Not every entrepreneur is blessed with deep pockets or generous family members. For many, “bootstrapping” involves lots of ramen noodle dinners, working weekends, and foregone hobbies.
That’s not necessarily a bad thing. But when it’s imperative that you watch every penny, you need to have a plan in place to stave off lifestyle inflation and keep the lion’s share of your cash flow directed where it matters most: your business’s balance sheet.
Here’s how to get it done.
1. Get Your Friends to Buy in.
If you’re not blessed with rich parents or extended relatives, don’t fret. You likely have access to another ready supply of startup capital: your friends. Those who’ve (it’s fair to say) have made more sensible career choices probably have extra cash they’re looking to put to work. If you’re self-confident enough to sell them on your vision, and said vision is actually worth selling, their largess may be all you need to get from whiteboarding to revenue.
2. Use a Rewards Credit Card.
If you’re going to finance startup-related purchases with a credit card anyhow, why not use one that pays you back? Check out this list of the best credit cards for young adults to determine which card best fits your lifestyle and business needs. If you don’t come across one that piques your interest, rest assured there are plenty more where those came from.
3. Use Contract Labor Until You Can’t Anymore.
Live by the mantra: be slow to hire and quick to fire.
That’s not a knock on anyone you might hire, to be clear. It’s just a pragmatic reflection of reality. Every new employee you take on adds to your company’s liabilities: salary, benefits, office space, equipment.
Sure, you’ll recover some of that burden through increased productivity and higher sales. But there’s no reason to take it on in the first place until you’re absolutely ready. As your workload increases, farm out tasks to contract workers and freelancers willing to work on part-time or per-project bases and forgo benefits.
4. Keep a Small Footprint.
Maintain your hire-slow approach and you’ll reap another benefit: lower overhead. The longer you can avoid expanding your office footprint, or leasing a physical office at all, the longer you’ll reap the remote-work dividend. Once a physical footprint becomes unavoidable, opt for a coworking space — a hybrid approach that’s cheaper than a standalone office.
5. Farm Out Non-Core Services.
Why retain a lawyer when you can use LegalZoom for basic business law needs? An accountant when QuickBooks and TurboTax will do? A full-time office manager when a virtual assistant is sufficient? Stick to what you’re good with and use cloud software or contract service providers for the rest.
Are You Living Lean?
You’ve probably heard something of the corporate veil. If you haven’t, you’d do well to get up to speed.
The fact that your business finances are at least theoretically walled off from your personal finances shouldn’t stop you from transferring your penny-pinching professional practices to your non-business activities. Just the opposite. If you’re planning to ride the bootstrap train as far as it’ll take you, you need to make sure you’re not letting a cent go to waste anywhere on your ledger. You never know when you’ll need to infuse some of your personal funds into your startup.