Planning a post-COVID business? Bootstrapping works. Here’s why – and how.
Despite the challenges we’re all facing during COVID-19, all is not lost for business owners and those looking to embark on the exciting journey of starting a company. Even if you’re limited on available funding, there are plenty of options available to you, whether you’re looking to get your company started with the help of a long-term personal loan or through the bootstrapping approach, where you bring all the funds to the party yourself.
Today we’re talking about the latter. One of the defining characteristics of the COVID period is the amount of time adults and families across the countries are finding themselves to have, making it an ideal opportunity to make decisive and clear plans for your business goals in the year to come.
Bootstrapping is an approach to business startup that’s as old as the hills. It brings with it its own advantages and disadvantages, which we’ll be covering now. Always remember that some of the most successful companies in the world began with little to no capital.
And you can do it too.
The benefits of bootstrapping.
The overarching allure of bootstrapping your business is simple: you have more freedom. That freedom does, of course, come with its own downsides as well as its advantages. You’ll likely have less immediate growth opportunities, but you’ll be well set for doing things entirely your way.
First of the benefits of note is the simple fact that you can focus more on your own products and services. Fundraising often takes up much of a business owners time, requiring networking and connections to succeed. Going it alone? You can get right down to work.
You’ll also be free from the issue of equity and its dilution. When you self-fund your business, there isn’t the spectre of having to give up part of your company hanging over you. Your cash flow will also be more stable, being free of the dangers associated with your stakeholders and creditors requesting periodic payments, be those for interest reasons or due to profit earned.
Finally, it’s an impressive achievement to pull off – and that matters to investors. Demonstrating your ability to self-start entirely will prove your competence and placement in your industry, making future connections for additional funding easier to achieve.
Tips on bootstrapping the right way.
So, let’s dive right into a list of important tips on how to approach this kind of business startup.
Keep it honest: Bootstrapping has benefits, but you pay in the short term in how much you can achieve. Don’t let this frustrate you. Instead, be honest with yourself about what you can achieve in your next quarter or financial year. You don’t have the luxury to set lofty goals.
Keep your job: Don’t quit too early; it’s a classic mistake. Even if you have a safety net in place already, resist the temptation to kick employment out the door and focus on your business. Will it be busier? Yes. Will it keep you safe during that turbulent first year of your start-up? You better believe it will. The crunch is worth it.
Minimise expenses: The less your operating costs, the better. Fortunately, you can have almost all of your business hosted virtually thanks to the internet and the abundance of SaaS (subscription as a service) companies, from your data storage to your phone system.
Keep records: It’s not sexy and it’s not glamorous, but it does matter. The better the data you build on the performance of your business, the more accurate and useful your future planning will be. Analytics matter – and they need solid data to work. Don’t skimp on the admin.
Good luck! It’s an exciting and worthy goal to pursue. We wish you the best of luck in doing it. With the time you have available, it’s a great thing to plan for 2021 and the future beyond it.
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