June 27, 2011

Rules for Bootstrapping a Startup Business

School for Startups: The Breakthrough Course for Guaranteeing Small Business Success in 90 Days or Less
School for Startups
book
In the Bootstrapping Your Business chapter of the book “School for Startups" the authors Beach, Hanks, and Beasley, offer us 23 rules for bootstrapping a business. Below is a summary of those rules for anyone thinking about starting their own small business.


1. Get operational quickly by selling. This maybe easier for a service business because you are selling you, but it can also be done whether or not you have a stockpile of products as long as you plan inventory wisely. (Inventory is covered in detail in another chapter of the book.)
2. Look for quick sales to jump-start your business. Remember you are not in business until you sell something.
3. Offer high-value products or services and make sure you sell the value proposition to get higher pay for your items. (Value proposition is covered in The WOW Factor chapter of the book)
4. Forget the crack team of recruits and do all the jobs yourself using advisors and mentors to help with the tasks you are less familiar with.
5. Under staff by doing it yourself and using contract workers only when needed.
6. Keep growth in check because slow growth requires less cash outflow than explosive growth.
7. Focus on cash, not profit to stay in business for a longer time so the customers will continue to sign-up and profits will eventually come.
8. Associate with other’s brand names through sponsorship, product-line, or loose partnership to build your credibility.
9. Do everything in-house – consider mailing and shipping yourself rather than hiring marketers or other outside vendors.
10. Do sales yourself in the beginning rather than utilize a salesperson. When you do decide you need another salesperson, do it based on commission rather than salary.
11. Start in your house or garage rather than rent or buy space to save overhead costs.
12. Don’t pay yourself or others get family and friend to volunteer to help until you can afford paychecks.
13. Argue every price because you do not know where you can save, how much you might save, or other options the vendor might offer you unless you negotiate.
14. Harness word-of-mouth advertising as it costs nothing and is one of the best methods for getting new business.
15. Use the royal “WE” to make your company sound bigger than 1 person when talking to potential customers.
16. Use free labor, such as interns found through the government, schools, or local networking groups.
17. Look for import/export opportunities by finding international suppliers or becoming one.
18. Get advances or deposits from customers to have money to buy necessary items before starting their job so you are not out any money.
19. Let customers fund your research for the next hot item by keeping your ears open for what they really want in the future.
20. Forecast from the bottom-up to figure out how much profit you must make to control your startup costs and continue your business growth.
21. Ship first, then test by sending new products to customers who can find the bugs for you without your investing time and money in the process.
22. Service businesses are easier to start than a product sales business because they require little upfront investment.
23. You do not need a formal business plan to start selling.

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