Tuesday, November 17, 2009

16 Bootstrapping Techniques to Preserve your Cash

by Elizabeth Symington

A major threat to new businesses is running out of cash. It can get tied down in places like the inventory or accounts receivable. One way to stretch your money further in these times is by "bootstrapping", which is doing without for as long as possible or using low or no-cost techniques to minimize cash flow.

I like to think of it as a game. What creative way can I get what I need without spending a lot of cash, if any? This can be done by knowing where to look for free, bartered or discounted products or services.

1. Technical Help - Ask a question on the “computer forum” on Craigslist. Often by the end of the day my frequent computer issues are solved. Also under “For Sale” there’s a section called “free” that has lots of random items.

2. Rummage – Ask businesses to save the things that they normally toss, like bike shops toss inner tubes that have holes. Now can you can reuse them for art. This will make the business owners feel better since it’s not going to the landfill.

3. Freecycle – They’re an online yahoo group that are all across the States who’s “goal is to reduce waste by connecting people who are throwing away unwanted items with others seeking the same items.” It’s a smorgasbord from Christmas lights, to clothes, to art supplies… http://www.freecycle.org/

4. Public Library - Next time you feel the impulse to buy a brand new book, try saving that cash and the hassle of moving heavy books and go to the library. In case it’s been a while since you’ve been there a lot of them have books, magazines, DVDs, VHS, CDs. My favorite features are being able to set holds on books by the Internet and renewal by phone or Internet.

5. Borrow - Network and borrow from fellow business owners, friends and family. You never know if you can use something until you ask.

6. $1 stores - Surprisingly enough, a lot of my tools came from the dollar store. It is a gamble, since you don’t know if they’ll hold up. I learned to avoid buying tools and hardware that take a beating like nails, screws, drill bits, caulking guns and hammers since they were made from flexible or crumbly metal. Most of my painting supplies and super glue were from the dollar store and they’ve been great.

7. Reuse - What do you have on hand that you could MacGyver? You could knit with wooden dowels sanded to a point or use a digital camera in place of a scanner.

8. Professional Business Advice - Talk to SCORE, SBA, or California Lawyers for the Arts. http://www.score.org, http://sba.gov/, http://www.calawyersforthearts.org/

9. Interns – When set up to benefit both parties, both you and the intern will be happy. Keep in mind to give challenging responsibilities, hold them to known expectations, and give timely constructive feedback, along with having fun. Be sure to check the state regulations for the differences between a paid intern versus an unpaid intern.

10. Check online for established barter systems between businesses. Or talk with local business about trading services like catering your gallery opening in exchange for photographing food for their menu.

11. Get to know your neighborhood - Some recycle centers sell back the donated items at a steep discount! It can also be a great place to pick up latex paint.

12. Rent instead of buy - This way you don’t have to worry about maintaining, insuring, storing, or disposing costs. You can rent just about anything: electronics, power tools, carpet cleaners, vehicles…

13. Buy used - Check out second hand shops, salvage yards, and creative reuse stores like Scrap and Urban Ore in the San Francisco Bay Area. http://www.scrap-sf.org/, http://urbanore.ypguides.net/

14. Advertising - Post products and services via etsy, Amazon, ebay, Facebook, Twitter…

15. Reuse - What do you regularly consume that could be swapped for something reusable? How about using rags instead of paper towels? A friend served beverages in glasses at his art show, instead of using the typical one-time-use plastic cups.

16. Labor – Hire eager college students or find freelancers on CraigsList.

The most challenging part of bootstrapping is to break the autopilot mode of buying something new to instantly fill a need. You don’t necessarily need five extra printer cartridges. How about replacing it when it’s the last one with a refurbished cartridge or the kind you refill yourself?

I find it rewarding to come up with creative solutions instead of buying brand new at the store. It not only increases the leverage of my cash, but it gives me stories to share with friends on how to save money.

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