The following excerpt is from Entrepreneur’s book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes
The majority of startups are founded without capital injection from venture capitalists or angel investors. The real numbers are eye-opening: Venture capitalists (VCs) fund only 0.05 percent of startups, and angel investors are responsible for funding just 0.91 percent. Take a moment to really think about those percentages in relation to the approximate 543,000 new businesses started each month in the United States.
With the chances of receiving funding so slim, if you’re serious about turning your idea into a reality, you’re most likely going to have to dip into your own pockets and bootstrap your way to the top. It isn’t easy, but it can be very rewarding, both personally and financially, as you retain 100 percent of your equity.
In no particular order, here are 10 tips to help you bootstrap your way to success:
1. Fully research your market and competition
Before you do anything else, you need to make sure you have a viable business opportunity. Is your proposed product or service already available on the market? If there’s competition, how will consumers differentiate between you and them? What makes you better? What is your unique selling point?
Some highly successful software-as-a-service companies have sold their product before they even developed it, to be completely certain there was a market for it. While this isn’t the conventional way to do it, it’s an example of entrepreneurs going to extremes to be 100 percent positive they had a winner before going all in.
2. Create a business model that produces quick revenue
If you’re bootstrapping, you need to make sure your business model generates revenue quickly. If not, you’ll be dead in the water once you blow through your reserves. Constant cash flow is mandatory. If you look at successful bootstrapped startups, you’ll see they all generated revenue very quickly.
3. Handle your own public relations in the beginning
Startups can benefit greatly from major media exposure in the beginning, but journalists and editors receive press kits from PR firms around the clock. They don’t want to talk to a public relations representative — they want to talk to you! They’re much more interested in speaking with a founder than a PR firm, because they want to hear your story just as much as they want to hear about your actual startup.
There are a number of ways for startups to score media coverage, so roll up your sleeves and…