Contrary to what you may have heard, not all tech startups immediately attract deep-pocketed investors right off the bat–many new tech founders go for years funding their operations by cashing out retirement accounts, maxing out credit cards and even borrowing money from friends and family.
Most institutional investors want to see that your company has a viable product and team in place to execute on the overall strategy. So, as a founder, you will have to go out and build a product and build out some kind of infrastructure and oh, get some PAYING customers before you can attract funding. This stage may seem scary, but trust me when I say that this is actually the fun part.
While bootstrapping may seem like an honorable way to launch a new company, it is more difficult than it might seem.
In this post, I will share three tips ( Based on my experience) to help make bootstrapping less painful.
1) Trim your personal expenses
I was able to start a successful insurance consulting firm, and later launch a software outfit. I was able to fund both businesses myself by aggressively eliminating most of my unnecessary personal expenses. I reduced time spent dining-out, travel, T-bone steaks, etc. Before you start your company, you will have to really think about what your priorities are and decide which activities you can do without for a while.
2. Be a shameless cash hoarder
Unlike, working for a large company, cash flow in any startup business in the pre-funding stage is very unpredictable. So when you get some cash from new customers, do not go out and celebrate yet. Save every penny so you can have the cash to fund your operations in those slow months, and trust me when I say that you will have plenty of "slow months".
Set two targets:
One: How much cash needs to hit the plus side of the balance sheet before it is OK to spend a little.
Two: What exactly do you want to spend the cash on.
Here is a tip: Make sure these expenses will add to the bottom line. So hold off on the massage chairs and feng shui lamp shades for now. Unless you are in the massage/Spa business.
3. Learn new skills
There are many functions in the initial stages of your company that will help build a well-rounded organization. These may be functions for which you have no "know how". It is easy to start outsourcing every single one of the jobs needed to launch. I strongly advise against this. Yes, there are things only a trained professional can do, but try your best to learn as much as you can and do the most to help facilitate an inexpensive launch.
Jeff Bezos is rumored to have written the code for the first version of Amazon.com himself and yes the first site was shitty, but you can always improve later on.
Starting a business on a lean budget is difficult, but not impossible. With an eye on the bigger picture, passion, hard work, you can build a successful company and build a more fulfilling future.