Bootstrapping: Advice you can use
Bootstrapping is the art of starting and running a business with little or no money. Here are some practical tips from my experience for bootstrapping a technology startup. I have some specific links and examples for the Waterloo region and Canada, but a lot of the ideas should be applicable anywhere!
Me wiring network cable :)
1. Do stuff yourself
When you have no money to spend, don't hire people to do things, do them yourself. Design your own website and business cards. Wire your own network. Do your own accounting.
2. Find free or cheap services and tools
- Pay $3.50/mo for phone lines, and $0.01/min for calls across North America with an Asterisk VOIP server and a provider like Unlimitel
- Use free business software, such as Ubuntu, Open Office etc
- Use free development tools, such as MySQL, PostgreSQL, Eclipse etc
- Embrace software as a service, avoid any in-house servers, use tools like Zoho Office, Gliffy for diagrams, host your custom domain email for up to 50 users free with Google Apps standard edition
- Use residential internet such as DSL or Cable, as soon as you say business the cost at least doubles
- We used to host our website ourselves, don't do that, get a cheap online account, such as GoDaddy for $4.99/mo
3. Be cheap
Don't spend any money you don't have to. We used to buy computers from TechnoTrade for less than $300. The power supplies would die every few months, we'd replace them, the computers worked fine apart from that. An early mistake I made was thinking we needed good quality computers, with good network cards and good graphics cards. That stuff has all been commoditized for years. Get computers with everything integrated on the motherboard, spend some money on RAM if its important for you. Being cheap is a bit like saving power. There's no point spending time turning of individual lights if you're leaving the fridge door open. So likewise, don't make your life difficult trying to save money where its not going to make a difference. Start with your biggest costs first, usually salary, office space, then equipment. 4. Leverage government funding- Here in Canada there are many government programs available, for all types of business. Go through them all, don't listen to people who tell you your business won't qualify, understand what the programs are for and find one that is relevant to you. In the past we've been helped on a number of projects by two great programs: IRAP and SR&ED. IRAP gives grants (that you don't have to pay back) towards salary and equipment used on approved projects involving commercializing new technology. SR&ED are tax credits the government will give back to you at the end of the fiscal year against salary you've paid out, with similar prequisities as IRAP.
- These programs take work, be prepared to write proposals, improve them, track time on your projects, file reports. But its free money!
- Get to know someone who works for these programs, say your assigned rep, their job is to give out money to eligible companies, so help them do their job, if you're the type of company they are looking for they'd love to find out about you and help you succeed.
- Talk to Communitech, they have someone responsible for keeping up with all of the funding programs.
- One key with these programs is that they typically contribute money to companies towards salaries they have already paid out. So setup a corporation, you can do it online for less that $1,000, open a bank account, and start paying yourself. You're working, aren't you?
5. Free or cheap office space
- Setup office in your basement
- Even better, setup office in your parents basement, Chris and I did this for 4 months, we lived (and worked!) at his parent's place for 2 months, and then at my parent's place for 2 months. I wouldn't do it again, but you can't argue with free everything (room, board, internet, furniture, phones, office space, moral support :)
- Sublease (or squat) someone else's office space, often comes with the benefit of shared internet, phone system and other facilities, people to hang out with, etc. We got free space for a few weeks from one friend, and later subleased space for 4 desks from our first consulting client.
6. Consult on the side
Perhaps your business is a services business in which case this doesn't apply. But if you're developing your own product, just work two jobs, write code (or perform other services) for other companies half the time, and spend the rest of the time building your product. This isn't easy, or fun, but it can be done. 7. Start your company on the sideKeep your day job, work evenings and weekends for "yourself.com". This usually works best before you're married or have kids etc.7. Hire smartIf you're just starting out you're probably not going to hire anyone, but as soon as you do need to hire some, its possible to keep your costs down and your success rate up.
- Hire coop students from the University of Waterloo. Number one reason: they're easy to hire. Unlike full time employees, you can get say 50 coop student resumes at a time, then interview the 10 you like in one day, and usually hire someone very smart and hardworking, often with experience from other coop jobs, or their own projects. Our philosophy was: hire geeks who write code outside of class and work. This demonstrates passion, independence, and talent. (Check out the coop tax credit)
- Hire recent grads and young inexperienced people in general. Again, look for geeks. You can pay these people less since they have less experience, they'll work hard because they are trying to make something of themselves, and they'll fit into your business because they don't know any other yet.
- Bring people in for 2-3 day hands on tests, pay them for their time, this helps you figure out if they're any good, and if you can work with them, and if they like you. Saves you both time and money. We did this many times, saved us huge. We avoided hiring duds, and people knew exactly what to expect when they joined our company, not like most jobs where you basically get married to the company after a couple interviews with a couple people.
8. Get a cofounder or two
See my post about resources and links in the Waterloo region.
