Bootstrapper's Success Secrets:
7 Golden Rules for Working on a Shoestring Budget
"Bootstrapper" (a person who starts a business with inadequate capital and manages to build it up relying more on creativity or resourcefulness rather than a checkbook balance) is a universal term. If you asked a room full of entrepreneurial professionals how many bootstrapped their ventures, the majority of the group would raise their hands. Why? Because 60% of all new businesses begin as undercapitalized start-ups
, so say SBA statistics.
I, too, am a bootstrapper. It was in 1985 when I was first bitten by the entrepreneurial bug to begin the journey. My bootstrappin' resume: I launched six successful businesses, and published independently an international newsletter. I've interviewed and networked with hundreds of bootstrapping veterans across the world and found that the start-up capital "amount" isn't our common denominator. It's our ability to maneuver successfully through the challenges that working with a little or no money poses. However, turning limited resources into a self-sustaining enterprise takes special skills and mental conditioning--training that is not developed by osmosis or readily available in a traditional workplace setting. There's good news, though. You can begin your bootstrapper's training right now. There are some basic principals that contribute to a bootstrapper's success. I'll share with you seven golden rules that will help you successfully build and grow your business on a shoestring budget. Here we go! Rule #1: Leave your corporate baggage at the door.
Besides a severance package and personal belongings, you leave the workplace environment with influences that affect your mind-set and shape your behavior. Most employee positions are insulated from cash flow issues. You can order and waste supplies, make long-distance calls at will, excessively use express mail, frivolously make photocopies, or spend everything in your management budget without much thought as to whether or not you're making the most cost-effective decisions. Chances are your behavior isn't any different from your co-workers. Bad habits begin to germinate here because you're not being conditioned to think about how much your actions are costing the company. When you strike out on your own those spendthrift habits can kill you.
Your survival as a bootstrapper will depend on your ability to distinguish between your needs, wants and absolutes. Make it your business to know the difference, so you don't indulge in your wants while ignoring your needs and end up too broke to handle your absolutes! Rule #2: Avoid ideas that really don't have a future.
Before you throw your heart, soul and piggyback into an idea, ask yourself three questions:
- 1. What problem does my product or service solve?
- 2. Whose problem does it solve?
- 3. And how do I know that? In other words, what research did you do to derive your answers to questions one and two?
Many people have great ideas but they flounder in the marketplace because there really is not an audience for the product/service. You can sidestep this heartache by asking yourself those three questions. How solid and thorough your answers, though, will depend on your research.
You can make sure your idea has longevity by digging up some information on trends for the next century that substantiate your thoughts. A low-cost strategy: visit your local library and do a database search for articles or books using the keyword "trend" or another word combination based on your own area of interest.
Testing your idea against the past, present and future is also critical. You need to be sure that your idea isn't a recycled version of something that has failed miserably in the marketplace, and if it is, you'll want to evaluate its predecessors so you can determine ways that your "fresh" or "revamped" approach can fare better. Great books to scan are ones that chronicle history (i.e., TimeLife's "This Fabulous Century: series); they'll offer you insights as to how certain events affect people's habits. Also, old telephone books; they'll show you who has gone in or out of business and who is thriving. Major libraries carry both types of books. Rule #3: Ignore all the "free" money talk.
"Where can I find 'free' money or a grant to start my business?" is one of the questions I am most frequently asked. Truth be told, "free" money is a myth. There are few government agencies, private foundations and organizations who give individuals money to finance a startup. Kimberley, one of my mentors, actually interviewed Norton Kiritz, president of The Grantsmanship Center in Los Angeles. He explained that the majority of available grant money is really targeted at nonprofit organizations and government agencies. These groups use the money to fund a variety of special projects such as community revitalization, job training or research, with a limited amount of money awarded to individuals for scholarships and financial aid or to fund artistic activities or fellowships. People who respond to junk e-mail, ads, infomercials and books that promise to help you "Rake in $1,000,000 per year by getting free grants" or "Milk Uncle Sam's free business grant programs" are only setting themselves up for heartache. All you'll receive for your money is recycled list information from directories of foundations and grant sources who do not give money for starting businesses. Rule #4: Mimic & Model the creative financing solutions of others.
