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Five Ways to Avoid Building a Cash-Strapped Startup
We all know the road to entrepreneurship is not an easy one. Anyone who leads you to believe their business was an overnight success is lying. It takes vision, determination, resilience, and capital.
Most new women entrepreneurs bootstrap their startup. While this seems logical on the surface, the road ahead may be filled with rocks and boulders, and if you are not wise to how to generate capital when you need it, you might find yourself between that rock and a hard place – unable to grow or invest because you don’t have the capital you need to succeed.
Believe me, that is a VERY uncomfortable place to be. Many of the coaches, consultants, and speakers I work with find themselves in this boat at one time or another. But you can avoid the bootstrap trap by following a few simple practices.
1) Bankroll your startup.
If you are bootstrapping your new business, be sure you have at least 12-18 months of working capital in the bank when you start. That includes putting food on your table and a roof over your head.
It’s a smart idea to get a line of credit while you still have an income and low debt. Having a line of credit available that you might not use, but is available when you need it, is gold. No money, no mission.
[Related: Three Simple and Essential Money Lessons for Entrepreneurs]
2) Invest wisely.
The most important initial investment for you to make is in a business strategy that will generate immediate revenue and a longer-term strategy that gets you real traction. Invest in market research up front to get to product-market fit.
If you don’t have a narrowly-defined market and a tested service offering that is priced right, you will set yourself up to struggle. This is investment #1.
You don’t need a super fancy and expensive website when you start out - it will cost time and money you don’t yet have. Best to get a minimum presence on the web until you know what you are selling and can message it right.
3) Reverse engineer your revenue goal.
Once you have a clear projection of a reasonable first-year revenue goal in place, reverse engineer your strategy.
How will you achieve your revenue goal your first year? What is the average value of a client? What are your sales triggers to get more new clients? How do you get repeat work from existing clients? A revenue goal is just a number if you don’t have a roadmap to get there.
[Related: The 5 Realities of Entrepreneurship]
4) Cultivate strategic partnerships.
Look for partners who also serve your market, but offer different solutions. This is a fast and easy way to create a consistent lead stream.
You might want to create reciprocal referral arrangements, or even a referral partner program where you offer a commission on each referral that converts to becoming a client. All you need is a small, but active, community of partners.
5) Master your money mindset.
Giving in to fear about not having enough money takes your eye off the prize of generating more capital and being able to invest in the services and opportunities you need to grow.
Keep focused on your three-year goal. Set aside time everyday to connect with people who can be powerful referral partners. If you are already generating more than $100K and can show a profit, consider a small business loan or a fund offering multiple loan options. If you can’t invest in your business, you can’t grow.
Entrepreneurship is all about the hustle. Connecting to the right people. Having the right message. Showing up in the right places. Building the right team. Making strategic investments. Being seen and heard. This is how you thrive as an entrepreneur.
[Related: 12 Wild Phases of Entrepreneurship: What's Yours and What's Next?]
Debra Boulanger is a business launch expert for coaches, consultants, trainers and speakers. She enjoyed more than twenty years in the consulting and advisory services industry as a product development and product management executive before launching her own coaching career. She’s now the founder of The Launch Lab for Women Entrepreneurs, a twelve-week virtual accelerator for women executives and is based in New York.
Have more questions? Follow up with the expert herself.
The Launch Lab for Women Entrepreneurs
After 27 years of successful product launches in the corporate world, I decided to combine my coaching skills and product launch skills to help new women entrepreneurs. Through the Launch Lab for Women Entrepreneurs, we guide women executives in making the leap from corporate leader to successful business owner with a business strategy and money making model to grow and scale. You can find out more about The Launch Lab at https://thegreatdoover.com/launch-lab/ Continue Reading
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