Yesterday, my Indie Business Radio Show guest was author and Forbes columnist Sramana Mitra. Sramana shared some great tips for bootstrapping your business. (You can enjoy the audio by clicking the audio link at the bottom of this post.will be ready in a few days.) For those not familiar with the term, bootstrapping occurs when you own and manage your business with no external sources of financing.
Instead, you run it solely on money as it comes in, credit cards, savings and gifts from people who have no expectation of being repaid. Sramana estimates that approximately 90% of US businesses are being bootstrapped.
Sramana has launched several businesses of her own and also coaches startups to help them get off on the right foot as bootstrappers. I asked her to draw on her many years of working with bootstrappers to share what is the least amount of cash she has seen an ultimately profitable bootstrapped business start with. Her answer: $10,000. (Bear in mind that Sramana mainly focuses on the tech sector.)
$10,00?! Woah! That's A Lotta Dough!!
Those of us who have been in business for a while know that $10,000 is not a lot of money in real life. Still, it seems like a lot of money for many of the small and independent startups with whom I come into contact daily. In most instances, their businesses start on far less than that. They build them slowly so that lack of thousands does not hinder them from owning a venture, even if they have a full-time job for the first few years.
But most people who commit to it can save $10,000 over a 12-month period of time.
So if you think $10,000 is a lot of money (and you don't have it right now), and you want to own a business of your own, why not try putting it to the test by saving $800 a month so that this time next year, you will be in a good financial position to launch your business.
For the next year, put the money you would spend at your favorite coffee shops and restaurants toward your business. For the next year, invest the time you would spend shopping and watching your favorite television shows in researching and planning your business.
Even if it takes you 2 years, or even 3, to save $10,000, those years would be well spent when you consider that, in year 3, you could launch a business capable of satisfying you personally, professionally and financially for decades to come.
Question: If you own a business, from the time you started planning your business to the first day your doors were open, how much money did you spend? Please share in the poll below. I'd love to hear your commentary and experiences in the comments section too! If you don't have a business, what's holding you back? Money? Are you willing to try the basic savings plan outlined above? Why or why not?
this is a little shameful. but i did it. i also had 2 car wrecks and spent that as well. driving with a dented car keeps me humble. 🙂
There are a lot of people wishing they hadn't traded in a dented car for the gas guzzler. Clearly, you're doing the right thing. No more car wrecks though!
this is a little shameful. but i did it. i also had 2 car wrecks and spent that as well. driving with a dented car keeps me humble. 🙂
There are a lot of people wishing they hadn't traded in a dented car for the gas guzzler. Clearly, you're doing the right thing. No more car wrecks though!
i would feel better if anyone else had a humble story to tell. i also am sacrificing fancy clothes, travel, and most of all time and sleep investing in my business.
You are not alone! I'll try to be brief. When my husband was laid off in 2004, we lost 60% of our combined income in one day. No warning. No severance. Our children were 3 and 18 months old at the time. We cut off the satellite and I started clipping coupons like a mad woman. We cut off the gym memberships and sold one of my husband's motorcycles. (We sold the other one a few years later.) We stopped getting the daily paper (and I love the Washington Post!) We stopped a bi-weekly maid service and refused to get anything fixed on the car that was aesthetics. (Mine still has a dent on the trunk from when I accidentally closed the garage door on it. Now that I can get smoothed out, it's just not important anymore.) We started buying more clothes from recycled kids shops and became positively shameless about letting friends with older kids know that we could use the sweater or pants suit. We didn't eat out for over a year unless someone else paid for all or most of it. 60% of our income gone and we never missed a mortgage payment. Today we wonder what on earth we did with all that "extra" money!! LOL!! We didn't know we could live on so little. If you want something badly enough, only you can stop yourself from getting it.
Still feeling lonely?
i would feel better if anyone else had a humble story to tell. i also am sacrificing fancy clothes, travel, and most of all time and sleep investing in my business.
