Ten Steps to Successfully Use Bootstrapping to Start Your Business
 by:
Marjorie Geiser
I am probably the queen of bootstrapping. Call it power, call it being in
control, call it wanting to know it all. Regardless of the motivation, the most
enjoyable thing for me has been to figure out how to do something with as little
cash outlay as possible. I started my original company, MEG Fitness, with just
my time. I was even able to promote my services by writing a free weekly health
column and then took advantage of a cheaper alternative to an ad in another
newspaper by being featured in their health section.
When I think of the term bootstrapping, I always think of
starting a business without outside financial help, but technically, it means,
‘using a special process to perform a task that one would be unable to do in
general’. I found it can refer to much more than just business! But, for our
purposes, I am referring to the term as I have always considered it: Raising
yourself, and your business, up by your own bootstraps.
With any new and small business, chances are you are going
to start it with the sweat and tears of your own efforts. You may be in a
position where you can quit your ‘day job’ and still pay your bills, but few
people are even in a position to do that! So, you must create the plan and
vision for your business, and then get it up and running, part-time and with
your own finances. Many people feel this is just too overwhelming a proposition
to seriously consider, but I know it can be done, because not only did I do it,
but many of my clients have done it, also. As the business grows, they have a
better chance to secure outside financing, but when creating the idea and the
plans, the big key will be to start and grow with as little cash as possible.
In business school, we have learned that there are several
sources of funding for starting up a business: The first is what is termed “FFF”
for Family, Friends and Fools. This category would be where smaller amounts of
cash would be offered, maybe $5,000 to $20,000. The second is finding an
“Angel”. An Angel is someone with a lot of money who would be willing to invest
in your company. Often this is a retired businessperson who has a lot of
residual income and is content to put his/her money to work on a high-risk
investment. Often an Angel is willing to invest larger amounts of money than the
first category. Banks, in the form of a Small Business Association loan, are
another possible funding source, which actually can be less demanding beyond
just making your payments. However, banks generally want to see a comprehensive
business plan that will outline how you will be able to make your loan payments
while growing your business. The final funding source is from Venture
Capitalists (VC’s) and VC organizations. VCs usually only consider companies
that have large growth and profit potential. They are looking for that company
that will likely go public or sell for an incredible profit and provide an
amazing return on their investment.
Now you know of possible funding sources, and you probably
don’t have a rich uncle or father, you don’t know any wealthy family friend who
wants to lend money to you, and you’re not ready for an SBA loan or VC funding.
The fact is that it is said that 99.9% of all business owners will pull their
business up by their own ‘bootstraps’. That probably means you! Let’s now look
at how you can make it happen with what you have:
Focus on your cash flow, not profits. This is an old lesson
in schools of business. Reality is you have to pay your bills, so the biggest
motivation is on sales. For a service business, this means bringing in clients!
There are multiple stories of companies who grew to success all based on those
first customers and clients. Then, not only do they have cash coming in, but
also a source of referral for new clients!
Just do it! What this means is, get out there and do it! No
matter how well you plan, until you start working with clients, you won’t know
what works and what does not work. Granted, you do have to plan, but no matter
how much planning you do now, you will change procedures and processes as your
experience grows. You can’t build up experience if you don’t start seeing
clients.
Keep your day job. Most of the service professionals I have
worked with have kept their full-time or part-time job while creating their
business. The best way to keep the pressure off is to know you still have a
regular income. That way you aren’t motivated by panic and can clearly define
what your goals and vision are and create the plans to make it happen.
Get your name out there. Sometimes the best way to become
known in your community is by offering free presentations or workshops. Examples
include health fairs, school fairs, chamber events or community events such as
bike races or marathons. Attend lunches and networking events and offer to give
small presentations on your area of expertise. People need to know you’re there
before they start contacting you. This is one of the easiest forms of free
advertising.
You can do most of it on your own. In business school,
there is big emphasis on building a team. It has taken me several years to start
building my team. If you are looking at conserving as much of your funds as
possible, there are always ways to do it yourself or only contract out for
services that either will take too long to learn or you just have no interest in
doing. For years I used templates to create my own websites. I studied all I
could on SEO and how best to create a website, learning about website text,
white space, headers and sub-headers, etc. Until business was so busy that I
could no longer justify the time spent on my websites, I was content to do it
all, myself.
Focus on function. You imagine that perfect office or
location, but you have an extra room in your house. If you want to start making
money, now, use what you have! When you have more money, you can then invest in
a better location or that ideal office furniture. The key is to see clients,
now, not wait until you can have the ideal setting. Many potential clients will
allow this very question hold them back from starting! Don’t forget that Bill
Gates started in his garage!
Forecast. I always ask clients how much would they like to
make in their first year, but then I have them break it down. How many clients
would they like to see each week? Then we determine how much they will need to
charge for each client and each situation to determine how they will meet that
goal income. Another part of forecasting, however, is to know what your expenses
are. If you have no understanding of how much you’re spending on your business,
you can end up out of business before you’ve even started. You have to keep in
mind that you can’t spend more than you are taking in or have to invest in your
business. For this reason, not only is it imperative to start seeing clients
immediately, and that you keep your expenses down, but it’s also critical that
you understand what your current expenses are and how they will grow as the
business grows.
Start with what you know. Let’s say you dream of opening up
a health and fitness spa, but you want to start your business now, and you also
enjoy working with people with food sensitivities. Creating a spa will take
outside funding and a lot of market research, but seeing clients individually or
in groups right now will just take some marketing and getting your name out
there. When clients work on their business plan, I encourage them to think of
the ultimate vision and set up the steps to make that happen. While working with
clients, you can also start conducting the research necessary for the ultimate
goal of a thriving health and fitness spa.
Always say yes! I know this is a scary proposition, but
suppose your vision is to provide corporate health programs to local
organizations and a company calls you today and say they would love to have YOU
create a wellness program for their company. They would like you to start it in
2 months, they want all 100 employees involved, you can create as many groups as
you like from those 100 people, and they are offering you your asking rate for
not only the time you will spend in presenting the program but also for creating
it. The first emotion you experience is amazement that it’s actually happening,
then utter fear, and then panic sets in. BUT; you say yes! You cannot afford to
say you’ll get back to them! This is increased cash flow. One first theory in
business is always saying yes and THEN figure out how you’ll get it done. There
are an unlimited number of options and resources when you allow your creativity
to come into play. Funny how creative we become when fear of failure drives us
and the passion to make it really happen motivates us.
Emphasize what makes you unique. You don’t have the luxury
of comparing yourself with the leaders of your industry when you’re starting out
on a shoestring. You must draw clients/customers to you by focusing on yourself,
period. Why will a client come to you instead of sign up for a hospital-based
weight loss program? Why will they call you for your personal training services
instead of join the health club? Why will they make an appointment with you
instead of the doctor down the street? It has to be more than money; it has to
be something about you and the unique services or care you offer. When you don’t
have the fancy trimmings to attract clients, you have to fall back on what you
do have to offer and use that as your competitive edge.
If you have a dream to start your business, don’t let lack
of funds stop you in your tracks. The number of successful entrepreneurs who
have grown a thriving business from nothing is huge! Life is too short to live
in a dream of what may have been.
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