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?