is the cash that is the bloodline of your business. If you lost your focus over its whereabouts, then your bootstrap business is at risk.

Business Bootstrapping Rule Number 9: Be Driven

You should put a big difference between a bootstrapped business and a funded business. While funded business rely its success to the available fund, the bootstrap business is more on the drive and the determination. In bootstrapping, every details of the work should be considered. That is getting things done that doing things right. The rule is, you should always get things done for it is better than to get it perfect.

Successful bootstrappers are reckless and driven. You do not need to be as genius as Einstein to keep things going. You should not be super bright to become a successful bootstrap entrepreneur. If you are driven and determined with your business dream, you may find your business better than the funded counterpart of your business.

Business Bootstrapping Rule Number 8: Find a Mentor

Bootstrapping might be a solo flight business but you should not be alone in doing that. You have to seek help from people around you which has the same interest as yours. That means, if you are an entrepreneur, you must surround yourself with entrepreneurs also. If ever possible, you should surround yourself with people who are successful with bootstrapping business.

Being successful in the business cannot be transferred by simple word of mouth. Oftentimes, successful people won’t tell you what it is that makes them special. However, if you stay in a group of successful people, you will eventually learn from them through their actions. Action speaks louder than words still apply. Observing them while having a negotiating sessions, or just staying in the same room with them is a great learning experience for you. This will give you a unique piece of thought which cannot be read in a book.

Business Bootstrapping Rule Number 7: Treat Credits and Bankers as Enemies

You should always bear in mind that “Bankers are not your friend”. Although for some starters, bankers are being branded as hero because you can find refuge to them to finance your start up business, but for bootstrappers, bankers should not be an option.

We cannot eliminate the fact that it is difficult to find credit. It is a terrible risk to seek for credit as you start a business. The best way to act on this is to plan ahead and line up credit in whatever forms you can find. You should also note that business never works the way you have planned it. There will always be trouble waiting ahead for you. Just be ready for any circumstances and think that all businesses have their own challenges.

Business Bootstrapping Rule Number 6: Pay Attention to Every Small Details

In bootstrapping business, you must keep in mind that every little things matter. You must manage your business in such a way that every small detail has been covered. Micromanaging your business will bring your bootstrapping journey to success.

Do not underestimate small details in your business. Just because it is small doesn’t mean you should not invest your time on it. Most often than not, the littlest details will bring big chaos to your bootstrapped business. Do not be blinded by the idea that little things can’t cause damage; sometimes blind trust is a luxury that startups can ill afford.

You must understand your business inside and out. Work out not only on the visible aspects but also with every small detail of the operation. This will give you much better operational control. In most cases, there is always a direct interaction between your decision and our revenue. Understanding even the small details that comprises this relationship will help your business to get even.

Business Bootstrapping Rule Number 5: Sell Yourself with Great Integrity

The revenue of the business does not come in a single form. It always comes in odd forms and format. The revenue can be obtained in a different way. It is not limited to simply selling your products but also by selling yourself.

As a bootstrapper, you must sell yourself first. Every transaction should always begin with you selling yourself as a knowledgeable, reliable person with great integrity. You should boost out your expertise for this is the one you are selling at first. Your confident and your integrity as a business owner will earn you some revenue which you can use to pay the bills and can set the phase for you to transform into the business status that you have been dreaming.

The most common mistake by some bootstrappers is that they fail to think that everything should come in transition. There is no such thing as abrupt success. The fact is, you must begin with an easy phase and later on transforminto the business you ultimately want to become. Of course, unexpected events are inevitable. So you just have to be flexible for the unexpected changes and keep your eye towards transforming your business. As long as your integrity is intact, you can always keep your business going.

Business Bootstrapping Rule Number 4: Keep your Vision Intact

Bootstrappers don’t have a business plan where they can refer and follow for their business path. This is in contrast to what have been taught by academicians regarding the important role of business plan for your business success. In fact, generating a business plan is just a luxury for some bootstrappers.

The most important thing that should be considered when you are into bootstrapping is to have a constant need to keep your options open. You should have that relentless drive for revenues. Keep your peripheral vision intact and always keep an eye to every opportunity that may come along the way.

At the start up of a bootstrap business, bootstrappers have a little accountability for their actions. What they are after is to prove that they have a viable concept in a viable market. The highlight of this rule is to keep revenues come first before anything else.

Basics on How Bootstrap Financing Works

This is a wiki article why or how bootstrap financing works.

Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. Bootstrapping can be defined as “a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors”.

The use of private credit cards is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company.

And to give us an inspiration – many successful companies including Dell Computers were founded this way!