So, you’ve sat down with your annual finances, stayed up until the early hours of the morning and drank the local coffee shop dry, and now your finished company budget is staring you in the face, challenging you to stick to it. It’s not easy—creating a feasible budget is hard enough, but sticking to it can be an absolute nightmare. However, with a little dedication and a bit of advice, making the company dollar stretch as far as you want it to is not such a daunting prospect.
Always, always, always have a slush fund—a portion of your budget unallocated to deal with major problems or expenses as they come up. No matter how well-planned the budget, if John from accounts somehow loses $50,000, or Mary the receptionist gets pregnant and requires maternity cover, or a virus crashes and wipes your server and causes all your computers to start displaying the lyrics to REM’s Bad Day, you’re going to be very, very thankful for every cent not allocated. Always plan for the worst, and if nothing goes catastrophically wrong then anything not spent from the slush fund can either go towards next year’s budget or a damn good Christmas party.
Learn to trim expenses wherever possible. Keep a weather eye on stock levels, employee overtime, charged expenses and company credit cards. Try and negotiate deals on rent every time the contract is up for renewal. Remember that if you can lower the expenses on the budget, you’ll have much more of a safety net inside your slush fund for that inevitable server meltdown.
Keep a close eye on the inflow of income, as this can also affect the slush fund and expenses. If you start to make more than you budgeted for, don’t clap your hands with glee and laugh all the way to the bank—put some of it into the slush fund or any other strained area of the budget.
Similarly, never let a month go by where you do not keep an eye on your budget, comparing it to monthly income and expenditures. Make it the same date every month, preferably some time around the 25th to give yourself enough time to start making changes before the next calendar month comes in. Check your cash flow, costs and potential liabilities with a fine-tooth comb, and when you’re done get somebody else to look at it for you. If you can snag an accountant to help out, even better.
Lastly, do not get downhearted if, at some point in the year, you realize your budget is completely messed up and you’re going to overspend this month. You need to remember that budget projections are a best guess only and nothing more—overspend is practically unavoidable in today’s uncertain economic climate. Face one simple truth—chances are that you will miss your estimates. Of course you try to avoid it, but if (when) it doesn’t make you the worst businessman ever or a dunce with no financial acumen. Just pick yourself up, dust yourself down, and look for ways that you can get the budget back on track next month—firing John from accounts for losing that $50,000 may be a good place to start.
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This is a difficult question for any small business owner to answer as incorporating a business has plenty of legal and tax-based advantages, but can also be a potential minefield, a massive expense, and ultimately not worth the hassle for the gains and returns made.
So, before we go any further, let’s take a quick look at the major advantages of incorporating your business. First up, there’s limited liability—probably the single most attractive benefit of incorporation. As a sole trader or partnership, if the business incurs debts then you personally may be forced to liquidate or turn over assets to pay for them. This can include homes, property, vehicles—fortunately, your dog will remain safe from these legal actions. As a corporation, the corporate entity takes on the financial responsibility of guaranteeing any loans made, meaning that investors and shareholders are only responsible for what they put in to the company.
Secondly, incorporation grants a much greater degree of income control to the shareholders and executives. By incorporating your small business, you give yourself the option of determining precisely when you, as a shareholder, receive income, which can definitely work in your favor tax-wise. Instead of getting your income when it’s received, being incorporated allows you to receive a dividend based on your share value at a time when the taxation environment is more to your advantage.
Another advantage of this is that anybody can be a shareholder—your spouse, your kids, heck, even old Uncle Albert, if needs be—meaning that income can be divided among family members in different taxation brackets. This is a nifty little benefit if you want the taxman to keep his grubby little paws off your family’s hard-earned cash!
Unlike sole traders, who can tail off if the owner dies or retires, corporations exist in perpetuity which allows the ownership to change through whatever reason and still carry on existing as a legal and commercial entity long after the esteemed founder has shuffled off this mortal coil (or earned a stack of cash and run off to Honolulu to spend their retirement drinking piña colada and debating the merits of the grass skirt.)
Lastly, there’s the fact that people are more likely to do business with a company with Inc., Llc., Ltd. or Corp. after the name. Contractors may find, for example, that certain companies will only deal with incorporated companies as it gives them an air of legitimacy and helps reduce the risk of becoming associated with a rogue or fly-by-night outfit.
However, despite all the great-sounding benefits, incorporation does have its drawbacks. For example, be prepared for you paperwork to go through the roof. You may find yourself needing to hire a lawyer or accountant to help yourself through the arcane process of incorporation, and to deal with the red tape to come afterwards. It is an expensive process to begin with, so make sure that the potential tax pitfalls are not more than you stand to gain from the process. Have an accountant look at your finances and give you proper, personalized advice before you decide to take the plunge.
Thats right. Forget to think big. You are bootstrapping your business after-all, so remove the dreams of external funding, and high dollar loans. You don’t need them in order to succeed! Toss out that whole “THINK BIG” idea for a while, and focus on the fundamentals of your business and the core structure that is going to fuel your success.
Bootstrapping your business is about getting into the mud and doing whatever possible to get your business off the ground with as little money as possible. We are all guilty of dreaming the life of Donald Trump or Steve Jobs for a while where you are the poster boy for a huge multinational company. It is fine to believe you can get to that point, but starting your business by focusing solely on that, you will lose track of the smaller things that are the building blocks of your business and get lost in the haze of the bright lights.
