8 tips to bootstrapping your business
All you need is a workable dream, and that‘s your most valuable investment. But what if there‘s no money to back you up initially? Should you apply for a loan?
November 28, 2012 / 14:26 IST
Khyati Dharamsi
All you need is a workable dream, and that’s your most valuable investment. But what if there’s no money to back you up initially? Should you apply for a loan? Here’s where the most oft-quoted cliché in the entrepreneurial space becomes all-too-real – that some of the biggest businesses across the globe started in a living room or garage.We spoke to entrepreneurs whose ventures had humble beginnings but went on to rank among the most successful Indian businesses today and found a common thread. It was best summed up by VSS Mani, Founder and Chief Executive Officer of Just Dial, arguably India’s most popular information service, “If you don’t have capital, work doubly hard. You will have to wear many hats and play multiple roles. You will have to put in 20 hours of work. But if you don’t have the passion, don’t even plunge into the business.”Start With Your Own SkillsThink of a venture where you don’t have to depend on anyone else. That is, the venture will hinge solely on your own skill set. So, if you can bake cakes without help, it makes sense to venture out even on a very low budget. Avoid businesses that require hefty initial capital expenses. Avoid DebtFaisal Farooqui, Chief Executive Officer, mouthshut.com, says, “It is very important not to take a loan till your business is established. You don’t start a business by borrowing money.” He suggests that one can get money from friends, relatives and others who can help jumpstart your business. Mani points out that his company never resorted to debt to grow. “Never take a loan. It’s the same as being stuck in a job you don’t like only because you have to repay a housing loan.”Save On Rent Instead of office space, operate out of your own home or garage, as did Tushar Makhija, who launched a website for stock traders and day traders, stockezy.com. Makhija, who started this venture along with two friends, spent $600 as initial costs and placed his administration personnel in his father’s office instead of leasing premises. Later, when stockezy.com received funding, the money was used to scale up and buy equipment. Even stocking inventory can be done in a spare flat, a relative’s home or a bachelor friend’s store room instead of in a warehouse.Lease Instead of BuyRenting office space and machinery could help avert a loan. Most entrepreneurs have relied on leased property, not just during the start-up phase but later as well. “Wherever we went, we used lowest-cost rental places,” reveals Mani, of expanding to multiple cities. He feels real estate is a “dud investment”. Focus On The ProductProduct development, not peripherals, should be top of your mind. “Prove that your product will indeed solve an issue for your target audience. Find out who the right customers are, and what type of product can solve their problem. You don't have to be 100 per cent correct. But the closer you are to perfect, the more fruitful your initial investment. Don't make assumptions without diligent research,” advises Makhija. One way to get the product right is to find the right human resources. “The key to building good products is hiring very good people,” says Farooqui. “Don’t focus on a small segment, have a bigger vision and for products that will have a broader appeal.”Don’t Outsource Core TasksTake a look at the mouthshut.com masthead. It is basic and conventional unlike many other portals that shout out loud. It was the result of Farooqui’s decision not to outsource the key task of designing his website. “We have a conservative approach to design and want to focus on what people write about a product or service. It’s also cheaper. Don’t outsource your core business. The core to any website is design and programming, which should not be outsourced,” says Farooqui.Use Marketing, Avoid AdvertisingSocial media marketing is just as efficient as conventional advertising, which is also very expensive. “Entrepreneurs often forget their original goal and start thinking of advertising and marketing. Launching your product should be the most important task. Don’t get sidetracked by marketing,” advises Farooqui, who says a company needs to be mature when it starts advertising – maybe a year after its launch.In fact, Just Dial did not have an active website for a decade after the service was launched. Advertising too came much later. Zero-Wastage Is KeyUse an iron fist when it comes to cash outgo. “When you’re starting up, you need to be frugal. This makes you work harder to avoid mistakes. Limited funds also make you conduct better research like talking to customers. You explore, experiment and end up making better decisions to building a better product for the right customer,” reveals Makhija.Mani sumps this up in just four words, “Save up to grow.” He adds that being frugal does not mean compromising on quality and it means absolutely zero wastage.When To Consider FundingAfter your venture completes pilots and sustenance tests, and you have a concrete business model to showcase, that’s when you look at external funding. “You have to first explore the space and have a product idea which has a viable market fit. It is important to prove to venture capitalists that your product offering is solving a genuine customer pain,” says Makhija.
You can send your feedback on smementor@moneycontrol.com or simply post comments below
Invite your friends and family to sign up for MC Tech 3, our daily newsletter that breaks down the biggest tech and startup stories of the day
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
