Bootstrapping your cash flow

Filed in archive Bootstrapper Tips on July 30, 2008

Photo courtesy of iStockphoto, Aliaksandr Autayeu


Managing cash flow is key to any bootstrapping effort.

But how do you take a good idea, no matter how viable, and turn it into a working business model that produces cash flow sufficient for expansion and growth?

Take the example of my own bootstrapping venture PostRanger.com, a blog network focused on niche posts providing a guide to the new media.

The network has been well-received by visitors thus far, but what approach should be taken to make it pay?

Here are some questions you can ask when looking at your own bootstrapped idea:

• What is the value? In the case of PostRanger, would it be to advertisers whether those coming to us through AdSense or some other service or those we sell to ourselves? Or would the site be more valuable to those seeking space on the network, maybe as a way to create posts promoting a website or selling a product? Or is there something else entirely ...?
• Where is the money? How are you going to get it? Of course, the best scenario would be payment through PayPal or some other means upfront. You may want to see whether this will fly with customers and if not figure out how you plan to collect.
• How much does it cost? What will you need to generate this cash flow? You're bootstrapping, of course, so we're not talking about initial investment. What we may be talking about is how much of the revenue generated will need to be plowed back into the business to keep it operating.
• How long will it take? Specifically, this is a time question. It deals with how much time it takes to do what needs to be done and thus keep that revenue flowing. For example, revenue is generated by this blog, but it requires a certain amount of time on my part to maintain it. This is time spent away from family, other endeavors and other everyday responsibilities and in the end is a cost just as real as money.
• How long will it last? A single sale-say of a product on ebay-is not enough to sustain a business and give it the revenue necessary to expand, however, a unique product line that can produce repeated and sustained sales is another story. Think of bootstrapping as an effort to generate a sustainable stream of these kinds of sales or to provide a service for which a customer or customers will pay steadily.

There are doubtless other things I've missed and it is an issue with which I am still grappling, especially connected to my current bootstrapped endeavor, so feel free to share your thoughts in the comment section below...