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When you’re starting a business, it doesn’t matter what sector you’re in; the chances are that you’re going to have to spend a bit of money to get things up and running. It’s a pivotal time, and the decisions you make around how you spend your starting capital can have a lasting impact on the success of your business.
If you’re one of the many businesses who choose to bootstrap through the early stages, making good decisions on how you spend your cash is more important than ever.
It’s likely you will be working to a tight budget (unless you already have deep pockets), and as we all know, money can only be spent once In this article I’m going to talk about some of the key do's and don’ts of successful bootstrapping.
The first and often most challenging point you’ll need to cover off when bootstrapping a business is to cut your personal outgoings as far as you possibly can. The less money that you are taking out of the business to live off in the early stages, the more you will have to use to fund growth.
This is often a hard pill to swallow if you have left a corporate career with a comfortable salary; particularly if you have family members who have become accustomed to a certain level if lifestyle and disposable income. However, the sacrifices you make in the beginning will be repaid many times over (both financially and emotionally) if your business is successful in the long term.
One of the biggest errors I see people making early on is wasting money on unnecessary equipment and ‘toys’ that they don’t really need. If you need a laptop, great. It’s a pretty essential tool for many businesses.
But if you are using it mainly for writing emails or creating documents in Word or Excel, don’t go out and spend £2,000 on a brand new MacBook Pro simply because you want one. The majority of the time a Windows based model costing under £500 will be more than sufficient (and actually more suitable for office based tasks).
Things like professionally printed letterhead paper, compliment slips, flashy business cards, and a nice Italian leather office chair may all seem like a great idea when you’re starting a new business. But in reality they are pretty unnecessary and can wait until later down the line when you’re making enough profit to justify the cost.
In most modern businesses, printed communication is fast becoming replaced by digital equivalents like email and electronic business cards anyway.
If you need a small run of cheap business cards to take out networking that’s fine, but don’t spend hundreds of pounds on getting flashy, gold leafed stationary printed for it just to end up sitting in a draw somewhere.
If you need to buy fixed assess such as machinery or equipment, it’s always worth seeing if you can get hold of it second hand. For example, you may be a photographer or filmmaker in need of camera equipment.
It’s more than likely you can get some great quality equipment second hand off eBay which is in perfect working order, and will cost you half as much as buying it new. Remember, you can always replace things later down the line when your business is generating enough income.
When you’re deciding which software packages to use in your new business, don’t just rush out and spend a fortune without checking whether there’s an open source equivalent that you can use for free. For example if we’re talking about office software, Apache Open Office is free to download and does everything that the Microsoft Office does.
It’s also well worth checking out Google’s range of apps, as there are some fantastic free resources you can take advantage of.
Google Drive for example is a great free alternative to paid cloud hosting, and it can be used to store shared documents which can then be accessed remotely by your whole team.
Do you bootstrap your business? How do you manage? Comment below (login or sign up first!)