Let’s face it! Most start-up ideas do not get investor funding, not because they are not interesting or worth acting upon, but rather because the investor market works on a very different model. You see most investors have a limited time cycle by which they look for exits and therefore some business ideas may not be able to attract their interest. However, that does not mean that you should stop working on those.
In this world, where only the funded start-ups and entrepreneurs are celebrated and appreciated, we have lost respect for bootstrapped start-ups. But there is definitely more freedom in building a business from scratch on bootstrapping model. The question is, how do you self-fund your start-up?
The easiest way is to begin by starting as a service company. If you start offering services for other businesses, you will be getting money in your start-up account to fund your product initiatives. To find clients for your service business, tap into your initial network, approach start-up incubators or even look for other entrepreneurs who might be looking for a solution you offer.
Remember, the service you provide might be different than the product you are building, as long as it employs the same skills. For example, we have previously taken service orders for graphic designing and comic strips designing while building TBS Planet Comics. Once you hit a good service order count to sustain your company head count, then go to the next step, that is, focus on building a cash flow rich business.
If you want to be in product business, then enter with a product line that goes out of shelves faster — this might take some market surveys and hit-and-try from your side. The quicker the sales, the quicker you will get your cash back and the quicker you will be able to invest it in your business. Price the products in a way that you will start relishing profitability once you hit a certain achievable scale, for example, 500 units a month run-rate. We understand that by just selling few units you will never be able to recover the fixed costs and thus scale will be a key factor.
Lastly, if possible in your line of business, try to work on models in which you don’t have to buy inventory yourself or rather, you can buy whenever there is an actual order. Happy Bootstrapping!
For any queries, write to me on
tamhankarrajeev@gmail.com