Starting a new business is a difficult proposition. Studies have indicated that nearly 80% of new businesses fail within the first five years. These failures come from all the usual suspects including a lack of funds, lack of dedication, a poor business model, but a new survey suggests that the number one reason small businesses fail is that they grow too fast too soon.
Growing too fast seemed odd to me, the limited budget for most small businesses would seem to naturally prevent over zealous growth. Could it be a side effect of VC funding and wildly valued IPO’s? Flipping a business or structuring it to go public or to be bought after a few years is fashionable, but not necessarily good business.
Scrapping together every last penny, finding DIY solutions and a simple focus on making money, are the hallmark traits of the nearly forgotten art of bootstrapping. Bootstrapping isn’t nearly as sexy as a massive valuation, but the bootstrapped business tends to be leaner and meaner than their well funded counterparts. Bootstrapper’s are focused on survival, they are forced to live in the present.
To successfully bootstrap your business into success, there are a few things to always keep at the forefront of your mind.
Take it slow - work your way into a new business slowly. Continue working and making money with a regular job while spending your evenings and weekends doing research and setting the foundation. Run the business out of your house for as long as possible
Don’t be conventional - Outsource tasks that you don’t have the expertise for instead of hiring a full-time employee. Utilize cheap interns to handle routine work. Barter for goods and services instead of paying in cash.
Be ruthless with your time - Eek out every last once of efficiency from your work. Focus on only the things that are going to make money. Don’t get distracted by all the noise.
Go guerrilla with your marketing - Embrace, don’t fear marketing. With a little creativity, marketing doesn’t need to cost a fortune. Facebook, Twitter and other social media properties are inexpensive ways to build brand awareness and with a little practice flyers, business cards, brochures and other printed materials can be DIY’d at home.
Bootstrapping is well suited for establishing a successful LocalUp site. The upfront costs for a site license are relatively small and come with the invaluable expertise of the LocalUp team. The online nature of the business allows it to be run from a home office. The partnership with LocalUp eliminates many of the technical issues and the maturity of the LocalUp software maximizes efficiency. Site owners can focus on making the most of their time to build a brand and form lasting partnerships with local businesses.
With a bootstrapper’s mindset entrepreneurs are less likely to over inflate their success and expand their business too rapidly, effectively eliminating the most frequent reason for a business failing.
Do you think bootstrapping will help your business become more successful than if it received outside funding?