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Focus, credit lines and a good accountant: 8 entrepreneurs’ tips on boostrapping a startup

10:44 am by | 2 Comments

We talk a lot about venture capital around here, but the truth is that most companies will never take VC money. Data from the Small Business Administration suggests that 99 percent of new businesses started each year will not get venture capital at startup.

Thanks to lower costs associated with starting a web-based company, many health IT companies have gotten off the groundand some even to profitability - without taking any outside investment money.

But it’s not an easy undertaking. Here are some words of wisdom I rounded up on bootstrapping a startup, from those who have done it themselves.

It’s not right for everyone

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Having a well-defined product or service, a small founding team, limited capital needs and a short sales cycle may be indications that bootstrapping is a good option, according to this piece by Les McKeown, a serial entrepreneur-turned-author.

Bootstrapping is a state of mind

By nature, entrepreneurs are disrupting the universe, says Seth Goden in “The Bootstrapper’s Bible.” Part of that mindset should be that your current business ought to be funding the next innovative thing you do. That thinking will help create a powerful product that “makes a ruckus,” he explains in this video.

Line up as much credit as possible, even if you don’t think you’ll need it all

This lecture is a bit longer but worth a look, starting at 19:00. Charles Plant, the founder and chairman of Material Minds, outlines a few big steps like finding a mentor, picking the right business, and bringing in early revenue. His first word of advice, though, is lining up credit ahead of time as a cushion, even if you don’t use it all. Get as many lines of credit as you can, and up the available limit on credit cards as high as you can, he says.

Find a good accountant

Software entrepreneur Suzanne Huber shares her experiences with business partners, clients and service providers in this post from TechVibes.

Find a few initial customers to help pay the bills

Early revenue will help bring in specialists that you couldn’t normally afford, says Jeff Solomon, who founded Leads360 (now Velocify).

Focus on one thing and do it really well

Entrepreneurs like to “go for the next shiny object,” says Hussein Fazal, who bootstrapped the company AdParlor from his parent’s basement. “Focus on what you’re doing and doing it really well.”

Use your product as if you were the customer

In a recent LinkedIn column, Jon Oringer suggests that entrepreneurs go as long as possible without outside capital. Some of the ways he stayed cash-efficient while building Shutterstock Images was by learning to code, using as much open source software as possible and using the product as if he were the customer.

And, always remember…

 

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Deanna Pogorelc

By Deanna Pogorelc MedCity News

Deanna Pogorelc is a Cleveland-based reporter who writes obsessively about life science startups across the country, looking to technology transfer offices, startup incubators and investment funds to see what’s next in healthcare. She has a bachelor’s degree in journalism from Ball State University and previously covered business and education for a northeast Indiana newspaper.
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