Bootstrapping 101: How to quickly launch and scale a profitable online business from scratch, even if you have no money to invest.
What You Will Learn
How to Bootstrap Your Business
So you want to start a business, but you’ve got no money? Yeah, being broke sucks. But you shouldn’t let it stop you.
I started my first ever business by picking up the phone and cold calling. No investment required. Many years later, I started over by launching another business with zero dollars investment.
So I know it can be done. And over the years, I’ve learned a lot about how to bootstrap a business and grow it from zero revenue to a seven-figure income.
Bootstrapping to $100 Million
Running a service-based business has proved to be a huge success for him. Now Russ has his sights set on hitting $100 million annually, while helping clients achieve transformations in their lives
There’s more than one way to start a business, of course. But if you are looking for simple, step-by-step process to follow, I’ve got your back. Here’s a tried and tested system that requires zero investment, but could genuinely put you on the fast track to seven-figure revenues.
My only assumptions are that you can access the Internet, and that you are open to finding a business model that works.
I started my first ever business by picking up the phone and cold calling. No investment required.
So let’s get right into it. Here’s a step-by-step guide to bootstrapping, scaling and (eventually) selling an online business.
1. Choose Your Business Model
So what kind of business are you going to run? That’s the first choice you need to make, of course. And if you are starting with zero money, you need to flexible about the model you run with.
Broadly speaking, we can divide your choices into two main options:
Seeing as you have no money to invest, you can rule out selling physical products. They require upfront investment not just in the product, but also in warehousing, shipping, insurance, etc.
Digital products are generally a whole lot cheaper to manage, but they do require some funding. Apart from the cost of production, you will need to invest in marketing. And whichever way you do it, that will end up costing you money.
So let’s forget about selling products, and focus instead on offering services.
As soon as we switch to thinking about selling services, the numbers start to make a whole lot of sense. In the short term, you can create a business that is based on selling your own time, skills, expertise and knowledge.
All of these are valuable assets that you can offer to customers for a relatively high cost. For example, it’s a lot easier to make money selling coaching programs at $10,000 a go than selling widgets at $10 per item.
There are many different ways you leverage your skills, knowledge and expertise to make money selling services:
Better still, it’s possible to start a business in any of these areas without spending a cent. You don’t need to invest in a product - because you ARE the product! And as we will see below, just about any of the above can be marketed for free.
What’s more, there is an opportunity to scale quickly. Getting your first few clients is the hardest part. After that, you can scale and grow as your marketing and closing skills improve.
Where possible, look for a model where you can make a recurring revenue. Let’s say, for example, you decide that you are going to create videos for clients. That’s certainly a service that is in demand, and there is the potential to grow a profitable business.
But the way you approach this model will make a huge difference to your profits. If you decide to specialize in, say, wedding videos, you are limiting your options. Most people only get married once, so there is no recurring revenue. You have to keep on investing in finding new customers every month.
A better option would be to position yourself as a specialist in creating and managing YouTube channels for businesses. Now you are looking at a whole different market. Most companies understand that in order to get traction on YouTube, you need to publish new videos every week.
This gives you an opportunity for long-term, recurring revenue. Each time you pick up a new client, your monthly recurring revenue (MRR) increases...and that means your profits explode.
Here’s a great example of how you can generate recurring revenue from an expertise-based business:
So the fastest way to build a new business from scratch is to create a high-value service with monthly recurring income.
2. Find Prospects
Great, so now you have a viable business model. The next step is to find potential buyers. Remember that as you are creating an online business, you are not limited to prospects in your own city, or even your own country. You can work with clients from all over the world.
And thanks the Internet, it’s easy to find companies that would make hot prospects. There are many different ways you can compile a list of prospect companies, such as:
Pro Tip: If you can scrape together just $10 a month, then Fundz Pro is a great way to reach companies that have just received funding. You get alerts as soon as startups get money, which means they can afford to invest in your services.
Another powerful options is to look for companies that you can partner with. Let’s use our video production company as an example. For this business, you might decide to partner with marketing agencies who don’t have an in-house video department (which is most of them). You can help them by providing an additional service for them to offer to clients, and they can send you lots of business.
This is a quick way to ramp up your business. One partner with a lot of clients could put a ton of business your way.
3. Generate Appointments
The next step is to generate appointments, which you can do by simply emailing them. However, don’t waste your time using the general email address or contact form on the website. That approach is almost guaranteed to fail.
Instead, you need to get personal. Head over to LinkedIn and search for your prospect company. Then scroll through the list of contacts to find someone who would be a good match for your services. For example, a Content Marketing Manager may well be interested in our video production services.
But you don’t want to get in touch by LinkedIn, as your hit rate will be too low. You need to find your prospect’s email address. There are a number of services that can help you with this, but my favorite is the Snov.io Chrome extension- their free plan is all you need to get started.
Once you have extracted an email address, craft a short, personalized email designed to open a conversation. Don’t try to do a hard sell at this stage - you just need to open the door to further discussion. If you don’t get a reply, within a week, follow up using a different subject line.
When a prospect responds and engages in a conversation, you can suggest booking a discovery call to discuss things further. Use a calendar app like ScheduleOnce to manage your appointments.
