Small Business Basics
Bootstrap Methods

(Last updated: August 30, 2010)

This page of business basics describes ways to save money when starting and running a small business.

One of the biggest obstacles to starting your own business is a lack of available cash. These bootstrap methods reduce the amount of cash needed to get a new business started.

Here are the topics:

Adopting the bootstrapping attitude
Deferring certain costs and expenses
Replacing cash with sweat equity
Saving money on equipment and supplies
Saving money on job materials
Sharing the profits
Working out of your home
Final thoughts

This page should help you understand how to build your own business. However, there are no guarantees of success.


IMPORTANT

Before using this information to start a business be sure to read the following notice: Disclaimer

Adopting the bootstrapping attitude

Adopt the bootstrapper attitude. Maximize revenue, and cut costs and expenses to the ABSOLUTE MINIMUM.

Choose a business idea that you can start on a shoestring.

You need a relentless drive for revenue. Be willing to adapt your product to what customers want and are willing to pay for.

Need to collect cash for your product as soon as you deliver it to the customer. Don't let customers buy on credit. However, you want to receive credit from your suppliers.

Don't even consider having your business provide you with a lavish lifestyle. Make the business into a success first. Then you can gradually enjoy the benefits of your accomplishment.

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Deferring certain costs and expenses

There are certain costs and expenses that must be paid before you start business operations. Examples might be a business license and an insurance premium. However, many other costs and expenses can be deferred until your business is operating at a cash profit. Here are some examples of the items you can put off for a while: Getting a business telephoneBuying a new computerSetting up a fancy home officePurchasing materials for future jobsPurchasing equipment you won't need right awayBuying a new vehicle to be used in the businessPaying yourself and your family for working in the businessPaying for a big advertising campaignIncurring other expenses in anticipation of future sales.

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Replacing cash with sweat equity

This refers to your sweat, because you will be doing the work instead of paying someone else to do it. Keep in mind that doing the work yourself may take longer. You want to limit this method to those tasks you can complete with the required level of quality.

You may have to develop new skills before being able to use sweat equity to save cash. Use the Learn New Skills chapter in my Magic Success Secrets ebook. It outlines a system for improving your skills.

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Saving money on equipment and supplies

You can save money on any equipment items needed by either borrowing or renting them instead of having to buy them. This especially applies where you don't need a particular item very often.

If you do have to buy any item, then you might be able to buy used, but fully operational, equipment.

Another way to save money is to buy equipment or supplies at a deep discount by attending yard sales, estate sales, or going out of business auctions. You might also want to visit discount stores, secondhand stores, or salvage yards. Another good source might be unfinished furniture stores.

You also may be able to use inexpensive tools or equipment, at first, instead of expensive ones. You only need the tools or equipment to last until your business is making money. Then you can afford to buy better tools and equipment.

Here's another idea, see if you can buy tools or equipment on credit. You will have to pay some interest expense. However, reducing your startup costs would probably make this idea worthwhile.

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Saving money on job materials

Another way to save money is to have the customer buy any expensive materials needed for a job. When the job was finished, then the customer would pay you only for your labor and any small expenses.

This both saves money and reduces risk. The risk is paying for the materials yourself and then having the customer either cancel the job or take a long time to pay you.

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Sharing the profits

You might consider having a silent partner. This is someone who won't be involved with running the business, but will share in any profits. This person might have a piece of expensive equipment or a sum of cash to be used by the business. After you are paid for completing a job, you would give a share of the cash profits to this person.

This would be someone who knows you and is confident in your abilities to run the business. Your agreement with this person might provide that after paying a certain amount there will be no more payments. From that point on you would get all the cash profits from your business.

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Working out of your home

A good way for you to save money is to work out of your own home, instead of renting an office or shop.

However, you need to observe any zoning restrictions. And you don't want to irritate your neighbors by having a flood of customers visit your home, making a lot of noise, or storing materials in public view.

If your home office isn't suitable for meeting with customers, you could always visit them at their home or at some public meeting area.

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Final thoughts

I hope you have enjoyed these ideas on how to start a home business on a shoestring. If you are serious about having your own business, you need to get going now. Don't keep waiting for some miracle to happen. In the business world, you create your own miracles.

Use your money wisely and be careful about going into debt. Good luck with your business venture.

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