You know you are a bootstrapped startup when only one member of your team orders a single, small coffee at the local coffee shop so your company can use the free wifi. It can seem daunting when you are pooling any resources you have available just to keep the business going, let alone think about what to do when you receive your first few infusions of cash from early investors. Whether your startup is funded by friends and family, your personal savings or angels, these three tips will help keep your finances in check during the early stages of your startup.
1.) Don't Spend if You Can Leverage Sweat Equity
Though it can be tempting to spend a considerable amount of money on the latest and greatest technology, toys, or consultants, remember that the goal is to survive on what limited resources so you may eventually scale. When possible, call in those favors you have been saving from people who can help offset potential hiring costs. There is a connective economy in the entrepreneurial world where people are willing to barter services if there is mutual value drawn from the exchange. Whether you have a knack for marketing, coding, prototyping, or some other skill, use them to your advantage to trade time rather than cash for what you need. Consider mentoring a hopeful photographer or writer to take the product shots or produce the first batch of content for your website. The value you create from these relationships may be the thing that gives you a competitive advantage when other startups are burning through resources by spending in a way that is not sustainable or even necessary.
2.) Strategic Alliances Help You Spend With Savvy
If your company is in a co-working space or is part of a meetup group, ensure to build relationships with those around you. The value you get from these strategic connections is in proportion to how much you give. Sponsoring or co-promoting events to help increase visibility for these organizations or groups shows that you want to be a part of the community and will also add to your credibility. Additionally, consider this as an opportunity to promote the business without coming across as pushy. This could potentially lead to new opportunities to engage with potential investors or new team members.
3.) Don't Underestimate The Power of Free Trials
Whether you need a website as a placeholder in preparation for a big pitch, project management software, or something else, leverage the free offerings that are available to you. You can achieve more than you think in the typical seven or fourteen-day trials that come with the tools you wish to use. Remember, it does not cost anything to create another email to get another week or more to use the tool again when you need it.
Don't be afraid to spend your resources when it is crucial, just remember when you do not know when the next infusion of cash is coming, that you want to make sure every dollar is being used to its fullest potential. Investors will appreciate your financial savvy and frugal approach knowing you only spend money on the essentials to make your business grow.