I was inspired by a recent article over at Small Business Trends about small business bootstrapping. In the article, the author tells the story of how he has successfully grown his business into a multimillion dollar enterprise with no debt and using no outside investors.
This is the approach I’m taking with my business and it’s great to hear about success stories of others who have gone this route.
One thing I realized after reading that post is that computer consulting fits perfectly into the bootstrapping philosphy. In fact, other than online businesses, I can’t think of a more frugal business to start than that of computer consulting.
As I’ve been working to establish my business, I’ve learned some things about how to keep expenses low and avoid the burden of credit. Although tailored for computer consultants, these strategies can apply to most any business start-up.
Keep A Healthy Savings Cushion – Why borrow from banks and other lenders when you can borrow from yourself? Before you jump into running your own business full time, build up a savings account with 3 to 6 months worth of your normal take-home salary. That way, during the rough and uncertain few months of your start-up, you’ll be able to “borrow” from your own savings account to make up for your sudden drop in income. Don’t forget to put money back into the account when times are good, because you’ll certainly need that money again later on down the road.
I’m still working on this and I’m not going to quit my day job and start running my business full time until I have this cushion established. Which brings me to my next item…
Be Patient – It may take you a while to get your cushion account established. It may also take time for you to build a steady list of clients, especially if you’re bootstrapping it. Don’t jump into high priced advertising methods or expensive equipment right out of the gate, it’s not necessary and may back-fire, leaving you in a mountain of debt with no way to pay it back. Once you get going, you’ll be able to pay for these things when you can afford them, but don’t force it.
It may be a few more years before I’m ready to run my business full-time. I’m trying to pay of credit cards, build a cushion account, and grow my client list in the mean time. Some may not need as much time, or some may need more time. My point is, don’t feel like you have to have EVERYTHING that the Geek Squad has right out of the gate.
Leverage Word-of-mouth – In order to save money on advertising, try to do as much as you can with the cheapest and most effective advertising method available for small bussiness: OTHER PEOPLE.
First off, tell EVERYONE you can about your business. When people ask me “What do you do for a living?” or “What have you been up to?” I immediately mention my business, give them a few business cards, and ask them to keep me in mind anytime they or anyone they know have a computer problem.
Secondly, when you service someone, leave them with no choice but to recommend you to their friends. Leave business cards, offer them a discount for referrals, and most importantly, BLOW THEM AWAY with your excellent service and attitude.
There are other things, like Craigslist and the old flyer-in-the-windshield stuff, but nothing beats the loyalty and targeted advertising that comes from word-of-mouth.
Buy Stuff As You Need It – I was really tempted to load up on goodies before I even serviced my first client. I wanted pens, t-shirts, and mouse pads with my logo on it. I wanted a bag full of computer tools, spare parts, and software. I wanted to be ready for anything! The truth is, you’ll never be ready for everything. Plus, all that stuff costs money, and most of it isn’t necessary early on.
What I’ve done instead is focus on purchasing things only as the need for them arises. I have a basic computer tool kit and some diagnostic software on a CD and USB stick. When a client calls, I make sure I have the tools I think will be necessary for the job, buying anything that I don’t have. If I arrive at the customers house and find that I’m missing something for the job, I’ll politely inform the customer that I need to run back to the shop to get something that I hadn’t anticipated needing and take that opportunity to purchase it somewhere nearby. So far this has worked wonderfully. The money I make from the job usually will cover the expense of the tool I just purchased.
When I’m ready to take my business full-time, I will have built up an impressive inventory of tools and software that I KNOW I will need, because I’ve used them in the past.
What tactics do you use to save money in your business?