Effective Tips For Running A Startup On A Bootstrap Budget
The most difficult and sometime the most exciting thing about startup is being on a bootstrap budget. Whether your startup just received seed round funding or your waiting for your investor’s reply, knowing how to maintain on a bootstrap budget for the time being is important. The last thing you want is to run out of funds before receiving your next stage of funding. Here are some effective tips used by many startup entrepreneurs that will help you run a startup on a bootstrap budget.
1. Don’t Waste Too Much Money On Design
I’ve encountered a startup CEO that told me his biggest failure was wasting too much time on the design. This CEO spent countless hours working on his company’s logo and interface design. He now recommends that all startups should never spend too much money and time on design. The best way is to get a prototype up and running ASAP and show progress to your potential investors. A fancy logo does not attract investors.
Instead of spending too much money on design, you can find fairly cheap and effective logos online. When you’re running on a bootstrap budget, it is crucial to take use of the free stuff that’s online. If you’re searching for free stock photos for your startup’s blog, check out Unsplash for a variety of free stock photos and icons. Hubspot offers 75 free stock high quality photos on their site as well, but the quality isn’t that great in my opinion.
Logo design is important because it represents your startup, but you do not need to necessary focus on it when you are in your bootstrap budget stage. If you haven’t received seed funding yet, then you should aim towards getting a quick logo from Fiverr. For 5 bucks, you can get an awesome logo. If you have a little extra cash to spend, check out 99 design. Most startups actually source from 99 designs for their initial logo. It’s well worthit.
Keep The Salary Minimum
If you are the CEO of a bootstrap budget startup, you must keep your salary at the minimum. It is recommended by investors that the CEO takes the lowest salary in the beginning. Most CEO opt for a non-profit salary until they get their initial funding. After that, keep it as low as possible. One of the Paypal executives once said that, chances of a startup failing when the CEO takes a big salary is higher than when a CEO takes a lower salary.
The reason behind this is because your startup only have a certain amount of funds to work with in the beginning. The big chunk that you are taking out of it could be used on advertising, hiring more people, equipments, and many more. Have enough to get by and hang on tight! It’s a bootstrap budget!
Bring In A Prototype Quick
Again, ignore the design and outlooks as much as possible. You can make your product look good after you receive more funding or income. VCs love to see progress. Snatch out a quick MVP and continue moving forward from that MVP. Add features and expand the product. Use as many open source gems/programs/modules available in the market as possible.
A lot of startup entrepreneurs want to be unique so they refuse to use certain APIs and open source files. There’s really no point in spending a month working on a simple favorite button or a simple retweet button. There’s plenty of developer resources out there that works with your current framework. Take advantage of it and use them like a plugin to bring in more progress and test.
Related Read: How To Get Your MVP Funded By A VC
Collect Emails And Get Viral Feedbacks
A lot of startups tend to pay for ads and email lead generation softwares to gain feedback and exposure. That might be a good choice if you have a bank of money to spend, but on a bootstrap budget, we want to use as much freebies as we could. A good email collecting software would be Mailchimp for the freebies. I personally use Aweber and I know the downside of Mailchimp’s hidden cost, but you would not need to worry about that until after 5000 emails. Use whatever you could for the most minimum cost.
Having an email list is a must before prelaunch. Think about it, what if you had a list of 1500 active users on the day of your beta launch? You just build an enormous amount of traction on the first day of launch. That is like saying you have a long line waiting on the day your restaurant opens. The best way to do this is to collect emails and put up a quick demo before your launch. A decent landing page won’t cost you a lot and fits well in a bootstrap budget.
Getting feedback is vital as well. What if your product doesn’t work? How are you going to pivot to make it work? Feedbacks should allow you to brainstorm these pivoting ideas if necessary. Getting feedbacks doesn’t have to be expensive as well. To keep it on a bootstrap budget, you could go out to startup events or walk up to people in the streets and ask for a minute of their time. You will be surprised how many people will actually try your product and give you feedback. Remember your best feedback is from people who know nothing about what you’re doing and what your product is about. The cost for getting viral feedbacks is literally zero.
Bring On A Co-Founder Instead Of Hiring
Paul Graham from Y-combinator have always been telling people that you must have a co-founder. The co-founder must be on the same level as you as well. This isn’t just because they need another expert in the team, but it is because startups require a lot of work and one person is just not enough. A lot of non technical entrepreneurs would move forward to hiring a software team, but a software team is costly. A decent engineer would cost you 90-100k per year with equity. Running out of money is bad, but owing employee salary is worse.
The cheap alternative is to bring on a co-founder for a big stake in equity. Would you rather make 1 dollar by yourself or make 10 dollar in a team of two splitting it 50-50? Not only does this help with your bootstrap budget, but it also helps with funding as well.
If you aren’t a technical co-founder and you’re on a bootstrap budget, you should be attending as many startup events in your area as possible. Treat the engineers to coffee and let them know what you’re doing. You will be surprised how many developers you can bring onboard for a low salary + equity. This is a low cost and boostrap budget way of recruiting. Hackathons and Startup weekends are excellent places for you to search for co-founder.
Related Read: How To Network And Find A Co-Founder
Use A Co-Working Space
Most startups start out in their apartment and sleeping under their desk, but a co-working space is better if you have some extra cash. If your in Silicon Valley, there are co-working space for $100 a month that includes unlimited coffee, 24/7 access, snacks, speedy internet, and a place for you to relax. If you’re going to be there for a long time, you can negotiate yearly contracts that will save you tons of money.
Not only is a co-working space a great way to be productive, but also because you will be meeting other entrepreneurs who are working on their startups there. Many of the co-working space host daily or weekly events where you can network with more potential investors. You can benefit a lot from using co-working space. A lot of mentors go to co-working desk to provide free mentorship for startup entrepreneurs. Very bootstrap budget friendly.
Create video demos using free screencast apps
Having an elegant demo video along with a landing page and collecting is key to drawing attention. That is how Dropbox got all of it’s early users through an engaging demo video. A video/demo editing firm will charge you thousands of dollars to get a professional short demo out, but you can easily do this for free using a webapp like Screenr.
You can also take use of professional softwares such as iMovie that is 100% free as well. ScreenR works because it saves time and doesn’t require much effort since everything is within a browser. Keep the software expenses to a minimum when you are on a bootstrap budget.
Related Read: Why your startup must have a Youtube demo
Don’t sign up for a big hosting plan
You probably have a dream that your startup will have billions of user one day, but by that time you might already have received millions in funding. Your engineers will be able to scale and move your product onto a stronger hosting plan. A good and safe way to approach early server space is to use something like Amazon’s web services. They only bill you based on the amount of data you use per month. A lot of the early data is free and is apart of their hosting plans.
If your product is a web application, Heroku offers a lot of free options to get your product up and running for a showcase. The whole goal here is to make it past your bootstrap budget stage and take your product to the next level.
Don’t hire a PR/Marketing Firm
All PR and marketing firms do is connect you to other public news site and make a public article posting about you. This can be done all by yourself in house. Personally emailing an editor is much better than having someone do it for you. For one, you’re building a relationship with that editor for future releases and second, you have full control of what the editor will be releasing. Nobody is going to understand your product more than yourself, search for editors of top blogs related to your product and reach out to them. PR/Marketing firm is a waste of money in your early stages.
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