7 Strategies to Start A Company for (Almost) Nothing

Bootstrapper Yvonne Shortt left a six figure salary at AmEx to start Small Biz Booster from her basement with $ 865. Her motivation: Opportunity to be close to her daughters Rebecca, 8 and Clara, 3. (Image Courtesy: Mark Schafer, Inc Magazine)

If you are an entrepreneur or ever dreamt of becoming one; you know for sure that any interesting idea related to entrepreneurship lights up your eyes.

This is what happened to me when fellow bootstrapper and friend RK Dhanvada of DH&R Consultants shared the article – 7 strategies to start a company for nothing – with me. It is one of the best compilations of ideas on entrepreneurship that I came across in recent times. (This article earlier appeared in Inc July 2006 issue.)

In the article, Stephanie Clifford makes a point about bootstrapping and points readers to the success stories of 7 bootstrappers who bootstrapped their way to success with fund ranging from zero to $2000. In these 7 artilces various Inc.com contributors have related the success of featured bootstrappers to 7 ideas which can set any bootstrapper on the path to success.

Lesson 1: Brand it creatively – First example is of Madsoul, an urban street wear founded by Marc D’Amelio in 2000 with $1000. Marc realized his inability to afford $100,000 billboard. He used his creativity to use free blank label and free ink from business relationships with UPS and Tektronix.

In true bootstrap fashion Marc crated a demo t-shirt for free, promising the screen printer a contract if he was able to close the sale closed. He was able to make the first sale with the demo t-shirt and rest as they say is history.

Lesson 2: Switch business models on a dime – This strategy has been successfully used by 1-800-Mattress founder Napoleon Barragan when he started in 1976.

He started this company with $ 2000 and ran an $18 ad in classifieds section of a newspaper to land 2 sales.

Later he put his commercial on late-night TV with a $30 spot. It brought more sales. By 1985 he graduated to daytime TV. His willingness to experiment made sure that his company crossed $ 100 million in revenue.

He continues to experiment with co-branding and franchising models to take 1-800-matters further ahead.

Lesson 3: Work from home – It looks very easy to do and makes sense to many. Yvonne Shortt started Small Biz Booster with $865 during June 2005, from her cramped basement in NY City.

The firm helps small companies in marketing. Currently she averages monthly $2150 with 25 regular accounts. She has the ambitions of taking revenues to $ 25 million within next 10 years.

Lesson 4: Get paid up front
– This is the lesson that many entrepreneurs learn after getting few bruises. It was no different for David Segura who founded VisionIT with $100. In 1996 David got a moonlighting gig for a company for a $ 7000 fee. The client refused to pay after project was delivered. (Familiar territory for may entrepreneurs)

His next break came up with a job offer from hot dogs company Ball Park Franks. He declined the job offer but took up the project for a $20000 fee; of which he took $ 10000 upfront.

During the transition period; he continuously dressed the part, set web-domains for potential clients and worked free for NGOs who provided referrals.

Lesson 5: Use cheap web tools – In 1999, Jason Fried started 37 signals with 150 dollars and fielded customer queries through a gmail account. Thought initially he has set aside & 10000 to start a web consulting company but later he realized he doesn’t need that much. He did it all with open source web tools.

Lesson 6: Get your suppliers to finance you –Gary Haberland founded Genicon with $1,000 in 1998. Gary found out the pain point of its suppliers and offered them 15 % equity for $ 1 million. Later, he issued 35% equity to 20 surgeons as they were the major stake holders. Sales in 2005 hit $ 10 million for Genicon.

Lesson 7: Get to know your customers really well – Pete Kight started CheckFree, the pioneers in electronics payment processing in 1981 with $ 777. He knocked on 900 doors because he could not afford sales staff. These early experiences were excruciating but very useful. It helped him understand what would make customers pay heir rents online.

Currently CheckFree’s market capitalization is in excess of $ 4 billion.

The ideas presented in the article are all workable. You just have to pick the one that works for you. You may even write your own rules; who knows down the people will read and learn from your success stories.

Further reading: 17 businesses you can start with little or no money.

Happy bootstrapping.

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