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The how's and why's of bootstrapping (Part 2)

Filed in archive Bootstrapper Tips by Shawn Hessinger on October 21, 2006

The how's and why's of bootstrapping (Part 2)
CONTINUED FROM PREVIOUS POST

So, you've made up your mind to resist the temptation of accepting big outside investment for your little start-up company. How do you go about financing your business dreams?

Well, fortunately, Ed Zimmer of The Entrepreneur Network again has some good ideas to get you started.

Here, from ZeroMillion.com, are his suggestions (again, with some of my added commentary). Zimmer recommends:

• Scale down your expectations.


This has less to do with your destination than it does with your starting point. The idea of bootstrapping is to use revenues to build your business, but the size and scope of that business isn't limited by the size of its start-up. Remember, Greg Gianforte, CEO of RightNow Technologies, launched what by 2005 was already a $350 million industry making calls to customers from a spare bedroom.

• Recognize that "investment" doesn't necessarily have to come in the form of money.


What Zimmer is aiming at here is making deals with suppliers to provide you with needed resources at reduced or delayed cost with the promise of more business in the future. In fact, this can also work on the simplest of levels. When I began this blog, it was amazing how many businesses offered me services free or at reduced rates simply because I had blogged about them. There's a need to watch your credibility, but if you can speak your mind about products and be honest about your relationship to the companies that produced them, similar arrangements are real possibilities.

• Try to work similar deals with customers.


Zimmer is talking mainly about business customers, I think, other companies that would be willing to forward you resources to help you provide them with a product they require. But I would argue today that even businesses marketing consumer products can start with little or nothing using services like print on demand (see examples here and here) and drop shipping (check out our two comprehensive posts).

• And don't forget competitors. If you're strong at something they're not, you have the potential for a deal.


Zimmer goes on to suggest that the same goes for niche markets your competitor isn't serving or markets that just plain don't exist yet. Entrepreneur and technologist Scott Burkett makes a similar observation adding:

I will admit, that this can be tricky, but if you can successfully convince a competitor (current or future) to invest cash in your business, then that is the first step for lining them up as an acquirer for your big liquiditylinks event at the end of the rainbow.


• Use your imagination and creativity.


Resourcefulness is the watch word in any bootstrapping endeavor. There are probably as many ways to bootstrap a business as there are entrepreneurs trying to do it. For a primer, check out our posts on" 45 bootstrapideas" and "stories of 11 bootstrappers" both from Inc.com plus our own bootstrapper profiles here at BootStrapMe.com.

• Lastly, minimize your costs. Don't spend money on anything that you can figure a way to get for free.


Blogger and entrepreneur Ben Yoskovitz recommends that bootstrappers "Track every single dollar spent" and "Force yourself to justify every dollar spent" and even gives a list of "5 things you shouldn't spend money on when starting a business".



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