Most start-up entrepreneurs seem to still believe in the myth that they need at least half a million dollars to start a business. In fact, more than 80% of successful new startups were created with much less investment – often at around $ 10,000.
Starting a startup on a tight budget without attracting investors is called bootstrapping. If you do not want to spend several months preparing and implementing an investment proposal or you do not have access to venture investors who would like your idea, bootstrapping will be the only right way to start a business.
In addition, bootstrapping saves you from additional pressure and the risk of losing an impressive (someone else’s) capital. In addition, the boss investor will not “stand above the soul”, closely monitoring any of your actions and demand the earliest possible increase in invested money.
Successful companies that did not attract investment
There are many examples of successful companies whose founders abandoned the capital of the “rich uncle” and never attracted investment. And this did not stop them from creating a profitable business.
Here are some of them:
Basecamp . Today, this is one of the most popular services for project management would be launched in 2004. And before that, the team has been engaged in web design for clients for five years. According to the founders, Basecamp has been a profitable company for more than 15 years and has been profitable from the very first day of its existence. Why? Because they immediately found paying customers and thereby avoided problems with the availability of working capital.
MailChimp . The absolute leader in the field of email marketing and a very convenient service for automating email newsletters for your business. This company has been more than 18 years old and its founders have never attracted investments, despite frequent offers. And this is not surprising. After all, the service is used by more than 5 million people who send more than 10 billion letters every month using Mailchimp.
ClickFunnels. A sales funnel designer who helps companies promote and sell their products and services on the Internet. The platform appeared relatively recently, but very quickly became very popular among Internet entrepreneurs. Largely due to its simplicity and effectiveness. In 2018, the company’s annual revenue amounted to more than $ 60 million.
GitHub . Oddly enough, the largest web service for hosting and joint development of IT projects has also never attracted investment. But this did not stop the company from growing to enormous size and interest in the IT giant Microsoft, who eventually bought GitHub in 2018 for $ 7.5 billion in space.
Semrush. A very popular service among marketers, which many use daily to get market insights and study competitors, especially in terms of SEO . The company was founded in 2008 and has long become profitable and has grown to more than 300 employees. From this list, this is the only company that nevertheless attracted investments already in 2018 to accelerate expansion into new markets and to more effectively deal with competitors.
As you can see, the lack of investment does not interfere with building a successful business and even becoming a market leader. The presence of large capital is a guarantee of success. Just like his absence is not a sentence.
10 tips for starting a business without investment
How to run an online business without investment, on your own savings:
1. Choose a niche in the business that you know and love well
Do not open a business in a field that is unfamiliar to you, no matter how promising it is. Otherwise, you will fail. Each business has its own unwritten rules and behind-the-scenes nuances, and your lack of insider data will cost you a lot. In an area where you do not have a good understanding of the features of certain processes, you will have to shell out a lot of money for what is given to many almost for nothing.
2. Tell everyone what you do.
Feel free to inform your family, friends, business contacts and former colleagues about your new business. Call, send emails, make your startup famous on social networks. Your friends and family can help you spread the word, and past business contacts may even introduce your brand to your partners. This is called mass marketing, and it will help you reach a much larger audience in the early stages.
3. Avoid unnecessary expenses
Be prepared for the fact that you will have a lot of expenses, and some of them cannot be avoided. But you can surely avoid cost overruns. Take business cards, for example. Of course, you can demonstrate your “coolness” by ordering 500 metal business cards for $ 1000, or you can spend only $ 10 on 500 ordinary business cards. Modesty at the very beginning often determines your future success.
4. Be creative. Take full advantage of free advertising and marketing.
There are several ways to create a healthy buzz around your startup. The most budgetary and safest option is social networks, which, in fact, are free, and which will help to find out how your idea will be in demand and popular. This approach will save your already limited resources and, of course, time.
Another invaluable, in my opinion, marketing approach, which is incredibly useful for novice startups, is media resources. You tell the market about your product / service for very little money and, at the same time, get the opportunity to “light up”, which is very beneficial to you, because no one wants to buy an unknown product to anyone.
Establish close cooperation with local media and actively interact with them. You can become a “local authority” for people and, thus, get additional channels for communication and increase the level of audience trust.
5. Assemble a team that at first will work “for an idea”, and not for money
People who will work with you should be fully aware that their failure means the failure of the entire startup. Do not mess with those who are only interested in the monetary equivalent of their work. At first, it is already difficult for a novice start-up to cope with subordinates and contracts, the fiasco is waiting very often. Therefore, it is so important to create an atmosphere of equality in the team. She will be the key to devotion and loyalty to the cause.
6. Develop a plan based on your budget, not your wishes
Entrepreneurs who start without a plan spend more money. Firstly, if you do not have a business plan, if you attract investments, you will simply waste your time courting potential investors. And secondly, most businessmen agree with the statement that too large a budget will certainly lead to incorrect decisions, cost overruns and lack of control.
7. Take your time to rent an office. First create a customer flow
The remote principle of startup work has already become common practice in the modern business world. Thanks to technology (gadgets, high-speed Internet), the quality of work does not suffer at all from the lack of a local office, which, by the way, is very expensive. Own representation requires not only rent, but also equipment, a permanent staff and travel expenses. Better invest in a website that, even without an office, will make you look no worse than your competitors.
8. Agree on discounts and offer barter
If your idea really has value, potential partners will make concessions to you, anticipating future benefits for themselves. Most entrepreneurs are loyal to start-ups, remembering the initial difficulties with finances.
Great idea is barter. Offer your services in exchange for what you want to receive. Demand in the nose does not hit. In addition, the practice of negotiating and selling will be very useful to you in the future.
9. Choose the right business model to optimize your earnings and time.
The most popular business models today are based on recurring payments – a monthly subscription fee and additional service charges. This is more profitable than revenue for a one-time sale of goods. Another option is to use the e-commerce site, which allows you to trade seven days a week, at any time of the day, wherever the client is. In fact, there are more than 20 business models of online businesses. You need to choose the one that best suits your business and will satisfy the needs of your customers in the best way.
10. Be prepared for one hundred percent dedication
Of course, your own business involves hard work, however, if you are launching a startup with little or no capital, be prepared to devote everything that you have to the success of your business. This means that, most likely, you will have to make “cold” calls yourself, serve customers, deal with accounts and bookkeeping, and generally do whatever your business requires. You will turn into the Hindu god Brahma with four hands, who must do everything and be in time everywhere.
Do not let limited capital prevent you from realizing a great idea and starting your own business.
Of course, this is a stressful and difficult way, but it is an integral part of entrepreneurship.
And, yes, it will pay off in the future.
A limited budget, like everything in this world, can be seen as an obstacle and additional difficulties, or it can be considered as an incentive for realizing one’s creative potential. It is up to you to decide.
Startup is always creativity and innovation. Do not let a small budget become an obstacle to the realization of your plan. Be creative and energetic. Then your startup will work with minimal investment.
Be decisive and persistent, otherwise your idea will become the property of larger competitors.