-
- Win $100 in prizes!
-
|
Bootstrapper's
Success Secrets: 7 Golden Rules for Working on a Shoestring Budget
© 2000,
by Kimberly Stansell
- "Bootstrapper" (a
person who starts a business with inadequate capital and manages
to build it up relying more on creativity or resourcefulness
rather than a checkbook balance) is a universal term. If you
asked a room full of entrepreneurial professionals how many bootstrapped
their ventures, the majority of the group would raise their hands.
Why? Because 60% of all new businesses begin as undercapitalized
start-ups, so say SBA statistics.
I, too, am a bootstrapper. It's been nearly nine years since
I bagged a corporate job to begin the journey. My bootstrappin'
resume: Launched two businesses, published independently a national
newsletter, and authored a book, Bootstrapper's
Success Secrets: 151 Tactics for Building Your Business on a
Shoestring Budget
(Career Press). I've interviewed and networked with hundreds
of bootstrapping veterans across the country and found that the
start-up capital "amount" isn't our common denominator.
It's our ability to maneuver successfully through the challenges
that working with a little or no money poses. However, turning
limited resources into a self-sustaining enterprise takes special
skills and mental conditioning--training that is not developed
by osmosis or readily available in a traditional workplace setting.
There's good news, though. You can begin your bootstrapper's
training right now. There are some basic principals that contribute
to a bootstrapper's success. I'll share with you seven golden
rules that will help you successfully build and grow your business
on a shoestring budget. Here we go!
Rule #1:
Leave your corporate baggage at the door.
-
- Besides a severance
package and personal belongings, you leave the workplace environment
with influences that affect your mind-set and shape your behavior.
Most employee positions are insulated from cash flow issues.
You can order and waste supplies, make long-distance calls at
will, excessively use express mail, frivolously make photocopies,
or spend everything in your management budget without much thought
as to whether or not you're making the most cost-effective decisions.
Chances are your behavior isn't any different from your co-workers.
Bad habits begin to germinate here because you're not being conditioned
to think about how much your actions are costing the company.
When you strike out on your own those spendthrift habits can
kill you.
Your survival as a bootstrapper will depend on your ability to
distinguish between your needs, wants and absolutes. Make it
your business to know the difference, so you don't indulge in
your wants while ignoring your needs and end up too broke to
handle your absolutes!
Rule #2:
Avoid ideas that really don't have a future.
-
- Before you throw
your heart, soul and piggyback into an idea, ask yourself three
questions:
- What problem
does my product or service solve?
- Whose problem
does it solve?
- And how do I
know that? In other words, what research did you do to derive
your answers to questions one and two?
Many people have
great ideas but they flounder in the marketplace because there
really is not an audience for the product/service. You can sidestep
this heartache by asking yourself those three questions. How
solid and thorough your answers, though, will depend on your
research.
You can make sure your idea has longevity by digging up some
information on trends for the next century that substantiate
your thoughts. A low-cost strategy: visit your local library
and do a database search for articles or books using the keyword
"trend" or another word combination based on your own
area of interest.
Testing your idea against the past, present and future is also
critical. You need to be sure that your idea isn't a recycled
version of something that has failed miserably in the marketplace,
and if it is, you'll want to evaluate its predecessors so you
can determine ways that your "fresh" or "revamped"
approach can fare better. Great books to scan are ones that chronicle
history (i.e., TimeLife's "This Fabulous Century: series);
they'll offer you insights as to how certain events affect people's
habits. Also, old telephone books; they'll show you who has gone
in or out of business and who is thriving. Major libraries carry
both types of books.
Rule #3:
Ignore all the "free" money talk.
"Where can
I find 'free' money or a grant to start my business" is
one of the most frequently asked questions I see posted online.
Truth be told, "free" money is a myth. There are few
government agencies, private foundations and organizations who
give individuals money to finance a startup. My book research
included interviewing Norton Kiritz, president of The Grantsmanship
Center in Los Angeles. He explained that the majority of available
grant money is really targeted at nonprofit organizations and
government agencies. These groups use the money to fund a variety
of special projects such as community revitalization, job training
or research, with a limited amount of money awarded to individuals
for scholarships and financial aid or to fund artistic activities
or fellowships. People who respond to junk e-mail, ads, infomercials
and books that promise to help you "Rake in $1,000,000 per
year by getting free grants" or "Milk Uncle Sam's free
business grant programs" are only setting themselves up
for heartache. All you'll receive for your money is recycled
list information from directories of foundations and grant sources
who do not give money for starting businesses.
Rule #4:
Mimic others' creative financing solutions.
A plastic visor
manufacturer convinced a mold-maker to build a $20,000 mold for
no money down. He agreed to finance the project through payments
of 2-cents for each unit sold. In the unlikely event the product
demand was fewer than a million, the company would pay the remainder
in bulk. Now that's creative financing!
