There are so many things to do when you have secured the first seed capital for starting your own business, and most of them cost money. A focus on doing the important stuff while bootstrapping the rest can help ensure your business survives until it has its first paying customers.
Seed capital – also known as the funding required to get a new business started – could come from many sources, including yourself. Since everyone knows you need to spend money to make money in the beginning, having a clear idea about where you’d like to allocate your limited seed capital could help you prop your business up on its first legs before the profit comes in. Here are five tips to help you maximize the initial funding you have.
Decide What Your Critical Priorities Are
Get clarity on the sequence of steps you need to take, which things have to happen first, such as market research or basic product design, and which things can take place in the sequence. This will help you, husband, scarce cash until it’s needed. Always remember that the big over-arching priority, for now, is securing your first paying customers.
- Cut Operating Expenses to the Bone
Consider following in the footsteps of entrepreneurs (like Amazon’s Jeff Bezos who famously used an old door on trestle legs as his desk) who are great at getting the basics for nothing or very little. This frees every spare bit of cash to invest in the critical parts of the business.
Do the same by sourcing cheaper or shared office space and equipment in the beginning. Today, there is also myriad low-cost online software for you to create a basic website, manage your finances or set up a CRM system for when you have to pay customers.
Set Goals with Deadlines
Deadlines for a series of defined outputs will help you and your team focus on the journey towards your first revenue. By putting a date to when something has to be achieved – for example, when your company’s Facebook page needs to be set up – you can remind everyone in the team that time is limited, and help them stay focused on the tasks you prioritize.
Get Your Product Out There Quick
How quickly you can get a product or service out for potential customers to purchase will set the pace for how much or how little cash you can burn through before your first payments start coming in. This doesn’t mean rushing out a product or service that doesn’t work very well but one that meets most customer needs without having to be totally perfect.
If you are running a software company, for example, you can present your app right now and upgrade your offering in the near future. You can also save by going with simpler packaging in the beginning and improve it later when you can afford to.
Get Early Feedback from Potential Users and Refine Your Offering
The worst thing to do is spend all your money on product development and find that customers need changes you can’t afford to make. Early feedback from potential customers who have used your product will help you adapt to changes more quickly and so compete better in the market. Sound financial management is especially crucial at the beginning of every new startup. Visit our Small Business Centre to discover more information about starting your own business.