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.
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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.
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