A plastic visor manufacturer convinced a mold-maker to build a $20,000 mold for no money down. He agreed to finance the project through payments of 2-cents for each unit sold. In the unlikely event the product demand was fewer than a million, the company would pay the remainder in bulk. Now that's creative financing!
One of my favorites is the president of Naimah Cosmetics. Working from an illustrated picture of her concept (a niche line aimed at women of color), she secured a tentative commitment from a major Southern California department store. Her challenge was to get the product samples and packaging produced with no upfront money. Her creative solution was to coordinate a consortium of professionals who could benefit from being a part of her ground-floor opportunity. She persuaded a manufacturer, who was looking to expand his market base, to produce $80,000 worth of samples and wait six months until the department store paid the approved purchase order. A photographer and graphic designer also lent their talents based on an agreement that they would become Naimah Cosmetics' primary suppliers once the company was up and running.
Both of these bootstrappers took the ceiling off their brains and thought out of the box, which allowed them to imagine unorthodox solutions for their situations. Rule #5: Conserve your cash by taking advantage of freebies.
Companies spend billions of dollars on samples and giveaways every year. Since big-business suppliers are competing fiercely for the small-business dollar, you can get FREE
office supplies, software, and resource guides to help you in every area of your business. Here's a sampling: State Data Centers (SDCs)/Business and Industry Data Centers (BIDCs)
listed on the Small Business Administration's
web page (http://www.sba.gov
) or by calling (800) 827-5722. These facilities offer information on product and service development and FREE
computer access to databases, software, and other resources needed to develop a business and marketing plan. "Best Sellers,"
by the Federal Trade Commission
, list hundreds of the agency's FREE
consumer and business publications. Contact: FTC, Public Reference, Room 130, Washington, DC 20580-0001; web address: http://www.ftc.gov
. "Small Business Success"
by Pacific Bell Directory, is an annual 80-page magazine, filled with marketing strategies and small-business management tips. Current and past volumes are available by calling (800) 848-8000. "The Small Business Financial Resource Guide: Sources of Assistance for Small and Growing Businesses"
(MasterCard International, (800) 821-6176). Combing through this guide will give you a solid overview of what's available, the qualifications, and application process. Avery Dennison
(800-252-8379), 3M Office Product
(800-395-1223), and Hammermill Papers
(800-242-2148) all offer sampler packages of labels, stationery, office or paper supplies. Rule #6: Focus on marketing tactics that require more time and energy than money.
You'll find that some of the best marketing tools cost you very few dollars. Take advantage of all opportunities to have your business listed for FREE
in various directories or databases. For example, if you subscribe to an online service, like America Online, complete your member profile with information about your business. These kinds of listings have produced countless inquiries and orders from all such listings year-round, and the the listings are free. Another example:
Consider co-op advertising dollars. Cooperative advertising is a cost-sharing arrangement between a manufacturer and a retailer for customers' advertising programs. Co-op opportunities are available in every medium, from yellow pages listings to print ads to radio and TV spots. Track down the Co-op Source Directory published by National Register Publishing at your local library to see if there's an opportunity for your business. Rule #7: Handle price objections with finesse.
It's premature to automatically deem people as unqualified customers when they say "Your price is too high." If you understand the meaning of an objection, you can respond with finesse and still get the sale. Very often a price-balker isn't making the right comparisons.
For example, a customer who balks at the price of an all-leather shoe over one that doesn't include a leather sole is making an off-base comparison. More leather equals more money. If someone is comparing your product or service to something of a lesser degree or quality, it's your job to point out the benefits your offering gives that are worth the difference in price--not view the comment as an irritant. Other tactics for chipping away at price objections include quantifying your offering's benefits in terms of price and minimizing or showing how insignificant a price difference is over the article's lifetime when compared to the extra benefits.
It may be impossible to eliminate every objection that comes your way. However, by preparing some answers today, you'll land more sales tomorrow!
Hope That Helps,For other useful tips for homebusiness entrepreneurs, please visit: www.jaguarenterprises.ne t and indicate your area(s) of interest