Either you can't get outside funding or you don't want it. Either way, you're bootstrapping, and need to grow your company using only your own resources. Josiah Humphrey, co-founder and co-CEO of app development agency Appster, has been doing it since 2011, when he and co-founder Mark McDonald started the company. They're doing something right--Appster boasts more than $1 million a month in run rates without ever having raised outside funding. Here's Humphrey's advice on how to grow on a shoestring budget.
1. Sell it before you make it.
Humphrey points to Microsoft, which was born when Bill Gates had the idea for a PC upgrading system that he claimed he could deliver before any code was even written. Appster, too, was an idea that was sold before its infrastructure was built. Instead of hiring a team of developers--which would have taken a lot of capital--Humphrey and McDonald started by building a website to generate interest in the company.
2. Execute on your idea with a low-risk test.
You might have a great product, but unless you can sell it you won't have a business. Test the waters with a website and an inexpensive Google AdWords campaign to see what kind of attention you can attract and if it looks like you can get enough traction to stay alive.
3. Find a company to partner with.
Instead of hiring expensive talent or investing heavily in manufacturing, partner with an established company; sell its products or services while you learn the industry. "You have to be creative, and if you can outsource or you can partner with someone that has that infrastructure and then slowly replace the company, you don't have to spend the money," he says.
4. Use cheap or free marketing.
Humphrey offers these ideas:
- LinkedIn is a good place to find and connect with people in your industry.
- Need someone's email address? Use the Thrust.io Anymail finder, where you can input a person's name and domain to receive probable addresses.
- Start a meetup for people interested in your industry, and then use attendee contact information to populate a database you can use to offer people white papers, newsletters, and access to your blog or other valuable content.
- Guest-post on another company's blog. It's a great way to drive traffic to your site.
You could also leverage another company's prospect or customer list in exchange for giving free product to people on the list, or via some kind of cross-promotional agreement. "Maybe it's a new sort of toothbrush," Humphrey says. "You could talk to dentists with databases around your city and say, 'We've got this new toothbrush that we want to give away to your database.'"
5. Pay yourself as little as possible.
If you can live without a salary, invest the money you're making back into the company. Humphrey and McDonald each found a way to live on $350 a week when the company was new. "If you don't need it, put that money back into marketing, back into growing the head count and bringing on more people that can add more value," he says.
6. Be creative about keeping your expenses low.
Do you need a brand-new office for $4,000 a month when you can work from home and spend that money on marketing and sales? Do you need a $500 office chair when you can use some old furniture to get by? Delay any expenses that don’t contribute directly to revenue.
7. Pay talent with equity.
It's hard to attract top talent when you're strapped for cash. Instead, pay individuals who are passionate about your vision with a percentage of ownership of the company. "Obviously, you have to balance it, because you don't want to dilute yourself as a founder too much, but it could be a really, really great way to motivate people," Humphrey says. "You have to have something that's really inspiring that people want to get behind."