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?
Renee says
Have you thought about building a fan page on Facebook or a profile on MySpace? It’s free advertising and anyone stopping by will at least be curious to read. My friends have a MySpace page for their gaming business and another friend of mine just started a fan page on Facebook for his real estate business. I guess it would also depend on how much time you can devote to updating them; the real estate page has had the same listings for a month or so now! Also I agree with your tactics for saving money. Many people get trapped into buying so many items they don’t need and end up going into monstrous debt for a business that fails. I’ve seen it happen.
Matt R. says
Hey Renee,
Great suggestion! Yeah, I’ve thought about it and I definitely plan to incorporate that into my business. I’ve seen computer consultants using Facebook and MySpace to strengthen relationships with their customers.
I find, however, something like Facebook is best utilized only after you’ve established a strong customer base. That way, your existing customers can become a “fan” of your business and their friends will be more willing to try your business out. If you have no customers, you have no fans, and therefore it’s hard to make your page known.
Great suggestions. When are you starting your business? 😉
Oleg K. says
I like how you mentioned word-of-mouth. You’re absolutely right about it. Most of my business comes from word-of-mouth, in fact, I’ve only posted a bulletin up on MySpace once years ago. Of course, my goal is to make a little extra money on the side, but still, things roll steadily along the bigger your business network becomes. Remember to hit the local Chamber of Commerce – you may get a few businesses interested in your services there.
Re: saving money, the tons of free diagnostic and security software that’s available online have saved me and my clients wads of dough. Knowing the tools that are out there adds to your credibility and ensures that clients won’t mind paying you more because you’ve saved them money.
Matt R. says
Hey Oleg,
I agree that word of mouth will only get you so far, but it’s a great tactic to use for part-timers like us.
Good sugestion about the Chamber of Commerce. Great to use if you’re looking for business clients.
And I’m right there with you on the free tools idea. There ARE a lot of great ones out there. But there’s also alot of bad stuff out there too, so it really helps to put the software through it’s paces BEFORE you use it on a customer.
Once I start taking on more clients I’ll be sure to post reviews of the software I use and what works for me.
bosborne says
Renee has agood point about fan pages – that might be a good idea if it isn’t too time consuming. Word of mouth might be your best bet though.
Matt R. says
I actually think a Fan page on Facebook is one of the LESS time consuming tactics for advertitsing. But like I said in my reply to Renee, I’m going to wait until I have a handful of clients that I know are on Facebook before I go through the trouble of creating a fan page.
It’s definitely on my list of things to do!
Alex says
I haven’t done with fan page on facebook, wondering about what should i write and how it will become popular and how to increase fan’s for that page. Thanks for such valuable information, Sacatech