I believe that most women, at some point in their life, have a million-dollar idea but don’t do anything about it because they don’t know where to begin, who to ask for help, or how to pay the costs to get started. According to IFundWomen, an amazing marketplace dedicated to connecting women-owned businesses with capital sources (as well as expert coaching and connections), 72% of female founders cite lack of access to capital as the biggest barrier to starting a business. While I’m thrilled to see that women are starting businesses at record rates (now 4.8 times the national average), very, very few will be successful with outside funding.
In fact, only 1% of all small businesses are able to raise any venture capital, regardless of the founder’s gender.
My fear is that these statistics will scare away would-be entrepreneurs because many of them think that securing outside funding is a critical necessity for achieving their dreams. And that may be true in some cases, for some types of businesses. But not all business ideas require venture capital to successfully get off of the ground.
To the women with ideas, I say—start small, with a lean, one-page business plan to codify your thoughts and do a gut check. The Small Business Administration has some great tools to help with this process, and the resulting document will present the potential of your idea. You’ll have shareable material to distribute to mentors, investors, potential partners, banks, and others who may want to help you on your journey.
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But beyond having a one-page plan, I’m here to argue in favor of taking a different road to launch and growth. It’s not an easy road, and it can be slow to travel, but it’s the road I took as the founder of a multi-million-dollar brand, and it’s paid off tremendously over time.
What was my road? Bootstrapping.
Like millions of others before me, I started my business using my own personal financing, ingenuity, and passion. I was also extremely fortunate to find a seasoned and well-connected business partner (who already had some beneficial banking relationships), and together we were able to cobble together a small amount of initial funding. These funds served as our start-up resources, but they would have been quickly depleted if we hadn’t been highly creative, innovative, and determined in several other ways. Namely, we took a number of specific steps, which may be helpful for other entrepreneurs to consider:
Expand your credit.
We expanded our existing banking relationships as well as our lines of credit to ensure we had as much available funding as we could get. We were also very careful how we used that credit and when, and worked to pay down any costs as soon as revenue became available.
Work with a small team and outsource.
We outsourced as many of our necessary job functions and roles as we could, as opposed to hiring full-time employees. This took tedious but important, tasks off our plate so we could focus our time on big-picture efforts to drive growth. We also focused on hiring only for roles that were essential.
Be creative with office space.
We creatively expanded office space to accommodate more people, leveraging less expensive warehouse space whenever possible. We converted warehouse space to office cubicles. We also implemented a formal-work-from-home policy so that office space could be rotated on a weekly basis if needed.
Put profits back into the business.
We reinvested as much of the profits as possible back into the business. This meant taking a small salary but gave us the necessary funds to grow the business faster.
Leverage your networks.
We spread the word about our business to friends, family, and colleagues, leveraging our personal and professional networks to let more people know about our products. This supported our initial marketing efforts and also connected us with business suppliers and partners.
We honed and scoured our budget for maximum efficiency, going line by line through our P&L (profits and losses) on a regular basis to leave no stone unturned.
There are countless other examples of successful bootstrapping from other small business founders – the realities are different for every type of situation. But these steps worked for us, and our company projects to increase year-over-year revenue by more than 200% in 2021.
Investopedia does a great job of defining bootstrapping and providing specific examples for practical application here. They sum it up nicely: “Bootstrapping is building a company from the ground up with nothing but personal savings, and with luck, the cash coming in from the first sales. It’s rarely a quick way to turn a profit, but bootstrapping can be a way to start slowly bringing in revenue and establishing a safety net that will fund future investments in the business. Bootstrapping allows business owners to experiment more with their brand, as there is no pressure from investors to get the product right the first time.”
According to IFundWomen, women aren’t just concerned about the lack of outside funding sources. Nearly half of them are also concerned about the lack of mentorship, specifically from women founders who have “been there, done that.” This is viewed as another major barrier to starting a successful business. My hope is that my fellow women founders and leaders will join me in answering that call for mentors. We can start by writing more articles like this one, seeking to share our stories, lessons, and tips—so that burgeoning founders can learn from our mistakes, grow their dreams, and find their own roads to success.
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