There’s nothing quite like the feeling you have the day you quit your job to start your own company. It’s nothing short of exhilarating and sheer terror all wrapped up in one giant ball of nervous anticipation to get going.
Your emotions run high the day you leave the comfort of a normal job. You’re excited for the dream and potential of being on your own and the successes that could bring. But at the same time fear, trepidation, and self-doubt are always in the back of your mind.
I have started two companies from the ground up and both have been bootstrapped using my own funds (the first business did have some funds from the 3 F’s: friends, family, and fools). I learned many hard lessons through trial and error, through success and failure, and the absolute necessity to make things work to keep the businesses afloat.
There’s a real awakening of your lack of small business skills and street smarts that you need to bootstrap a company to success when you leave the comfort of your job.
The first company I started was a retail store that sold home décor and furniture nationwide, and the second which I’m currently running is an online marketing agency that I started in 2008.
Below is a list of 10 tips and practical advice that could have helped me greatly while I was getting started, and that hopefully can help you in your journey as an entrepreneur.
Nothing supersedes the real-world experiences gained from doing things yourself. While I had an MBA and worked for several years at a management consulting firm, neither prepared me for the tactical and operational skills that you need to bootstrap a company from the ground up.
Here are my 10 tips for bootstrapping entrepreneurs:
- Focus on what’s most important:
- Things that make you money
- Things that save you money
Ask yourself: will what I’m doing now help us create more sales profitably? If not, then stop doing it. When you’re first starting there is so much money exiting your bank account that it’s imperative that you focus on lead generation and sales right away – that’s priority one. The bulk of your efforts should be focused on how you can create more sales and cash for your business. Without cash flow, you’re dead – end of the story.
At the same time, run a lean business. Don’t spend cash on things that are not essential to helping you create more sales and keep the business running.
- Pay Higher Ad Rates In Exchange For Flexibility.
Negotiate shorter terms on advertising contracts until they have proven themselves. I used many different advertising tactics early on that didn’t work, but I always tried to negotiate the shortest contracts possible so I wouldn’t be stuck for too long in a bad relationship if it didn’t work out. By the way, the things that have always paid the highest dividends were online marketing tactics.
- Leverage Vendors For Credit.
If you carry inventory this is important so ask your vendors for credit or terms on the inventory you buy, such as net 30 or net 60. You would be surprised at how often suppliers will extend terms to you. See point 1 regarding things that save you money…in this case it’s really things that preserve your cash.
- Hire A Lawyer To Negotiate Your Lease
Without a doubt, if you’re in retail you will need a lawyer to help negotiate your lease. Yes, it’s expensive, but it could save you far more in the long run.
Landlords write contracts completely in their favor. A good lease will give you better terms, protect your future success, and ensure that you have a first option on the space when the lease is over, and help reduce your financial exposure should the business not go the way you wanted.
- Track Everything Marketing Related
You absolutely need to make sure your marketing dollars are working and returning your investment – it’s absolutely necessary that you make marketing pay for itself. Utilize call tracking for any advertising and calculate your cost per lead.
- Hire An Intern To help With Graphic Design
If you’ve been working for someone else chances are you’re not an expert with the Adobe Suite of creative products such as Photoshop or Illustrator and cannot graphically create logos or ads for yourself. Find a graphic design student from a local junior college that can help with these tasks. Interns will get valuable experience and at the same time save you a lot of money. Remember we’re bootstrapping here. Spending thousands on a logo this early on isn’t going to increase your odds of surviving through year one.
- Create A Promotional Calendar
Plan out when the major holidays or events are for your industry and coordinate your promotions. Planning ahead will make you feel more in control too.
- Logos and Fonts
Keep your logos simple and readable. When we first created the logo for our retail store it had a graphical element next to the brand name that was difficult to print on all our promotional material so we eventually dropped it. Keep your fonts simple and easy to read. Artsy definitely does not equal effectiveness – it actually makes your advertising less effective. If people cannot read your logo after just glancing at it, or easily read your ads when quickly glancing at them then it’s not being effective. Pick up a couple of books on advertising – I wrote a post here on some of my favorites.
- Media Buyers
It will only be a matter of time after you’re open before a media buyer will contact you. At first pass, media buyers appear to be a great benefit. They purchase advertising on your behalf, coordinate it all and help plan, and in many cases do not charge you directly for the service. They make money from the advertising you buy. In other words, the advertiser gives them a kickback for the order. Media buyers can be beneficial and help you plan some of your marketing, but be careful as they are incentivized to spend more of your money on the advertising that makes them the most money. Most likely if you want to do postcards, direct mail, or print ads the publishers will not give the media buyer a kick back and so it’s not as likely that this tactic would be recommended. I personally felt I knew better where my advertising dollars should be spent and I never used a media buyer (but was approached by many). Pro tip: if you decide not to use a media buyer, ask the advertiser for reduced ad rates since you are acting as your own ad agency. In essence, you’re asking them to forgo the commission they would have paid the media buyer and pass this on to you as savings.
- Don’t Tie Up Your Cash Unnecessarily in Tenant Improvements
We had a client once tell us that they spent an extra $30,000 on the tenant improvements of their retail space because they wanted to make their first location “special.” Eeek. They used their own cash to do this. By all means, safeguard your cash and preserve it for the areas that need it most – marketing and advertising, and working capital to keep you going while you build the business. You will never get your money back from over-investing in tenant improvements. Think long and hard about this one – if it’s not going to contribute to increased sales, then you will not get any return for that investment and you’d better leave the cash in the bank. This is one of the worst mistakes you can make and consumes valuable working capital.
Hope these have helped you. What are your comments to bootstrap a company?