(Photo credit: Wikipedia)
There's really only one rule when you start a business: Don't run out of money. Yet many would-be entrepreneurs can't seem to keep this prime directive at the forefront of their planning. Overspending is all too common, followed by a quick end.
Smart entrepreneurs look hard at their expenses. and then even harder. Then, they think of ways to cut even more overhead.
At bottom, it's a question of how bad you really want this to work. What are you willing to give up -- free time on the couch watching your favorite TV shows? Lattes? The comforts of home?
If you'd like a few ideas on how you could slash your startup's expenses, here are tales of three entrepreneurs who took creative bootstrapping to new highs as they launched their business:
Blank Label- This mass-customization startup sells design-your-own dress shirts. To save money, in mid-2010 three key team members who were living in various cities and working virtually all moved in together in a work/live apartment -- in Shanghai. This arrangement was much more than a money-saver.
Living close to the company's factories allowed the trio to learn more about manufacturing and strengthen their ties to their suppliers. They aren't all living an entrepreneur's version of a Big Brother-style reality show anymore -- last time I checked in on Danny Wong he was in Argentina -- but that formative experience helped bond the team and let the company scale to profitability with less money stress.
YoungPrePro -- When teenage Nigerian blogger Bamidele Onibalusi launched his website of online writing tips, he was still in high school. In a country with poor infrastructure, it wasn't exactly like he could get high-speed broadband piped into his bedroom, at any cost. So he found a local cafe owner and helped the owner tap into the Internet -- illegally. "I was a desperate 16-year-old kid when I did that," he told me. "I even thought there was nothing wrong with it."
Oni, as he's known, got busy with that free Internet, and was soon landing guest posts on some of the top writing blogs online. In short order, he had enough money to get that Internet at home, leaving the cafe squat for a custom-built home office. His site now brings in an income that, while modest by U.S. standards, allows now-19-year-old Oni to easily pay for college and live like a millionaire.
Boo-Boo Cover-Up -- When Brandy Jans was looking to launch her bandage-alternative/concealer for the fashion-minded, she knew she'd need to spend real money on marketing. So she slashed about $20,000 of expenses -- by subletting her New York City apartment and moving, at age 30, back in with her parents, who lived near Detroit.
"It was crazy to do when you're an adult," she told me. "But I feel it was worth it. It basically helped me avoid financial desperation, and the tradeoff was my personal sanity."
With the savings, Jans was able to shoot a TV commercial and revamp her website, all at lower rates than she would have paid in the Big Apple. She says she still has some of her $75,000 in startup capital she had when she launched in March 2011 -- and Boo-Boo Cover-Up is available at 20 different salon and beauty-supply chains.
