This is a guest post by Erik Bergman. In his own words,
I am the co-founder of Catena Media — which grew from nothing to a more than $200M valuation. I left my role at Catena to build another iGaming affiliate marketing business that donates 100% of its profits to prevent climate change.
As you launch your startup, it’s easy to get caught up in the world of angel investors and funded projects. It can seem like other brands are raising millions of dollars with nothing more than a business plan and charismatic pitch. While investors can certainly help some entrepreneurs, many successful companies (including my own) were bootstrapped with the funds in my checking account.
You don’t necessarily need a high-interest loan from the bank or a panel of Shark Tank investors to fund your startup. Follow these five financial hacks to get the money you need to bootstrap your business.
Start Your Business as a Side Hustle
You don’t have to wait until your business is fully funded to launch it. Instead, consider starting your business as a passion project that you develop at night or on the weekends. Not only can you mitigate business expenses with a stable paycheck, but you can focus on building a strong foundation and scalable infrastructure.
If your dream is to become a realtor, consider setting up your website, creating marketing collateral, and getting all your licenses while you’re still employed elsewhere. By getting the ball rolling while having another job, you’re able to avoid some of the financial stress that comes with launching a new business.
Starting a business as a side hustle also lowers your risk when you do quit your job, as you will already have an established brand — and hopefully, clients.
When we started Catena Media, it was just a hobby. It took almost a year before it made any money. From there, it became a side hustle that we worked on in our spare time — eventually, growing it to the point where my partner and I could focus our full attention on it. If not for side hustling, I wouldn’t have been able to prepare myself and my finances to grow it to where it is now.
Utilize Coworking Spaces and Virtual Offices
When you are finally ready to quit your day job, look for ways to mitigate your expenses — especially ones which recur frequently like rent. If you need an office or physical location to operate your business, look into an alternate solution for your space.
Many companies start with just one or a few employees. While businesses were once forced to sign long-term leases for office buildings so that their employees had a place to work, there are creative, flexible solutions that enable businesses to retain the benefits of an office — without the financial burden.
Coworking spaces, short-term rentable offices shared by many employers, is a great option for smaller businesses. Not only is a coworking space more affordable than your own brick and mortar location, but you will save even more in supplies and services.
Your monthly rent will likely cover the use of the printer, meeting rooms, and other perks. Plus you won’t have to pay for electricity or cleaning services on your own.
Another alternative to the traditional office is moving it virtually. My new project, Great.com, is a completely remote organization. We conduct weekly calls, utilize project management software, and communicate daily via Slack. Thanks to the advancements in business technology, we’re able to operate effectively without needing to meet in person.
Rent can be one of the biggest expenses for your business, and if you can find ways to work effectively without a long-term expense like rent, then you can put that money towards more important areas of your business.
Take an Accounting Course
When you launch your startup, you are going to be head of operations, HR, marketing, and accounting. It will fall on you to make strategic financial decisions that are best for the company and for your own personal bank account.
Look into taking an online accounting of finance course for business owners. While you may want to lean on a professional for your taxes, bookkeeping, and financial planning, it’s still good to have a baseline of knowledge about the financials of your business.
Taking an accounting course will also make you more proactive at improving the clarity in your books. You can clearly understand your expenses and develop strategic ways to reinvest your profits. Even if your passion project has nothing to do with accounting, a little financial know-how can open up doors for you.
Don’t Rush to Scale Your Business
Patience is one of the top traits that any entrepreneur can have. I get it, you are excited about the possibilities to grow your business. You want to be successful today, not tomorrow. However, if you want your startup to be successful in the long run, then you need to plan for it.
Learn how to say no, especially if it’s going to lead to bandwidth issues which could affect the quality of your work. Scaling your business is not easy — but if you do it slowly and with a methodical purpose, you can increase your chances for success.
The other risk of scaling too quickly is the expense. Your operational costs will increase with your client base. Many startups make the mistake of hiring employees early on so they can scale before they can really afford to pay them over the course of a year. This mistake leaves them in debt or laying off team members – or both.
Understand That Your Time is Money
As a bootstrapping entrepreneur, you will likely end up doing hundreds of small tasks that a CEO of a major company wouldn’t. When you are the only employee or operating in a small team, this makes sense. However, you can’t and shouldn’t take on more than you can handle.
Entrepreneur burnout is a real problem, with more than 25% of startup founders reporting feeling exhausted, stressed, or anxious. You need to learn when to outsource a task and use your time in a valuable manner.
Learn what tasks can be outsourced to save you time. For example, unless you have a marketing background, it may be worth the cost to hire an agency or contractor to provide advertising services.
You may also want to hire an entry-level employee to handle small day-to-day tasks. If these two people can save you several hours per week of work, then you can apply that time to the big-picture tasks that can really move your company forward.
Rolling up your sleeves and doing the dirty work as a startup founder is admirable, but you need to make sure you are using your limited hours each week wisely.
You Can Bootstrap If You’re Wise
The adage “it takes money to make money” is not always the case. For many startups, you can launch and grow it on your own with minimal capital.
Instead of seeking VCs or investors, try planning your finances carefully and growing your business slowly and wisely. If you practice these traits and some of the others mentioned above, you can successfully bootstrap your startup.
If you want to learn more about bootstrapping your startup, follow me on Instagram and Twitter or check out my podcast “Becoming Great” which features insight and stories about entrepreneurship and growth. Feel free to reach out about any questions that you have.