When starting your business, or putting together a product, don’t aim for the laundry list of features, or the largest inventory, but aim for getting your name out there, and making sure you even have something that people want. The WANT has to be there in order for your business to succeed, or you have to have the power to make people BELIEVE THEY WANT AND NEED your product / service. Starting small will also give you more time to work on other aspects of your business like customer service, which is key in any successful business.
Thinking Big in the beginning will just leave you with analysis paralysis over the smallest details, that really, get in the way of taking action in the early stage of a business. Get your product or service running, and get feedback from your clients. The feedback from them will give you all of the things you need to work on in the future. Rely on their feedback, because after-all, if you like your product and the customers don’t, you have a crap, period!.
If you are having trouble putting this in perspective for your business here are 4 thoughts to keep in mind.
- Think small – You can make all the money you need solving a small problem well instead of trying to tackle the world’s issues.
- Close your mouth – If need to draw your line in the sand at some point. Once you do, stick to it!
- Open your ears – Now find out if it is sticky now that you are stuck, Feedback and testing, they will let you know if you have the next post-it-note or if it is just a generic gum wrapper.
- Get out there – My friend John Assaraf said that if you sit on your couch planning and meditating all the time eventually people will come and take your house from around you and all that is left is you and a couch.
With all the stellar advancements in Web technology it can be extremely easy to get carried away and soup up your site with all the latest technical bells and whistles. And if you go through a professional website programmer, then there’s a good chance they will try to talk you into more than a few types of bells and whistles. As much as additional site elements—flash graphics, talking avatars, interactive questionnaires—may be legitimate add-ons, adding viable value to your site, bootstrapped business owners shouldn’t even start to consider these add-ons until they’ve got some positive cash flow consistently coming in. Even if you have a small business loan to fall back on, that loan can quickly dissipate if you stray from your path of essential business-building tools.
Unless you’ve got a friend who specializes in Web programming and website design with whom you can strike a barter deal, you’re going to want to keep your first website as basic as possible to relives some stress on that precarious budget of yours. But you fellow bootstrappers will be delighted to know that you can build your own website in a day (if you work really hard). And you don’t even need any prior experience to build a successful site.
A site hosting company is a business that provides a server for your website and allows it to be seen live on the Web. Essentially, they plug you into the Web for approximately $10 per month (I use Host Gator). Many times, your site hosting company will also offer you free site-building software with your monthly hosting service. This type of software helps you construct your own website using a simple plug-and-go format ( I recommend WordPress and Joomla).
The software incorporates preexisting tablets and preprogrammed coding, which means that your site is essentially already built for you. All you need to do is select a few elements that will help to personalize your site, such as selecting your favorite color schemes, uploading a photo of yourself, and adding content about your business. And it’s incredibly easy to add your own copy, usually just requiring simply copy and paste procedures. Other website programs include a content management site (CMS) that allows you to write your copy directly into the site and choose your formatting options.
Most of these complimentary site-builder software programs will be accompanied by simple instructions, but you can easily search for keywords such as “how to build a website,” “easy-to-create websites,” and “website building resources” to find even more extensive information on how to do it yourself.
After you have gotten your feet wet trying it out yourself, and you are ready to add new things it is a good time to talk to some web professionals about what is out there. I am one of those people that can set you on the right path, send me a note.
Do you believe in magic? If you do, that’s great—it means you’ve got a youthful spirit, and that will invariably help you to live a longer and happier life. However, you should probably dispel any notions of magic when it comes to your website. If you don’t do any marketing for it, you’re certainly not going to magically attain site traffic.
Getting Internet users to visit a website is consistently one of the most difficult tasks a small-business owner can undertake because of the time and money involved. However, if you plan on surviving on the Web, you will need to make efforts to optimize your website.
Search engine optimization (SEO) starts with a properly designed website. Now, it may be extremely tempting to make your own website through the site builders that you are usually provided with through your site hosting service, and this may be your only option starting off as a bootstrapped business, but your site will fall significantly short of effective optimization. You see, there’s a wonderfully intricate world of coding and design techniques behind the curtains of your website. These features help search engines find the relevant content within your site and naturally rank them higher in the search engine results pages (SERP’s).
So, as much as you might be able to save a few bucks designing your own site, you’d be better off saving yourself a significant amount of time by creating a single home page as an online business card; a credibility measure for people checking out your business. Then, when you get some positive cash flow going, you should put serious consideration into hiring a professional Web designer to help you out. Unfortunately, you may feel a little nauseous when you see how much it can potentially cost you to get a quality website up and running. However, if a site is properly designed and optimized, the front-end costs will be justified by the business it brings you on the back end.
And if you finally get the cash flow to make such a purpose possible, you’ll want to make sure you don’t just jump in with the first option you come across, getting sucked in by the appeal of virtual bells and whistles. Absolutely always look for live samples of a site designer’s work. In addition, you should make sure you ask them about what measures they take to optimize your site’s design. If they can’t provide you with specific information regarding optimization, then chances are they’re just providing you with a cookie-cutter template, and that’s most certainly not worth the heavy price tag.
And as was mentioned in a previous article, if you can’t afford a necessary item for your business, barter before you go broke. Before you opt for outside professional help with your website, look through your list of friends and business contacts to see if there’s someone who can trade services with you. Site design is one of my specialties, so I welcome any and all questions you might have on this topic—I’d love to help steer you in the right direction!