More than 80% of startup businesses are funded by the founders personal finances and savings. The start-up capital has a median amount of $10000. That might seem impossible as everyone would think that starting a business is expensive and the average Joe would not be able to afford it. Think again. We look at bootstrapping as well as free tools bootstrappers could use to keep costs as low as possible when starting a business.
What is bootstrapping?
Bootstrapping is a term used to describe when someone is building a company from the ground up with nothing but personal savings and monies coming in from the first few sales. This has become a very popular way for entrepreneurs who start their own businesses. A bootstrap is a business or entrepreneur with no outside cash like investments or loans. Some of the most famous bootstrapping companies are Amazon, Apple, Microsoft, HP and Disney that started out in someone’s garage and ended up being worth millions. These companies bootstrapped in their early stages, learning to fine tune their products and when investors came along their already had the most important functions and products figured out.
The benefits of bootstrapping
Bootstrapping is great for slowly building a safety net and bringing revenue. It also allows business owners of founders to experiment more with their brands as no pressure comes from investors. With a bootstrapping business the emphasis is placed on making money as fast as possible and not on presenting and wooing over investors and venture capitalists. Another benefit is that entrepreneurs learn how to stick to a budget, how to be stingy when spending and this prevents business owners from getting reckless with spending. Bootstrapping also forces the business owner to not throw money at problems and rather think of creative, cost-effective ways of solving problems. Because all the money comes from customers and sales, the customers become the number one priority and not the investors. Surviving bootstrapping would mean the business would be customer focused, lean, efficient and strong.
The disadvantages of bootstrapping
The disadvantages are that it is not always practical for particular business types that need large invested money up front like importers or manufacturers. A bootstrapping business can take longer to grow without investments. The bootstrapper will not be earning a salary any time soon and could find him or herself in a lot of debt.
Free tools bootstrappers can use
Below we give a list of some of the best free tools that are detrimental to use as a bootstrapper wanting to save time and money, who needs to focus on customers and sales and not on administration.
TRUiC provides the best business logo ideas. They also have a free logo maker tool to help bootstrapper brand their companies for free. This is one of the best tools out there as they offer customers thousands of templates as well as advise on how to choose the best and most memorable logo for a company. TRUiC explains on their website what is needed for an efficient and good logo. What to look out for when choosing colours and fonts. This is a great option for bootstrappers that want to save a lot of money by not using a designer.
This tool is a powerful marketing automation platform. On Mailchimp people can set up automated emails, build databases and sell products over email. They also provide e-commerce companies with needed resources for building traction on their websites.
Survey monkey is perfect for market research as well as identifying a target market. This is a great free tool to set up and send surveys. One can also do market research, analyse market and survey data, engage with users and visitors, collect reviews and discover insights. Survey Monkey is an innovative and helpful tool for bootstrappers.
InvoiceNinja is a great tool for companies that want to save money on accounting tools. On this tool bootstrappers can create tasks and track time. They can also create their own customised invoices as well as set up their own recurring payments and invoicing.