This is the first part of a “Bootstrapping an Ecommerce Business” series.
The list of things you need to build a successful store is long.
It’s so long in fact that most people never make it to the end.
They give up. And often they do so at the very first indication that they will have to spend money.
But I am sure this has never happened to you, huh?
You probably have wads of cash to launch your store and don’t have to worry about any expense.
Well, if that’s the case, you can skip reading this post.
If however, you fear that what you have might not be enough, read on.
Launching an ecommerce store isn’t free, there is no point in denying. Design, technology, marketing and many more things require some investment. But whether you need lots of money or can do it with a limited budget is debatable.
Yet, it’s easy to think otherwise. Ecommerce giants occupy every available scrap of communications space – TV ads, press, internet search and advertising, social. And it may seem that you need at least a matching budget to compete against them.
Nothing is further from the truth.
Sure, there are certain markets which might be harder to get into without big money behind you (travel for instance). But there are still plenty of niches in which you can build a successful store without having huge finance backing.
It may seem obvious that you’d do it anyway but that’s not true. When you have large resources, you are more prone to make unverified assumptions. After all, you have the money to test them. And if it doesn’t work? Hell, you hire someone to fix it.
But when you only have limited resources at your disposal, you think through and verify your every move, from general concept to any strategy you want to employ. For instance, when you can’t afford the stock, you might consider starting with drop shipping and slowly building up to carrying own inventory.
When your resources are limited, you become much better at prioritising what do you really need to do or buy. Money can be distracting. But since you don’t have a lot of it, you become very selective and think of what you want to achieve first.
When you can’t buy a full page ad or run a TV campaign, you have no other choice but to be creative, to find out other ways to your target market. And usually it means building a much deeper connection with them. No money can replace the value in that.
Lastly, since chances are that you will launch your store on your own, you will also learn it inside-out. There will be no one else to help you set it up, add products, work out taxes and shipping rates, pick up the phone, order flyers and so on. You will do it yourself and in the process, get to know every aspect of your business – something I believe is invaluable for any business owner.
It’s probably hard to give one, uniform definition of bootstrapping. Most people understand it as starting something without money or an investment, bank loan etc. This definition is only partially true.
To me, bootstrapping means building something by using the resources you already have (and yes, it might mean your savings too). It’s about being smart, creative and allocating your resources wisely.
There are naturally some downsides of bootstrapping too:
Building a business with limited resources can be a slow process. You have to take longer paths to achieve your goals. For instance, if you can’t afford advertising, you need to work on your SEO and wait until this channel starts bearing fruit. This can take up to few months though, during which you might not see much of a traffic to your site.
Yes, there is no point in denying this. This is primarily due to the time it takes to build a business. Seeing other, well funded companies outdoing you can be stressful.
Some might say that access to finance has never been easier. Banks can lend you money. You can seek investment or simply borrow from a friend or family member. But, in each case there is a price you have to pay beyond your interest.
Bootstrapping however, offers some real benefits:
It is often quite tempting these days to just go out and seek an investment for your business. After all, the financial benefits of that are many. There is however one major drawback (actually there are more but let’s focus on this one for the moment) – once you take an investment, you give away a major part and control over your business to someone else.
This one is pretty obvious, right? Without any outside money, you are debt free and can sleep soundly knowing that the bank is not going to come down knocking at your door tomorrow.
When only your personal resources are in line, the risk of start a business is lower. Sure, if things go wrong you might lose your savings. But that’s still million times better than ending up with a massive loan or responsibilities towards people who put the money upfront for you.
When you take money from someone, suddenly they control a part of your business. Whether you like it or not, they have a say. That means that if you promised to do something by doing X, that’s what you need to do. Even if it may seem that changing and pivoting may yield better results.
Launching an ecommerce store isn’t free. But whether you need plenty of money to do so is debatable. Bootstrapping can be a great way to get started into ecommerce using the resources you already have, reducing your risk at the same time.