Bootstrapped, and looking to scale? Here are 5 tips
In 2015, brothers Yatin Hans and Aman Hans co-founded Bigsmall.in, a gifting company focusing on unique and creative gifts. At its inception, Bigsmall was a bootstrapped startup – and has remained true to that nature ever since. Here are some tips from the co-founders on how to scale a bootstrapped business.
First of all, a bootstrapped business requires you to analyze your own – as well as your team’s – strengths and weaknesses inside out. Knowing what you can do, and what you can’t do, is an integral part of carrying out operations. You have to find the right balance while outsourcing – to minimize cost for your business, it’s important to outsource the tasks you know you can’t carry out yourself, reaching out to specialized skill in those departments – increasing efficiency and quality, whilst also keeping your own strengths in mind.
Outsourcing the right task is key – not too much, not too less
You should also keep in mind the importance of every task, even if you can do them. If you can do a task yourself, but your time is better utilized doing something of more importance, it’s better to outsource said task, since your time is also worth money. Prioritizing while outsourcing is key. Outsourcing is vital, but don’t outsource too much. If you outsource too many of your tasks, the personal touch and the factors which differentiate your brand from the competing pack could become blurred, and gradually, your brand’s touch could change. Keep the tasks which require your touch to yourself.
The bottom line is – you have to minimize the expenditure while maximizing the output of the resources at hand – as well as quality and efficiency – maintaining the brand image you wish to portray in the process.
Keep costs down to a bare minimum at the outset
While starting out as a bootstrapped business, there are myriad ways to keep costs down to a minimum. At the start of operations, it’s not very important to splurge on an office space – it’s nothing less than a luxury. You could start out from your home – it provides for a comfortable and safe space to start off in, without any extra tertiary costs. It’s also easy to host meetings at home. A lot of startups start out of coffee shops, but coffee shops aren’t the most cost-efficient – those coffees start adding up over the long term, while there is also no long-term asset value associated. Money now is always more important than money later, so any cost-cutting measure at the start is worth its weight in gold.
We personally started out from our home’s garage – it was a great space to store all our products, pack them, and ship them to our customers, saving the cost of an office space or a warehouse. Another trend that has emerged recently is the idea of co-working spaces, which is, we believe, another brilliant idea to save costs.
For some people, working out of homes could get tedious and isolating over time – co-working spaces not only counter that, but sharing an office space with people roughly in the same stage of their business as you can be a great experience, and a source of knowledge. Not only can you gather ideas, opinions, viewpoints, pitches, etc., you can also get your first audience, focus group, and potential clients there, which are potentially invaluable.
Find solutions to optimize with the lowest cost and least hassles
In the initial phases of operations, spending a large amount of money on coders, designers, and maintenance to run a professionally curated website isn’t the best idea, especially if you’re still scaling. It’s much easier and cost-effective to run your website on an e-commerce solution (our website is powered by Shopify). An e-commerce solution provides you with innumerable templates, themes, and plugins for your website at a much cheaper cost. Such sites know what an e-commerce website requires – they provide preset pages, widgets, and integrated support with other sites and services for your perusal, saving you a lot of effort in ideation and execution. Not only do you save money directly, you also save money indirectly by saving effort.
Specifically for e-commerce websites, instead of partnering with one shipping partner, partnering with an aggregator of logistics partners could be a wise move. Some shipping services may be efficient overall, but not as efficient in certain areas. A shipping aggregator provides you with the best of all worlds – it’ll match you up with the best shipping service for the given area on a given order. Shipping might not be something you do directly, but in the minds of an average consumer, it is still one of the major factors that can shape your brand’s image – how fast and efficient your shipping tie-ups are – and a shipping aggregator helps immensely in that regard.
Always look out for the future
While starting out, you do require cash in hand, but you might simply not have it. Instead, try paying with incentive-based deals, promises based on milestones, and future IOUs – money now will always be worth more than money later. This way, your risk is minimized – if your business is successful, you can afford to pay the costs; if you run into financial turmoil, or things don’t run as planned, you have fewer financial liabilities to tend to.
For a bootstrapped startup, it is all the more important that you keep reinvesting your company’s revenue back into the business to perpetuate its growth. Instead of taking out profits in the initial phases, reinvest the money back – it acts as your own further investment, which will lead to much greater profits down the line rather than taking minimal profits out at the outset.
Embrace the digital marketing era
Digital marketing is an unignorable phenomenon in today’s day and age. After all, you have to drive traffic to your website and products, and digital media has emerged as an uninhibited tool for marketing. It is important to identify your business, your products, and your targeted audience of customers, and choose a suitable platform for advertising it. For Bigsmall, as visual content played a huge role in getting across to our customers, we chose to move our primary focus to social media sites such as Facebook and Instagram, instead of increasing expenditure on other marketing channels such as Google AdWords.
Organic growth and paid advertising on digital media are both handy tools to maximize your reach. While paid advertising is also important for a sudden rush of customers, it is just as important that your organic growth comes along equally well simultaneously. However, you have to constantly monitor the expenditure and performance of your digital media advertising campaigns to optimize cost per acquisition (CPAs). Number of hits notwithstanding, the CPA should not be too high – take into account the cost and the benefit.
If you run a bootstrapped business, minimizing costs is of paramount importance. A startup should always know where its significant costs lie, and where its revenue sources are in order to become and remain profitable, which is the end goal for every startup. As a founder, you should always look for as many sources of revenue as possible, and monetize your property – don’t rely on outside sources to keep your company profitable. You should always keep a check on your costs, in terms of profit and loss, and know exactly where your company stands at any given period of time.
Yatin Hans is the Co-founder of online creative gifting portal Bigsmall.in.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)