o create a business and brand that is uniquely yours, consider bootstrapping your business. And if you’re asking yourself, “how do I bootstrap my business without a loan?” we’ve got you covered. You don’t need a large loan or investment to become a successful entrepreneur. Instead, you can work with the resources you have to push your idea forward. And if you decide to go the bootstrap route, there are a lot of things that can go your way. [caption id="attachment_1331" align="alignnone" width="525"]
Here are 3 ways to fund your dreams without a traditional business loan.
1. Try Bootstrapping Your Business With Crowdfunding
One of the most ingenious ways to get funding for your business is with crowdfunding sites like Kickstarter and GoFundMe. The way crowdfunding works is you share your business idea on one of these websites, along with a description of how you hope to make an impact on customers’ lives. Kickstarter or GoFundMe users can then donate or contribute to your biz. In exchange, you can offer them equity, samples, or gifts. Crowdfunding is easy, and it’s one of the most common ways to launch a business. See how Novo customer Mystic Mondays founder Grace Duongo launched her business on Kickstarter.
2. You Can Always Go the Overdraft Path
Another option is an overdraft line of credit. Some financial institutions allow you to overdraft your account, and add a line of credit so you won’t miss any payments or have any checks bounce. [caption id="attachment_1332" align="alignnone" width="525"]
As you probably figured, an overdraft line of credit is not free, so you’ll need to be ready to pay interest on the overdrafted amount. Nevertheless, going with overdraft credit can be a way to fund your business if your checking account balance is not enough.
3. Some Business Are Eligible for Grants
You can also find a grant for your business in some cases, including for some technical businesses, small business exporters, and more. The government is able to fund small businesses with grants, and you may not have to repay it if you are accepted for one. There are various ways to search for a grant, including through Grants.gov, the U.S. Economic Development Administration, and the Small Business Administration. [caption id="attachment_1333" align="alignnone" width="525"]
And here are 8 pieces of advice for bootstrapping your business!
1. It Helps (a LOT) to Know Your Industry
To find success when you’re bootstrapping your business, it helps a lot if you know what you’re getting yourself into. You don’t need to be an expert in your industry, but it’s essential to choose a market you’re somewhat familiar with. If you’re going into a new field blind, at the very least, it’s important to have connections in that space. Ideally, you’ll be entering a market that you both have knowledge of, as well as connections since your network will come in handy as you progress.
2. Build Up Sweat Equity
The term sweat equity refers to the work you put in to build or improve an element of your business. You may not be getting paid directly for it, but your sweat equity adds up over time, laying the foundation for your products or services. We recommend you create daily, short-term goals of how you’d like to improve your business and follow through with them as best you can. By creating tasks, you are holding yourself responsible for putting in the hours to help your business grow. And by following through with them, you are building up sweat equity.
3. Wear All the Hats at First
If you know anything about entrepreneurship, you probably know you’ll have to be a jack of all trades. There are a lot of hats you’ll be wearing when starting out because you’ll be the CEO, the head of customer service, a sales rep, accountant, manufacturer and inventory manager, and more. Accounting is a challenge for many businesses, but there’s some great accounting software out there to help keep your finances in line as you build your business. When you take on all these roles early on, you will learn the ins and outs of your business. Later on, the sweat will be worth it because you’ll be better equipped to lead employees in each area of your business. Remember, the old saying goes, “A jack of all trades is a master of none, but oftentimes better than a master of one.” And that brings us to our next point.
4. Hire the Right People
You are bootstrapping your business, which means that you’re passionate about your craft. Otherwise, you’re better off selling now and start a brainstorming session with other business ideas you care about. But if you are passionate about what you do, you’ll need to hire employees who share your passion and can carry your vision forward. [caption id="attachment_1334" align="alignnone" width="525"]
In some cases, you won’t be able to pay these employees what they’re worth upfront. Instead, you can offer them equity in your business that may pay dividends in the future. These employees have to be in it for your visions and the value you are offering to your customers. Anyone who’s in it for the money is probably not worth it.
5. Stick to Your Working Capital
Part of the importance of bootstrapping your business is making sure you spend within your means. If you need extra money, do anything you can to avoid getting a bank loan, because that could haunt you in the future with high-interest rates. Instead, consider doing business with a company that provides extended payment terms, which can stretch the deadline of your invoices. Sticking with your working capital can stimulate creative business solutions as it pushes you to become more efficient with your funds. These limitations can challenge you to develop new, more affordable systems or technologies that fit your budget.
6. Negotiate, Negotiate, Negotiate
A lot of rookie small business owners may not know the power of price negotiation. You can negotiate just about everything, including office space, the price of materials, the technologies you’re including, and more. Mastering the art of negotiation is another vital element in bootstrapping your business, helping your funds go further. Keep this tactic in mind when speaking with distributors and property owners, and your entrepreneurial venture will continue taking shape.
7. Find the Right Business Model for You
It may take a while for you to become profitable, and it takes the right type of planning to get there. More importantly, you should be focusing on how to keep your business afloat and healthy by thinking about how to make the most of your revenue stream. You may go with a monthly subscription model, customer loyalty incentives, optional service fees, or something else. The model also needs to consider your financial obligations, as you’ll want a revenue flow that allows you to keep up with operational costs, employee wages, and your own income. Once you put all these elements together, you’ll be in an excellent position to crush it as a small business owner bootstrapping their business.
8. Keep Your Business and Personal Banking Separate
Another valuable move to make when bootstrapping your business is to keep your personal and work finances separate. When you make this decision, you will have a clearer idea of what funds are available for your business. Sign up with us today and get a Novo debit card! Remember, it’s important to be organized when you start your business with limited resources. And knowing what funds belong to your work versus personal one is a vital part in crushing it as a small business owner who is bootstrapping.
It can be scary at first when you decide to bootstrap your business, but it is one of the best approaches to entrepreneurship if you want to create something truly unique. Having financial and creative control over your business allows you to chart your path with a brand that provides the right kind of value for customers. And that is what bootstrapping your business is all about.