Here are some great bootstrapping suggestions from a diverse group of business leaders in an article from the Kansas City Star.
The article covers a recent workshop on bootstrapping held by the Enterprise Center of Johnson County.
Why bootstrap your next business venture? Experts and sources say that:
• Few companies will get outside funding anyway, only 40,000 to 50,000 of the 500,000 to 600,000 started each year, according to the National Venture Capital Association
• There are fewer big financial mistakes because in the beginning entrepreneurs have less money to work with and spend it sparingly
• It's lots of fun. (On a side note I can tell you I have a hell of a lot more fun on my bootstrapping side ventures than at my day job!)
• Passion can translate into sales. An entrepreneur passionate about a product will be better at selling it. Bootstrapping promotes that passion because you've selected a product or service you believe in rather than one your investors believe in.
Important suggestions when bootstrapping:
• Be honest with yourself. "Don't chase an idea forever if you can't pull it off," says Dave Cummings, owner of North Kansas City-based broker-dealer Tradebot Systems and a participant in the workshop. "It's OK to fail a few times if you can cut your losses. Eventually you get one you can validate."
• Build a team, not necessarily the top people in your field since you probably can't afford them, but folks with basic skills that you can mold.
• Negotiate salaries by either asking employees to defer their pay or offering them a piece of the action. (Or come up with anything else you can think of.)
• Start selling as soon as possible. As Guy Kawasaki (and plenty of others) have suggested, shipping that first project out the door is crucial to cash flow and to learning what you can do better in the future.
• Get some good advice. It can be something as formal as a board or something as informal as fellow business people willing to give you an unbiased appraisal.
Other tips:
•Be conservative in your revenue projections. Don't kid yourself about the amount of revenue you can bring in.
•Design great stuff, but buy cheap. Look for deals on used or secondhand products.
•Sell direct. Cut out the middleman. Use e-commerce.
•Look for creative ways to get customers to pay fast. Get an advance payment with the contract or offer a discount.
•Communicate with vendors. Work out payment arrangements with vendors. Prioritize accounts payable.
•Barter. Even if you don't have cash, you may have a product or service that someone else wants.
For more suggestions and reiterations of the above, check out Greg Gianforte's bootstrapping principles here.
See article.
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