Starting Your Business
Ten Reasons to Keep Your Business Start-up Lean
Written by Ashwin Satyanarayana for Gaebler Ventures
Starting a business need not be an expensive affair. In fact, small businesses start with almost nothing. Here are some quick pointers why you should keep your business start-up lean
Do you have a fancy MBA consultant and aide who tells you about Venture capital funded businesses and other businesses that have creditors chasing to lend money?
Have these consultants also told you how easily your business is the next "Google" waiting to happen? They have been stupid, to say the least. Starting a business doesn't have to be an expensive affair. In fact, 99% of all small businesses start by bootstrapping. Here are some quick pointers why you should keep your business start-up lean.
Start for free: It's only sensible to start without spending too much on requisite infrastructure, isn't it? Why spend more when you can spend less. There is no need to hurry to get yourself a huge 2000 workstation centre to run your business operations from the word go. You could start with the very basics and from your home, if needed. Heard of Garage start-ups, haven't you?
Spending more and earning less is not profitable: Go back to basics and think about that equation R- E = P. If you need to be profitable, it is evident from the equation that earning more revenue while keeping your expenses low is the way to be profitable. In that case, shouldn't I be starting from getting more R (revenue) and cut down expenses (E) as much as possible?
Learn to figure out how to survive: When you start out with nothing but a passion, zeal, idea and determination but without silver spoons, fat wallets, and fancy VC funds, you are left to survive on your own. You will begin to figure out how to get things done for less or no money at all. You will look to find solutions to problems in the cheapest or the most effective way.
All the odds are yours while you are against all odds: One of the defining traits of entrepreneurs is that they battle with all kinds of odds in their life. Even when nothing seems to be working for them and when they feel the collective weight of odds stacked against them, they fight on. When you are bootstrapping, you have more problems than funded entrepreneurs. But contrary to common opinion, this makes you a better entrepreneur.
Lean is mean: Think about it, no business school can teach you the ways of the street. Further, if you come with the bells and whistles of being a funded entrepreneur (easy money), you won't learn anything. Because you start with nothing and you are forced to run your business with nothing, you turn mean. You turn efficient and extremely resourceful - the way a true entrepreneur must be.
Gain competitive edge: Think about the incredible edge you get over your competition. You will be able to compete with them on speed, quality, price and much more. For every product you sell, your profits are higher compared to your competition because of your lowered expenses.
Give more to customer: By not spending on fancy equipment, buildings, infrastructure, etc., you will be able to give more to your customer thanks to your savings. You could perhaps give a better quality product for a much lower cost. The benefits you gained from bootstrapping can be passed on to the customer - another great reason why your customers always buy from you.
Diluting your ownership might not always be for you: Raising funds for your business is possible through methods such as Venture Capitalists, raising cash through equity dilution or loaning from public at large. However, not everyone business is ready for such dilution in ownership. A substantial part of the profits you earn are routed to Venture Capitalists and equity stake-holders. If you want to retain your ownership, keeping your start-up lean might be the only way left for you.
You are forced to fight battles: When you launch your start-up lean by bootstrapping, you are perennially in a battle mode. Nothing comes easy for you and you will probably have to battle against a lot more things than normal entrepreneurs have to. Think about the learning you amass while working like this. If you could start from nothing and grow your business, what would you do when you have a lot of funding to help you grow?
Be debt free: While taking business loans to launch your business isn't bad, it isn't necessary. One of the greatest spin offs to bootstrapping is that you are not as loaded by debt as those entrepreneurs who start out by using start-up funds. You remain virtually debt free since you operate on thin capital - most of which is earned as against borrowed.
Ash has an undergraduate degree in engineering and an MBA from Ohio University. Today he is a corporate trainer, business coach and a freelance writer.
Share this article
Additional Resources for Entrepreneurs