This could be audio or video - let the prospect decide. While Skype is the most popular way to connect, Zoom is fast becoming the preferred option for video calls.
4. Negotiate a Deal
In order to negotiate the best deal, you need to be in a position of strength. And that means:
Every deal should be a win/win for both you and the client. Once you have agreed a deal that works for everyone, get a signed contract that confirms everything you have agreed.
In particular, beware of scope creep. Your contract should clearly define what you are expected to deliver. If your client moves the goalposts and expands the scope of the project, then you will need to charge more money. Failing to manage scope creep can turn a lucrative project into a loss maker.
5. Over Deliver
We live in a very competitive world where buyers have many options. If you fail to deliver what is expected, there are many others suppliers they can choose next time around.
But that’s not all. In this connected world, underperformance on your end can lead to bad reviews. And in a social media driven world, bad news travels fast.
From Zero to $2 Million a Year
After leaving the military, John Lee Dumas had failed at many jobs before he decided to start an online business. But he needed a venture that he could bootstrap to success. He had the idea of starting a daily podcast for entrepreneurs, and his plan was a huge success.
Today, he makes over $2 million a year and the business is growing fast. Nowadays, guests have to fork out $3500 just to appear on Entrepreneur on Fire, with additional revenues coming from sponsorships and membership programs.
You can turn this negative into a positive by aiming to over deliver on every project. Go the extra mile to ensure that your client gets a fantastic return on investment. This will lead to positive reviews and recommendations, as well as repeat business from your happy client.
Don’t be shy about asking your clients for recommendations and referrals. If you have done a great job, they will be more than happy to help. And there is no easier prospect than one who has been referred to you by a satisfied colleague.
6. Minimize Churn
A recurring revenue service business has the potential to be a real profit machine. But that is only possible if you are able to minimize churn.
Churn is the rate at which you lose customers month by month - and it’s an incredibly important metric. Just reducing your churn by modest percentage has a compounding effect that massively increases your profits.
Test out the numbers for yourself to see how a 10% reduction in churn could transform your business - the results can be mind-blowing!
Reducing churn is largely about delivering quality service, of course. But there are other factors to work on. You should pay particular attention to:
Here are seven strategies for reducing churn and maximizing your profits:
7. Manage Your Money
One of the leading causes of business failure is not a lack of deals, but a failure in cash flow. In fact, a staggering 82% of businesses fail for this reason. If you can’t make payroll at the end of the month, you are out of business - no matter how much revenue has been booked.
In any service-based business, cash flow really is king. For this reason, you need your clients to pay at least half of the monthly service fee (plus other expenses) up front. Ideally, you want them to pay 100% up front.
You also need them to be reliable payers. If you find yourself chasing the client hard each month to get your money, maybe it’s time to find a better client. Don’t feel bad about firing clients who don’t pay on time. You need them like you need the proverbial hole in the head.
8. Keep on Marketing
Many small businesses get trapped in a boom-then-bust cycle simply because they fail to keep on marketing. This is what happens…
And so the cycle repeats. You are trapped in an endless circle of low-quality, low-value projects, and your business never grows.
The solution is to keep on marketing, no matter how busy you are. You get more work than you can handle? That’s great. Now you are in a position to cherry pick the most lucrative clients. And when the business continues to come in, you are ready for the next step…
9. Remove Yourself from the Business
If you are doing all the work, you don’t have a business - you just have a job. You need a clear strategy to make the transition from self-employed freelancer to business owner.
Eventually, you want to be in a position where other people do the work - while you rake in the profits. You want to be the principal shareholder, not the head cook and bottle washer.
As soon as you start bringing in more work than you can handle yourself, outsource the projects to others. Nowadays, you can find great people to handle most kinds of work on freelance platforms like Upwork and Freelancer.
Now you should step back from doing the day-to-day work altogether. Your role is to be the project manager who keeps everything running smoothly. But even that is only a temporary transition.
As the business continues to grow (because you are still marketing, right?), your next move is to hire a project manager - so that you can take another step back. Now you can focus on being the CEO, looking at the big picture and working on growing the business faster.
10. Have an Exit Strategy
From the day you start your business, you should have a game plan in mind. You need to know how you will exit your business at some point in the future. Having a clear strategy for how you achieve will help generate a much higher final sale price for your business.
Here’s why an exit strategy is so important:
Service-based businesses are notoriously hard to sell. That’s because they generally don’t have any assets beyond their employees. When employees quit (which they can do at any moment), the value of the business evaporates.
You can combat this by productizing your services and creating a model that generates reliable, recurring revenue. There’s sound advice on how to do this in Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow.
So there you have 10 steps to starting a new business with little to no investment. But the most important step of all is simply taking action.
To succeed in business, you need to be proactive, and you need go out and get results. Nobody is going to make success happen for you - you need to have the drive and initiative to make it happen.
It won’t always be easy. There will be days when you want to just crawl under a rock and die. Sometimes you will long for the security of an employee’s monthly paycheck.
But if you stick with it, you can create something special. Few things in life are more rewarding than seeing your own business venture grow and prosper. So work on your business step by step, and you can look forward to exiting with a bank balance that will change your life forever.
How to Start a Blog
To discover the quick & easy way to start a money-making blog, click here.