Most entrepreneurs can sidestep the frustration and distraction of finding angel investors or lenders to fund their startups, at least in the very early stages.
Here are five tips that will help you bootstrap your startup with considerably less outside capital:
- Start virtual: An office is often a luxury which – thanks to ubiquitous online collaboration tools like Zoom (video and screen sharing), Slack (instant messaging on steroids), Skype (voice and video communication), and Basecamp (project management) – is often superfluous. If you don’t actually need a physical location for your business, such as a retail shop, why bother? If you can work out of your home office, garage, or a co-working facility, do it – at least until you start generating cash flow. You’ll not only save money, you’ll be in good company: Amazon, Apple, Disney, and other legendary successes started at home too.
- Use the cloud: Not only has the Internet eliminated much of the need for physical office space, but it has also spawned alternatives to pricey software as well. For the vast majority of software needs, there is a free or relatively inexpensive option available via the cloud – no need to buy, configure, and maintain your own servers. Dropbox makes file sharing and backups seamless. Google’s collection of office software available through Google Docs gives you all the functionality of Microsoft Office, plus bonuses like the ability to simultaneously edit documents from practically anywhere, on any device. Adobe’s Creative Suite is now also available online for a fraction of the normal price tag. Platforms like Zoho integrate dozens of tools needed by small businesses: sales & marketing, email & collaboration, a help desk, finance, human resources, and other business processes. Your customer-facing apps can be hosted virtually by Amazon Web Services so you can expand your capacity without ever touching a piece of hardware. Whatever your industry, odds are that you can find the software you need somewhere in the cloud.
- Hire wisely: You don’t need a large staff to get your business off the ground. Every hire should be related to executing on your company’s core competency; most other functions can be outsourced to independent contractors (but don’t treat them like employees – the IRS doesn’t like that). When you are ready to hire, hire quality over quantity. Junior staff may be cheaper, but they can ultimately cost you more if their work is subpar or simply wrong. Hire experts who can be “utility players” that can fulfill multiple roles, even if they are slightly more expensive.
- Get social with your marketing: Online marketing tools are not only effective, but they’re also often cheap or free. Start by choosing the two most important social media channels for your business (and remember, not every business needs a Facebook page) and devote an hour or two each week to queuing up a few posts through social media monitoring tools like Hootsuite. You can create free newsletters through sites like li or create and distribute newsletters to your mailing list very inexpensively through services like Constant Contact. Done properly, social media can help create a community among early adopters, who can then help evangelize your business.
- Act big: With limited resources, you must find cheap ways to create the illusion of “big” so that you look like a business that will be around for the long haul. A well-designed, clear, and informative web presence is absolutely essential – you can use WordPress templates to do a lot of the heavy lifting (but be sure to implement strong security on your WordPress site). Do everything on your own domain – your @hotmail or @aol email won’t cut it. Use a virtual PBX system like Grasshopper to create a call tree with multiple extensions.
Small businesses can be lean and nimble in ways that big businesses simply cannot. Monitor your costs closely, trust your instincts, and take advantage of that small business edge by offering the personal touch and customer care no giant corporation can compete with.