Putting every dollar you make into your business, and not into your pocket, can be brutal. Although they may sound extreme, these cost-saving ideas can help a lot.
You are building your business with your own money, which means you can maintain control of it, without handing it over to some investor. But the start is difficult, especially Yes, it means putting every dollar you earn into the company. instead of in your pocket.
So short of taking out a second mortgage on your house, maxing out your credit cards, and eating ramen every night, what can you do to take your idea to the next level on your own?
Jerry Jao, co-founder and CEO of Los Angeles-based Retention Science, has some ideas. His current startup, which uses big data to help e-commerce retailers retain customers, raised $1.3 million last year in a VC- and angel-backed seed round. But his two previous companies, one that failed and another that was cash flow positive before he transformed it into Retention Science, existed solely on the dimes of Jao and his co-founder.
The duo also managed to avoid earning a salary from Retention Science for more than two years. They are considered “extreme bootstrappers.”
Self-described as a “dumb Asian guy with glasses” who is “not a natural salesman,” Jao says he taught himself how to negotiate deals by reading books and getting advice from others.
In addition to incorporating Retention Science using BizFilings and managing all of the company’s books and tax returns, he drives a 1998 Toyota Corolla that has a non-working door and sometimes won’t start. Still, he doesn’t complain about his junk: He previously lived for two years with his co-founder’s parents in Los Angeles, and for five months he didn’t own a car.
Negotiate with your lawyers to be able to pay them until you get seed capital or Series A funding. Jao says the law firm advising Retention Science provided discounted advice that the company didn’t have to pay for during the first two years of getting off the ground.
Yes, you’re busy, but managing your books isn’t terribly burdensome once you set up your accounts and enter data. Additionally, Jao says that looking at your monthly expenses helps foster a cost-saving mindset because you can see how quickly money runs out.. “Do not use an accountant or hire an accountant”says. “It is absolutely a waste of money.”.
Jao recommends using QuickBookan accounting program especially focused on small businesses
Jao says Microsoft, SoftLayer, Rackspace and Amazon Web Services offer promotions for startups. In fact, the latter offers more than a dozen products that include a free tier.
CDo you know anyone who works for Apple? Jao says Apple employees can get up to $500 off the sticker price of a Macbook and 20-30 percent off iPads.
«Post a message on Facebook and you will be surprised by the responses you receive. Or look on Craigslist and shop at other startups »says. «You don’t need new machines. You just need something that works and when you have a real business later, you can upgrade.”
Working from home is isolating and if you camp out in a cafe you may end up spending too much money on food and drinks. Instead, find another startup that has extra space and make a deal to use it. Either that, or rent a place in a space coworking. Besides being much cheaper than paying for your own office, they’re great places to meet other founders and creative types who may end up being new partners, allies, and even clients.
Advertising is extremely important, but incredibly expensive if you are paying someone else to increase it. “Since founding Retention Science, we have spent zero dollars on public relations and marketing to date”says Jao. “No matter what they tell you, as an early-stage company, you can’t justify an $8,000 to $10,000 retainer. Do your homework and contact the representative
While you need a professional-looking website or digital storefront, hiring a design agency or shop to create one can be expensive. Jao says he and his co-founder created the websites for all three companies and suggested using cheap talent you can find on platforms like Freelancer.com once you are ready to scale. In the beginning, however, WordPress will be enough: it offers thousands of free themes and plugins.
Instead, Jao hangs flyers at universities known for hosting brilliant minds. “We found our first Caltech hire this way”says.