You are not alone! I'll try to be brief. When my husband was laid off in 2004, we lost 60% of our combined income in one day. No warning. No severance. Our children were 3 and 18 months old at the time. We cut off the satellite and I started clipping coupons like a mad woman. We cut off the gym memberships and sold one of my husband's motorcycles. (We sold the other one a few years later.) We stopped getting the daily paper (and I love the Washington Post!) We stopped a bi-weekly maid service and refused to get anything fixed on the car that was aesthetics. (Mine still has a dent on the trunk from when I accidentally closed the garage door on it. Now that I can get smoothed out, it's just not important anymore.) We started buying more clothes from recycled kids shops and became positively shameless about letting friends with older kids know that we could use the sweater or pants suit. We didn't eat out for over a year unless someone else paid for all or most of it. 60% of our income gone and we never missed a mortgage payment. Today we wonder what on earth we did with all that "extra" money!! LOL!! We didn't know we could live on so little. If you want something badly enough, only you can stop yourself from getting it.
Still feeling lonely?
I started out with my tax return and my last yearly company bonus, a combined total less than $2000. Best investment ever!
Now I'm broke all the time! But I'm happier.
Since you can't buy happiness, you don't need the money anyway, right? Thanks for sharing!
I started out with my tax return and my last yearly company bonus, a combined total less than $2000. Best investment ever!
Now I'm broke all the time! But I'm happier.
Since you can't buy happiness, you don't need the money anyway, right? Thanks for sharing!
I started my biz with $300.00, purchasing ingredients, taking classes and experimenting with my products, labels, logos etc as I went along ~ Since then, I've grown it slow and steady to where I'm almost ready to launch and everything is already paid.
I try to do the same with my biz . I don't think most of us realize how much money we WASTE in a month~ If you will just cut back and put that money away you'd be amazed at how quickly you'll have the $$ to launch a biz~
So keep driving that dented clunker~& keep @ it, you'll be fine~
BTW~ DH and I have 6 kids, we haven't had a vacation in 15 years~ me, I wear sweats, shorts and flip flops most of the time~ I save my Fancy clothes for biz meetings, church and such~ and my kids SWEAR I only sleep 4 hours a night~! Owning a biz means sacrifice and lots of it~ but it is worth it.
Sindy: I've been watching you and you are doing such fabulous things! I can't wait until you launch. I know it will be amazing. When you are doing what you love when you're awake, even 4 hours of sleep can seem like a long time!
I started my biz with $300.00, purchasing ingredients, taking classes and experimenting with my products, labels, logos etc as I went along ~ Since then, I've grown it slow and steady to where I'm almost ready to launch and everything is already paid.
I try to do the same with my biz . I don't think most of us realize how much money we WASTE in a month~ If you will just cut back and put that money away you'd be amazed at how quickly you'll have the $$ to launch a biz~
So keep driving that dented clunker~& keep @ it, you'll be fine~
BTW~ DH and I have 6 kids, we haven't had a vacation in 15 years~ me, I wear sweats, shorts and flip flops most of the time~ I save my Fancy clothes for biz meetings, church and such~ and my kids SWEAR I only sleep 4 hours a night~! Owning a biz means sacrifice and lots of it~ but it is worth it.
Sindy: I've been watching you and you are doing such fabulous things! I can't wait until you launch. I know it will be amazing. When you are doing what you love when you're awake, even 4 hours of sleep can seem like a long time!
I started with a bottle of olive oil from our local supermarket, and the same amount as Sindy did… $300.00. I also paid $50.00 for a one-off evening business course in Boston, and husband techy guy came along for free. Every penny has been put back into the business, and I've grown steadily with much happiness along the way. We do tend to eat, sleep, and live for the business though, but I think this is so common among many Indies. I love bootstrapping, and find that I thrive best when faced with little money and much to do. I think you have to find your own pace, and not feel pressured by how well you perceive others to be doing. Set your goals, and stay focused on each and every one of them.
I love this: "I thrive best when faced with little money and much to do" That's priceless. Uh-oh, I think I feel a Tweet coming on. Thanks for sharing that!
