A startup is said to be bootstrapped when there are no or very limited external funds, this means the funds and resources needed for the startup are sourced from the founder(s) personal funds and assets.
With the current trend of limited investors funds, this is a viable option for founders who are willing and passionate about what they are building. While this isn’t exactly an easy route, it can be done.
For this to happen, it means that the startup must account for every kobo injected into the business, ensuring that it all goes into improving the business for increased returns.
There are various strategies startups can employ to make the most of bootstrapping, even in the face of limited funds. Below are 7 of such strategies;
Eliminating or Minimizing Fixed Costs
Initial fixed costs such as rent can be eliminated by working from home or minimized by working from a co-working space. This way expenses are reduced.
Another is salaries, outsourcing some roles when needed instead of hiring will help minimize costs. For example, a non-core role like legal can be outsourced when the need arises.
The use of a Minimal Viable Product (MVP)
This involves introducing a small-scale version of the startup’s service offering or product into the market first. Monitor its performance, get feedback, iterate, and before proceeding to go all out.
This way, the startup is spending significant money when there are greater chances of increased return while minimizing the risk.
Also read, Bootstrapping vs Venture Capital – Which to Choose?
Outsourcing Low-cost resources
This involves leveraging available free tools such as open-source software to carry out your operations, the use of social media for marketing activities to promote their products and services, build the brand, as well as connect with customers.
Some technologies can be used to automate processes, thereby saving overhead costs, startups can use readily available mobile applications, and cloud-based software, among others. This increases efficiency and reduces cost.
Partnerships and Negotiation
This is a powerful arsenal for when bootstrapping a startup, strategic partnerships bring a certain dynamic to startups, which could lead to access to new markets, resources, and assets.
While sourcing for deals and raw materials, negotiation can save the startup a great deal of cash. The startup could exchange either services or products, as the case may be.
Innovative Revenue Generating Activities
There are always new ways of earning, bootstrapping startups should always seek them because this will help in generating and sustaining the limited cash flow.
Get involved in Ecosystem Activities
Participate in these activities, see other startups, and be seen as well. This helps startups build a network which is an effective way of securing collaborations, partners, and even customers.
Explore Alternative Funding Options
In cases where the startup is in dire need of funds, alternative funding options such as crowdfunding, and grants, can be explored.
There is a lot of work involved when bootstrapping a startup, however, there are lots of advantages too especially when those involved in the startup are willing to roll up their sleeves and get down to business.
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