Steps in the right direction.
Sandy Weinberg, professor of entrepreneurship at Muhlenberg College in Allentown, Pennsylvania, offers the following advice for bootstrapping a business:
1. Realize that some businesses are easier to bootstrap than others. Service businesses, especially homebased ones, are easier to run leanly than manufacturing businesses, which require equipment and machinery.
2. If possible, run your business part time in the beginning. It's less risky if you can get your business going in the evenings and on weekends. "Many Internet and retail businesses have started part time," says Weinberg. "However, it may be impossible to start a retail business part time because you have to be open at key times to attract consumer traffic."
Running your business part time could also pose ethical dilemmas with your current employer. A programmer employed by a software manufacturer, for example, may not be able to start a part-time systems integration company because those services compete with those of his or her employer. Consider the legal implications of starting part time, advises Weinberg. To avoid potential problems, consult an attorney.
3. Keep overhead low. Work out of your home as long as possible. "Conserve the capital you have," says Weinberg. Don't be in a rush to rent an office.
4. Negotiate time rather than price. Rather than expending effort negotiating reduced prices from vendors and suppliers, try to get payment extensions. "Instead of paying bills in the traditional 30 days, ask for 45-, 60- or even 90-day terms," says Weinberg. "It's an opportunity to stall payments so you can build cash flow and working capital.
5. Maximize your resources. You don't necessarily need top-of-the-line equipment and cutting-edge technology. Take advantage of that 10-year-old truck and five-year-old PC until they no longer serve a useful purpose. Only replace equipment and technology when it's absolutely essential. Even then, buy used rather than new equipment.
6. Stay focused. Bootstrapping isn't easy. It requires discipline, diligence and hard work. It's unreasonable to expect everything to fall effortlessly into place. Be prepared for bumps in the road. No matter how tough things get, stay focused on the mission at hand: successfully starting your business.