Bootstrapping is the fine art of building a company with little or no external funding. Some of today's biggest tech companies including Apple, Dell and Microsoft were started this way.
Bootstrapping really boils down to two things: spending less and starting revenue generation as quickly as possible. Lets look at each side.
Earlier this year I posted on how to save money. There are a 1,000 little things that you can do to save money. Let me touch on the big areas. You'll get 90% of your savings here. The rest is small change.
Don't hire: This is your single-biggest expense. Don't add a new position unless you absolutely can't live without it. Every body you add pushes out the point at which your business breaks even. Not hiring forces you to focus and be creative.
Don't travel: Technology will never truly replace in person connections and relationships, but more and more, we can use web and audio conferencing to replace many of our meetings.
Focus, focus, focus: Do one thing really well. This focus reduces the time and investment you need to get in market and starts revenues quicker. Too many startups try to build more than what the market wants or needs. One of my former investors, David Aronoff of Flybridge Partners has a theory for this – the "theory of adequacy" which basically states the market is only looking for something slightly better than what it has now.
Embrace free: From open source tools to social media, you can leverage a wealth of free resources to both build your product and take it to market. Free is your friend.
Remember the cycle: All new technologies follow an adoption lifecycle. Your innvators and early adopters will put up with buggy software because they want the latest stuff and because they want you to succeed. Don't by shy about selling. Get into market as early as you can. Even if what you have still has some rough edges on it.
Hire an agent: It's really expensive to hire a sales person and wait several months while they get productive. Instead, you should be selling all the time. In addition, consider using a sales agent, who is only paid when she brings in a deal. Agents are great for Countries or industries you can't serve directly and are a good way to get started. You can expect to pay a high %, but in the right circumstances, it makes sense.
Make it easy for customers to say 'yes': Don't get into a long sales cycle in order to get an order. Instead, make it easy for customers to get hooked and committed. 37 Signals and Freshbooks both do this well. You can get started for free and move up incrementally. Easy to get started. Easy to exit. No risk.
Two final tips:
Don't be afraid to start part-time. Most bootstrapped companies do consulting on the side to get going and keep the lights on.
Move very quickly. Time is your enemy because time costs money. Saving time comes from having a clear focus and fewer bodies to coordinate.
Thanks to StartUpCFO / Mark MacLeod is a Partner at Real Ventures, Canada's largest seed investor.
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