Bootstrapping can be very challenging. Besides being financially strained, it can be disappointing as a business owner to be rolling all the money you’ve made back into the business, rather than into your pocket.
However, the lessons and experiences gathered along the way are invaluable, and all the challenges and struggles involved in financing yourself are well worth it in the long-term. Not having investors breathing down your neck or debt pile burying you reduces the pressure you have to just one: growing your business. One of the biggest challenges many people face when bootstrapping is scaling or staying cost-effective. Consider five ways you can achieve this successfully.
Use your home or a coworking space
Many startups focus on things that do not matter much in the beginning, like a state-of-the-art office. A beautiful office space with a nice gym is cool but can be an unnecessary cost in the beginning. How about using that money for marketing or customer acquisition instead? Consider starting from your home or using a coworking space. You get to save money by cutting out the overhead costs. Your home gives you a safe and comfortable space to start in, without any extra costs.
If working from home in the long-term becomes isolating and tedious, spring for a coworking space. It is an office space with people who are in a roughly similar stage of their business as you. Not only do you save money, but you also get other benefits, and it can be a source of knowledge from being close to people who are also starting their own businesses.
Carefully evaluate every expense
The key to this is financially responsible. When the money begins to come in, do not make “afterthought expenses”. Do not let your guard down. Spend like someone who is owing, because if you drop your guard down and spend freely, there will be problems down the road if you encounter a challenge or business slows. Always review outgoing expenses as that ‘wasted money’ can be reserved in an ‘emergency operating fund’ for rainy days. This builds a business survival mindset.
Keep in mind the importance of every task. It may be better to outsource a task even if you can’t do it yourself. It’s something to think about as your time may be better spent doing something more important. Time, they say, is money. It is also important to prioritize while outsourcing. Over outsourcing may make your tasks lack the unique personal touch that sets your brand apart from the rest. Reserve such tasks for yourself. Also chose the best possible option when outsourcing. Do not look for the cheapest, look for the best. Outsource wisely, as the people you hire will, for that period, be part of your business and brand.
Embrace the digital marketing era
It is impossible to ignore digital marketing today if you want to drive traffic to your website and products. Identify your target audience and chose a suitable platform to reach them. In fact, there are loads of businesses that are run successfully on social media platforms alone. When you combine that with your website, you may not have to increase expenditure by using channels such as Google AdWords. Paid advertising and organic growth are useful tools that help maximize your reach. However, to optimize cost per acquisition (CPAs), ensure you keep tabs on the performance of your digital marketing campaigns concerning expenditure. The CPA should not be too high, the number of hits notwithstanding. The goal is to make the most of digital marketing at a minimal cost.
Find solutions that optimize with the lowest cost
Spending heavily on designers, coders and maintenance running a professionally curated website is not the best idea for startups, especially when you are still scaling. Instead, try running your business on an e-commerce solution. It is cost effective and much easier. An e-commerce solution comes with many templates, plugins and themes at a much cheaper cost. They already know what websites require and provide pre-set widgets and pages, along with support. You save both money and effort.
For e-commerce websites, another e-commerce solution will be to partner with multiple logistic partners. This provides you with the best of all worlds as you will have the best shipping service for every area. You may not be the one shipping your products personally, but the average customer does not consider that. Using a shipping aggregator helps in providing the best possible service to your customer and positively shaping their minds about your brand. If you provide shipping yourself, you may have to outsource some deliveries to serve your customers better. You should also consider cover for your van to keep you on the road at all times.
Cost-effectiveness is very important if you run a bootstrapped business and are a start-up. Always know the major sources of expenditure and revenue and work to minimize and maximize them, respectively. Only then will you be profitable. Always check your costs, with respect to profit and loss, and know exactly where your business stands at all times.