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As a small business owner, you probably have a vision for what you want your business to be, but you may be struggling to secure the capital you need to drive that vision. There is no doubt that having financing and establishing steady revenue are keys to growing your business, but if you are just getting started and have only limited resources, it is still possible to build a successful company.
Bootstrapping a business can be a high-risk undertaking, but it can also be extremely rewarding and profitable. So, what exactly does bootstrapping mean, and what does it take to bootstrap your business?
What does it mean to bootstrap your business?
Bootstrapping refers to developing a startup or small business with few capital resources and without relying on outside funding. Small business owners may use personal funds to get the company up and running or utilize the new company’s operating revenues to grow the business.
While it is easy to become overwhelmed by the perceived expense of starting a small business, in reality, the bootstrapping process is not as difficult as it may seem. Bootstrapping is more of a mindset; it's about finding a way to make money with few resources and having confidence that you'll succeed. However, it will require you to put in the time and effort necessary for success.
Common bootstrapping methods
Bootstrapping is all about taking small, incremental steps to grow your business, using the resources you currently have available. Some of the most common bootstrapping methods include:
Inventory minimization
Inventory management is critical for bootstrapping a business, as overstocking products can be a huge waste of money. To avoid the common pitfall of investing in inventory you don’t need, conduct market research to ensure that you're only buying items your customers want to buy. Once you learn more about your customers’ purchasing habits, you can invest in the right inventory to meet their needs.
Operating costs
To maximize profits with limited resources, you need to minimize costs as much as possible. Reduce your overhead by hiring few (if any) employees, outsourcing work, finding a cost-effective office space, and looking for other ways to reduce operational expenses wherever possible.
Owner financing
If you don’t have a business partner or investor, you'll likely need to invest personal funds into your business. So, when preparing to bootstrap your business, focus on building your savings and managing your finances well.
Personal debt
Another common bootstrapping method is incurring personal debt to fund your business, such as by opening a new line of credit or taking out a loan. If you plan on using this method, make sure you have a strategy for how you are going to pay the debt back.
How to bootstrap your business while increasing profits
Bootstrapping your small business can be rewarding and profitable, but it requires strategy and diligence. If you are considering using this method to grow your business, consider these tips to get you started:
Develop a strong set of core values
Developing a strong set of core values will help you prioritize your goals and objectives when bootstrapping your business, which will in turn help you make better decisions. Your core values will also unify your team, as they will have a common objective.
Prioritize skill development
Another way to increase profits while bootstrapping your business is by prioritizing skill development for you and your team. Investing in skills training and cross-training will help your team work more efficiently and effectively. It will also allow you to reduce overhead, as your employees will have the skills necessary to fill multiple roles, allowing you to keep your staff small.
Consider partnerships
Partnerships and collaborations can help you drive profits while bootstrapping your business. You can form partnerships with friends, colleagues, and/or other business owners, and these partnerships can help you reach new customers, gain new skills, or even make new connections in your business.
Get your brand online
Online marketing is an essential part of running your business. When bootstrapping your business, you need to develop an online presence to reach new customers and create a strong brand identity. Your website should offer customers valuable resources and high-quality services, which will build loyalty and trust.
Get your small business off the ground with more tips from the BBB
If you are trying to grow your small business with limited resources, the BBB® has many valuable tips to get you started.
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