Every entrepreneur faces the challenge of funding when they are about to start their new business. And due to this, many startup founders feel that they need to take out loans or accept investments for them to start their business. But this is not true, self-funding is a great way to begin your journey with your business. And there are many who use this idea instead of taking up investments or loans.
The idea of self-funding is called bootstrapping and if you have enough of resources to put into your business, it is the best way to fund it. In fact, you will have complete control over your business with this. There will be no shareholders asking you to change parts of your business or how you run it, and there won’t be repayment of loans and debts.
But there is a downside to this, of course. You will have to keep a hold on your budget and take care of your spending. If you do not manage money well, you can go into a debt eventually. This is the reason why every bootstrapper always has to take care of every last cent they invested into the business. And if their management skills are not good enough, it can lead them to fall into a very serious debt.
So, if you are about to start your own business and self-fund it, here is some advice that you should follow:
1. Start Small
You do not need to spend on things that can work in the initial stages and keep things small instead. For instance, you can focus on your main products to ensure that it’s quality is great without focusing on increasing the number of products you want to sell.
Pick two or four main products that will give your business a kickstart. Also, ensure that you take in small orders so that you do not have to spend a lot just for preparing your products in a go. This might seem as something good for your business, but it can also cause you to lose a lot and get into debt in case the order is cancelled or something comes up.
Basically, you need to put all your efforts into starting small. And slowly slowly you can move ahead and grow better. When everything gets better and you have the funds to expand, go for it. Till then, make sure you focus on what is important for your business and leave the secondary things alone.
2. Take it Slow
It is common for the entrepreneurs who have outside investors to grow fast. And the reasons behind this is that the investors keep pushing them to do so. But if you are funding your business on your own, you should keep it slow. Not because you can’t grow like the other companies; it is mostly because you are not being funded heavily from behind for it.
Being your own investor, you will have to make more conservative decisions for your business. So, stick to a simple plan in the beginning. And keep moving slow. This will help you save a lot for which you can then add into your business slowly. In fact, focus on building your customer relationship and brand in the beginning. This will help you and your business better.
3. Lower Your Initial Hiring Costs
While you are adding your own money into your business, you will obviously have to take care of how much you are spending. And keeping the costs as low as you can will help you in the long run, especially during the initial stages. With this, you can avoid hiring a lot of staff to do your work. In places where you can handle something, it is better that you work on it yourself instead of hiring someone for it.
For instance, you do not need an HR department during the initial days of your business. You can take care of all the admin work and payrolls. Just like this, if you are able to handle any other tasks, it is better to handle it yourself rather than hiring an assistant or any other person. With this, you will be able to save money where it would have otherwise been used for the salary.
4. Prioritize Things You Need
Just like you need to work on taking in short orders and so on, you also need to ensure that you save from every other side that you can. For instance, if you can get your products prepared at a cheap rate from another company, make a deal with them for a while. In such a case, you will be able to save money instead of purchasing the machines that can put you under debt.
5. Create a Scalable Process
Many companies usually feel that they have to spend a lot on things like marketing and such to get a place in the market. But that is just not true. Once you have the right idea and create the right plan as per budget, you will be able to fulfil your goals.
For instance, instead of paying a lot for Adwords, or TV advertisements, you can resort to SEO techniques and social media. You wouldn’t be successful immediately but at least it will last longer. You will be able to build a brand like this. So, ensure that the process you create for your business is a scalable one and one that would also help you work under a budget.
6. Save & Plan
Yes, you read it right. You also need to save from what you have. Even though you might feel like you do not need it, you should know that it is important to save. In fact, early planning is the key to success mostly if you want to take investments later on during your business life.
Obviously, you do not want to enter a place where you get a good team and prepare a beautiful looking office, but then you run out of money. What would all this then do for you? So, it is always better to go slow and save as much as you can.
If you are sitting and comparing your business with other businesses then you are thinking in the wrong way. No business runs like the other and everyone has its own timeline. That is the beauty of each business. So, help your business based on your resources and efforts by following these tips. And with this, you will surely end up in a good place with your business. Remember that the slow and steady one always wins the race!