Most entrepreneurs can sidestep the frustration and distraction of finding angel investors or lenders to fund their startups, at least in the early stages.
Here are five tips that will help you bootstrap your startup with considerably less outside capital:
- Start virtual: A traditional office is often an unnecessary luxury 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). If you don’t 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, but 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. For most software needs, there is a free or relatively inexpensive SaaS option available via the cloud – no need to buy, configure, and maintain servers. Dropbox makes file sharing and backups seamless. Google Docs gives you all the functionality of Microsoft Office, plus bonuses like the ability to edit documents from practically anywhere, on any device, simultaneously. Adobe’s Creative Suite is available online for a fraction of the normal price. Platforms like Zoho integrate dozens of tools small businesses need: 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 launched. Every hire should be related to executing 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” who can fulfill multiple roles, even if they are slightly more expensive.
- Get social with your marketing: Online marketing tools are not only practical, 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 and distribute newsletters to your mailing list very inexpensively through services like Constant Contact. Done correctly, social media can help create a community among early adopters who can help evangelize your business.
- Act big: With limited resources, you must find cheap ways to create the illusion of “big” to look like a business that will be around for the long haul. A well-designed, clear, and informative web presence is 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 – @hotmail or @aol email addresses 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 agile in ways big companies cannot. Monitor your costs closely, trust your instincts, and offer the personal touch and customer care no giant corporation can compete with.