Today we continue to deal with the fact that startups around the globe are facing a major battle to raise money. This includes both brand new companies and established ones looking to raise the next round. As always, Enable is here to help and we provide startups with tips to overcome this situation and stay afloat until things get better.
A very important technique for startups to learn right now is bootstrapping. This means getting things done by spending as little money as possible – and not raising outside financing. Many successful companies never raised outside money and only bootstrapped. It is a proven technique that semi-disappeared due to the wealth of venture capital that used to be available to startups.
Now is definitely not the time for startups to waste money on anything that they can delay, get for free or get for a substantial discount. In the past, Enable provided insights that can also help bootstrapping startups save money. These insights are found below with a link to the past Enable column.
Do not spend money on these items
- Your business plan If you are raising money now, you definitely need a professional business plan that will really impress investors. I am sure that you have been tempted to pay consultants tens of thousands of dollars to prepare one for you. Don’t do it! Your money can be spent on other things – like rent and salaries. Enable has covered business plan preparation in great detail and I know of numerous companies who used Enable to prepare business plans that impressed investors and raised money.
- Market research Venture capitalists are now only investing in companies that solve an identifiable and growing need (why they invested in companies in the past that did not address this issue is a mystery to me). Therefore, you might be tempted to pay a lot of money for a research report that backs up your particular need. Again, don’t do it. There is so much market research and knowledge available for free on the Internet.
- Strategic planning You might also be tempted to spend your precious cash on high-powered strategic planning consultants who you think could change you from a dot.com to a technology powerhouse. Don’t bother. Enable showed you how to get McKinsey strategic planning information for free so check it out before wasting your money.
Save money by doing it yourself
While professionals are important, you can use the Internet to get some of the services they provide either for free or at a discount. Do it yourself first and then have your professionals check it over for you – this will be much cheaper.
- Provisional patent applications The US Patent and Trademark Office came up with provisional patents to save small companies and inventors money. Enable covered this topic in detail and you should seriously consider a provisional patent as a way of to save some money now.
- Basic legal forms and information Enable covered a site called FindLaw and focused primarily on the fact that you could find actual agreements and contracts used by leading companies on the site. Bootstrapping companies can use this together with their lawyers to save money. You can also find sample forms and agreements on the site as well. Use these with your lawyer and you can save a lot of money.
- Press releases It would be really ironic if you have some good news that could really help your company, but you don’t have the money to pay for press releases to get the story out. Enable showed you how to do the press releases yourself. I personally used the site covered in Enable to write a release for my company and the results were just as good if not better than what I would have gotten if I had to pay someone for the service.
Don’t forget to smile
Finally, you must keep everything in perspective and try to keep a positive attitude. In Enable’s column on jokes and humor I gave some advice that is especially relevant today: “Remember, in every business there will be good times and bad. Try to remember to smile during both of them”.
Published by Israel's Business Arena on January 9, 2001.