How to Bootstrap Your Business Without Outside Investment
Money. Money. Money.
Ah right?! It’s the first thing we all think about when we are playing with the idea of starting a business or growing it. Where hell do we get the funding? How much is it going to cost us? Will we even be able to find the money, save the money, or do we really have to bring in outside help?
Although bootstrapping your business is no doubt difficult, it takes planning for sure, it’s not impossible and a lot of owners prefer to take this route instead of taking out a loan or seeking out investors.
We spoke with Neha, the owner, and designer of the niche fashion label Aam geared towards dressing hourglass figures, about how she with no prior experience in business went about bootstrapping her fashion company.
How do I determine the cost of bootstrapping my business?
The biggest thing I would recommend to anyone who's thinking about bootstrapping is to really make a financial plan. And I know that that can seem really intimidating, especially if you don't have a business background. But what I'm talking about is sort of a rough plan and you can find temp bullets for this online. Just a rough plan of how much you think everything is going to cost so say, for example, you're launching a fashion label, you know, for a fact you need raw materials. You're going to need labor, someone who's actually cutting and sewing your pieces. You're going to need to pay for shipping to get your product from wherever it's getting produced to wherever you're planning to fulfill from. You want to make sure that your products will wash in the washing machine or that the dyes are safe. So there are third-party testing companies, packaging, all marketing, all of the different costs that go into you know having a fashion line and you should roughly plan out how much these things are going to cost you.
I did it on a monthly basis. So how much money am I expecting to spend per month for the next year or 18 months? These are all values you can estimate just by Googling around so you can roughly figure out, what is the per meter cost of cotton. What are you know, labor cost in X country, things like that. That's like your business financial plan and then layer on top of that what your personal costs for the next year and a half. You got to pay rent, you got to eat food, like how much are you planning on spending every month?
How do I know when I’m ready?
After you’ve figured out your number to launch your business and also live then add maybe like a 15% buffer on top of that, because we're going to plan and you're never going to hit your costs exactly the way you want to hit them. Take a look at your savings and sort of match that up to see if you have enough for the next 12 to 18 months. If you have just enough I would say it's probably just to be safe, maybe try supplementing with a secondary source of income. So if you are able to freelance on the side, if you're able to do consulting work on the side, so anything where you can kind of give yourself like you're not just breaking even but you have a little bit of wiggle room if you're in that place financially, I would say you're ready to bootstrap your business.
What are other avenues I can explore for funding other than investors?
I think there are actually a lot of investment options that are not discussed very publicly, especially since I'm from the Bay Area, and the most common conversation that I was having was you should go seek investment, you should go raise money. And it didn't make sense for a business like mine that is a fashion label, a small business, and a business I intended to grow very slowly and intentionally. So some other ways of raising money are applying for grants. There are tons of “small business” and “women in business” grants that are available. They give you anywhere from like five to $25,000 in a stretch. There are also loans that once you have inventory, you might qualify for from the bank or other federal loans because they look for some kind of assets that you can use as collateral. There are a number of ways where if you don't have all of the money saved up, you can then supplement. The important thing is that you have that financial plan ahead of time so you understand how much you need from the beginning.
Where do I find grants?
It requires a little bit of digging and searching and I do think Google is a great place to start. If you are an American citizen, which I'm actually not but if you are an American citizen there are a number of government and federal websites that are really strong places to start, where they have sort of programs that they've been running for years, and they run very religiously. So I would probably start with those government sites first. The other thing that I would consider looking at are companies I would call aggregators. So there are pages where they have aggregated grants. They just have like a long list of them with criteria written next to them so you can quickly browse through and see okay, out of these, like 50 grants, I might qualify for 10 and then click into each of those grants and read through the criteria very closely.
What are some grant writing tips?
1. Research your audience and grant specifics: It's important to understand exactly what they're looking for, and cater to that in your writing. One helpful exercise is to turn their values and requirements into a scorecard and give that scorecard to a friend or mentor. Then have that friend or mentor read your grant proposal and rate it from 1-10 for each item on the scorecard. See how well your grant did!
2. Get feedback and iterate: Do you have a friend, mentor, or colleague who has experience in this field? Share your grant proposal with them and get feedback. If you don't know anyone in the specific field you're after, you can try folks who work in fields where grant writing is the norm (e.g. non-profits or the sciences). The specifics of your grant will be different, but the common features of a successful proposal - credibility, clarity, persuasiveness, being results-oriented, etc. are likely to carry over.
3. Practice pitching your business to others: This is the #1 thing I've heard from seasoned grant writers in science. They practice pitching their project ideas at competitions and gain valuable feedback from the audience on how clear and persuasive they are being. This translates into clear grant writing.
4. Make sure your grant proposal is specific and solutions-driven: More often than not, organizations that grant businesses money are looking for specifics on how that money will be used to achieve positive results. Show them you know what you're talking about, and that you'll be putting their money to good use.
5. Udemy course: I cannot personally vouch for them, but Udemy has several highly rated courses on grant writing
6. Hire a grant writer: You can also hire a professional grant writer if your budget allows! Ask for samples of their prior work and their areas of specialization (if any). If your grant proposal requires visual aids, make sure they'll be able to create those as well.
Listen to more of our interview with Neha on the podcast below. We talk about what it takes to create a fashion line, how to start a business with no business experience, and more ways to collect funding. Make sure to follow and keep up with Aam on their Instagram.