When entrepreneurs tell me they can't afford to hire the executives they need to grow, I wonder if they have what it takes to survive as a startup.
Every startup could use more people, more marketing expertise, more product development skills, more fundraising contacts--the list goes on and on. But entrepreneurs committed to their business don't wait for capital to grow. They find a way to make it happen, often using the people they already have around them: their employees, vendors and even customers.
For example, rather than pay a full salary to hire new executives, consider paying them on an escalating scale: As the company grows, so does the salary. Another take on the idea: Instead of offering a $25,000 bonus, increase the base salary from $75,000 to $90,000 after performance goals are achieved.
Smart entrepreneurs also benefit from supplier relationships. Vendors will often give flexible terms on payment and, as long as expectations are clear, they can function as an inexpensive source of credit. Likewise, many law firms have a lower rate for startups. (If yours doesn't, you can find unemployed but experienced lawyers on Craigslist and offer them a chance to build their résumés in return for legal help).
Another way to save--and impress investors--is to do market research while selling. There is nothing more credible than in-market testing. So rather than hiring a focus group or doing a survey, take a video camera on sales calls. Watch them later with popcorn and do some post-game analysis. A set of videos like this can be used for market research, refining your sales technique, training future employees and showing potential investors.
Customers are also a great source of credit. For example, most service businesses can be repositioned with a product that comes with an upfront cost. An event planner might sell clients a guided tour of events in town for a few hundred dollars to whet their appetites and earn upfront income, or a business consultant could sell a list of investors or market research techniques.
Bootstrapping takes some creativity, effort and passion--but in the end, that's what entrepreneurship is all about.