I started with a bottle of olive oil from our local supermarket, and the same amount as Sindy did… $300.00. I also paid $50.00 for a one-off evening business course in Boston, and husband techy guy came along for free. Every penny has been put back into the business, and I've grown steadily with much happiness along the way. We do tend to eat, sleep, and live for the business though, but I think this is so common among many Indies. I love bootstrapping, and find that I thrive best when faced with little money and much to do. I think you have to find your own pace, and not feel pressured by how well you perceive others to be doing. Set your goals, and stay focused on each and every one of them.
I love this: "I thrive best when faced with little money and much to do" That's priceless. Uh-oh, I think I feel a Tweet coming on. Thanks for sharing that!
I started with $19.00. I bought 1 bottle of organic lavender oil $7.00, sea salt $12.00. That started it all!
I started with $19.00. I bought 1 bottle of organic lavender oil $7.00, sea salt $12.00. That started it all!
I was making soaps as a hobby and selling them to friends. When I reached $500. in sales I opened a bank account and started my business.
I was making soaps as a hobby and selling them to friends. When I reached $500. in sales I opened a bank account and started my business.
I stumbled across this today: http://www.weenc.com/support-files/startingabusin… .
Really makes sense in light of what we have been discussing here. Some great ideas on marketing without spending much money at all.
Great link, thanks for sharing, Mary!
I stumbled across this today: http://www.weenc.com/support-files/startingabusin… .
Really makes sense in light of what we have been discussing here. Some great ideas on marketing without spending much money at all.
Great link, thanks for sharing, Mary!
I started my business with between $10,000 and $20,000. I paid for 98% of it with cash and I'm glad I did so that I wouldn't be caught up in a tangle of debt. I haven't taken any loans out either which is a relief.
I think my business if off to a great start (opened in 3/09) because we've been turning a profit since the 'doors opened'. It's exciting to see it keep building month after month.
Bravo! It should be the goal of every small and independent business owner to be debt free. You are proof positive it can be done, and so am I. Taking out a small loan or racking up a credit card for a while is great — so long as you have a way to pay it back. And it looks like your plan — to launch a business and sell great products — is working! You go!
I started my business with between $10,000 and $20,000. I paid for 98% of it with cash and I'm glad I did so that I wouldn't be caught up in a tangle of debt. I haven't taken any loans out either which is a relief.
I think my business if off to a great start (opened in 3/09) because we've been turning a profit since the 'doors opened'. It's exciting to see it keep building month after month.
Bravo! It should be the goal of every small and independent business owner to be debt free. You are proof positive it can be done, and so am I. Taking out a small loan or racking up a credit card for a while is great — so long as you have a way to pay it back. And it looks like your plan — to launch a business and sell great products — is working! You go!
I started my business with $2000, cashing out some money left over from my college fund since I got a swimming scholarship to college. Since then, I have majorly bootstrapped so I haven't had to look for investors or take out loans as my biz has grown. I utilize my relationships with family members and friends who are entrepreneurs for advice and direction. I've found entrepreneurs love to help other entrepreneurs succeed! I also have had wonderful results trading my Grapeseed Co. and Dirty Dog Organics products for professional help such as help with web design and photography. I totally agree with you dM that it should be the goal of every small biz owner to be debt free!
I started my business with $2000, cashing out some money left over from my college fund since I got a swimming scholarship to college. Since then, I have majorly bootstrapped so I haven't had to look for investors or take out loans as my biz has grown. I utilize my relationships with family members and friends who are entrepreneurs for advice and direction. I've found entrepreneurs love to help other entrepreneurs succeed! I also have had wonderful results trading my Grapeseed Co. and Dirty Dog Organics products for professional help such as help with web design and photography. I totally agree with you dM that it should be the goal of every small biz owner to be debt free!
I started with a few bottles of carrier oils and essential oils. That was it. I've been bootstrapping ever since. I do work in another industry, to this day, however and I'm not sure that's the way to go about it because it's slow going this way. I have been able to cut back from full-time to part-time though and hope to transition out of the other industry completely by the end of this year. It has taken ten long years to get to this point though. Some *seed* money when I started would have been nice!