One of my favorites is the president of Naimah Cosmetics. Working
from an illustrated picture of her concept (a niche line aimed
at women of color), she secured a tentative commitment from a
major Southern California department store. Her challenge was
to get the product samples and packaging produced with no upfront
money. Her creative solution was to coordinate a consortium of
professionals who could benefit from being a part of her ground-floor
opportunity. She persuaded a manufacturer, who was looking to
expand his market base, to produce $80,000 worth of samples and
wait six months until the department store paid the approved
purchase order. A photographer and graphic designer also lent
their talents based on an agreement that they would become Naimah
Cosmetics' primary suppliers once the company was up and running.
Both of these bootstrappers took the ceiling off their brains
which allowed them to imagine unorthodox solutions for their
situations.
Rule #5:
Conserve your cash by exploiting freebies.
Companies spend
billions of dollars on samples and giveaways every year. Since
big-business suppliers are competing fiercely for the small-business
dollar, you can get FREE office supplies, software, and resource
guides to help you in every area of your business. Here's a sampling:
State Data Centers (SDCs)/Business and Industry Data Centers
(BIDCs) listed on the Small Business Administration's
web
page
or by calling 800-827-5722. These facilities offer information
on product and service development and FREE computer access to
databases, software, and other resources needed to develop a
business and marketing plan.
"Best Sellers," by the Federal Trade Commission,
list hundreds of the agency's FREE consumer and business publications.
Contact: FTC, Public Reference, Room 130, Washington, DC 20580-0001;
web address: http://www.ftc.gov.
"Small Business Success" by Pacific Bell
Directory, is an annual 80-page magazine, filled with marketing
strategies and small-business management tips. Current and past
volumes are available by calling 800-848-8000.
"The Small Business Financial Resource Guide: Sources
of Assistance for Small and Growing Businesses" (MasterCard
International, 800-821-6176). Combing through this guide will
give you a solid overview of what's available, the qualifications,
and application process.
Avery Dennison (800-252-8379), 3M Office Product (800-395-1223),
and Hammermill Papers (800-242-2148) all offer sampler
packages of labels, stationery, office or paper supplies.
Rule #6:
Focus on marketing tactics that require more time and energy
than money.
You'll find that
some of the best marketing tools cost you very few dollars. Take
advantage of all opportunities to have your business listed for
FREE in various directories or databases. For example, if you
subscribe to an online service, like America Online, complete
your member profile with information about your business. Mine
is loaded with information about my consulting and training firm
and plugs my book. The listing has produced dozens of inquires
and opportunities. Another example is for newsletter publishers,
which many small-businesses produce. Make sure your newsletter
is listed in directories such as Gale Research's "Newsletters
in Print." The listings are free. Here again, I receive
countless inquiries and orders from all such listings year-round.
Another example: Consider co-op advertising dollars. Cooperative
advertising is a cost-sharing arrangement between a manufacturer
and a retailer for customers' advertising programs. Co-op opportunities
are available in every medium, from yellow pages listings to
print ads to radio and TV spots. Track down the Co-op Source
Directory published by National Register Publishing at your local
library to see if there's an opportunity for your business.
Rule #7:
Handle price objections with finesse.
It's premature
to automatically deem people as unqualified customers when they
say "Your price is too high." If you understand the
meaning of an objection, you can respond with finesse and still
get the sale. Very often a price-balker isn't making the right
comparisons.
For example, a customer who balks at the price of an all-leather
shoe over one that doesn't include a leather sole is making an
off-base comparison. More leather equals more money. If someone
is comparing your product or service to something of lesser degree,
it's your job to point out the benefits your offering gives that
are worth the difference in price--not view the comment as an
irritant. Other tactics for chipping away at price objections
include quantifying your offering's benefits in terms of price
and minimizing or showing how insignificant a price difference
is over the article's lifetime when compared to the extra benefits.
It may be impossible to eliminate every objection that comes
your way. However, by preparing some answers today, you'll land
more sales tomorrow!
- Kimberly
Stanséll is an internationally-recognized entrepreneurial
trainer and author of Bootstrapper's
Success Secrets: 151 Tactics for Building Your Business on a
Shoestring Budget, and the forthcoming Witty Workin' WomanTM:
A Problem-Solving Guide for Professional Women. A retired
corporate personnel director, Stanséll launched her first
venture with only $328.21! Visit Kimberly's
web site to have her Bootstrappin' Tip of the Week sent to
you automatically each week, or contact her at: PMB 306 · 6308
W. 89th Street · Los Angeles, CA 90045; Phone: 310-568-9861;
E-mail: [email protected]
|