Growing Your Business

5 Tips to Bootstrap Your Startup

by
Julie Farless
on
5/18/2017
5 Tips to Bootstrap Your Startup

When you're talking about an environment like a startup, to say that every penny counts is a little bit of an understatement. This is especially true if you haven't been able to attract outside funding right away and you'll be providing a lot of that initial cash yourself. At its core, this is what bootstrapping is all about - it's about taking what money you've been able to bring with you and stretching the value of every last dollar as far as it will go in an effort to keep you going.

If you really want to see success in terms of bootstrapping your startup, there are a number of important things you'll want to keep in mind.

It's About Cash Flow, Not Profits

The fact that cash flow is the proverbial elephant gun that takes down the vast majority of all startups is not something that is up for debate. It's possible to both be profitable on paper AND go out of business if you don't maintain complete visibility into your cash flow. If you complete a job for $10,000, that's $10,000 that only exists on paper until you collect on the associated invoice. If your client doesn't actually pay for 60 days, you've got a problem on your hands. It's also one that you may not realize you have in the first place if you're focused too much on "profit" and not enough on how money is coming into and out of your business in the first place.

Keep That Overhead Low

At this most critical stage of the startup game, if you ever have an opportunity to save a little money you should take it, no matter what. You should do this before you bring in new employees, use virtual assistants, or consider outsourcing to independent contractors. Learn how to cut down on general human resource costs by utilizing an integrated payroll or HR application like Gusto.

Right now, the disparate elements that make up your overhead are the single biggest expense that you're dealing with. Doing whatever you can to reduce those costs will go a long way towards keeping your doors open for as long as possible.

Choose the Correct Business Entity

This is a simple mistake to make that could end up costing you dearly in the long run. Always make sure that you're choosing the correct business entity when getting your startup off the ground. This has major implications - particularly when it comes to taxes - so this is one mistake that you do NOT want to make.

Accounting Matters

Because you're not only a startup founder, but you're also going through the bootstrapping process, the instinct to "do it all yourself" is a strong one. It's also one that you need to fight, particularly when it comes to mission-critical functions like accounting.

If you try to do it all yourself, you become a "jack of all trades, master of none." Small accounting mistakes that you make today because it's outside your area of expertise can have huge ramifications down the road. Let's get one thing clear: hiring an accounting professional at the start of your business' life is no longer an optional investment. In many situations it is literally the difference between the success you've always dreamed of and closing your doors.

It's All About Your Customers

Finally, never forget the most important people of all: your customers. If you take good care of your customers, they will take good care of you.

This also means being willing to pivot into a new direction if the customers that you're trying to serve tell you that you should. Many businesses start out with "Product A," but slowly morph into "Product B" once customer feedback comes in. You have an entire market of people that you're trying to serve who also have very strong opinions on the shape of your relationship. You need to listen to those opinions whenever you can.

The fact of the matter is that you need to give your customers not what you think they want, or what you think is good for them but what they ACTUALLY WANT. If you can master the fine art of doing precisely that, you and your startup will go far.

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Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

Deborah Martinez & Earl Shanken
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Arizona

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