Extreme bootstrapping

Starting a company does not have to be expensive. It is more about being highly selective about how much it should cost to purchase much needed items.

Many people (I have been one of them for a long time until I changed my own mindset) who start companies act as victims to the suppliers. They say stuff like “well, it sounds great to start a company with a few dollars, but you miss the reality of what stuff really cost to purchase”. The thing is, they are wrong. Horribly wrong. The reason others follow industry norms (or whatever they like to call it) is because they obviously are poor capitalists in the first place.

A good capitalist/entrepreneur knows that you shall sell things for a big price, but purchase all stuff for a crazy low price. A capitalist also know that you shall only purchase quality value from desperate sources. Not the opposite source. Unethical? Well, only you can tell, but that is how you need to think.

That is extreme bootstrapping. The less you have to pay to start something up the less you have to invest. Logical, right? So why do people insist on paying more?

So always start with a total budget. Then list all items you need to have in order for you business to start. Focus on the few quality things you absolutely need to have to start the startup, discard the rest. As the author of Go Big or Go Home said “remove the fluff”. I agree. Remove it. Be cold hearted.

Then you look at your total budget and then you decide what each item on your “need to have” list will cost (the amount you will be willing to pay). Never break the budget.

The sharper you are, the less money you need to have to start your business. The more you do something the better you will be at it. It goes with everything in life. The better you become at something the faster you will do it, the less energy you need to invest and the less money it will cost. Just look at Tim Ferriss, the author behind the four hour work week book. He travels around the world and enjoys a lot of luxury in the process because he is a seasoned veteran of travelling. He knows the tricks of the trade so to speak.

What I want you to do now is: look at your current startup and then look at you projected total budget. Now divide it by 10 and do the same project with that new budget and have the world conform to your budget. It sounds crazy, but you need to think like this. It is not a choice, it is a necessity. Remember what I said above: find the desperate quality sellers and get the stuff you absolutely need at the price you have set as the maximum purchasing price. Think about yourself. Be egoistic .

Today I read about Kevin Rose who founded digg.com. He started a web venture with a top budget of $2000. Other people would have said “no, no. Impossible. It will cost at least $100,000 to launch”. There are so many examples of famous founders who do this all the time. It’s a mindset. Even if you have millions of dollars to invest, avoid it. Invest less and you will reach break even faster and you will not bankrupt your life if all things screw up. You want to minimize monetary risk by doing things as described.

The whole idea is to think like a pauper. Imagine you have no money and you can’t get a job and you can’t receive social grants or anything. It’s you and your imagination that will save you from starvation. How would you go about doing it? You really can start a business with no money. I mean there are cans on the streets right? Collect them and get money for them. Voíla, you are in business. The can collecting entrepreneur. Now save 30% of the money you make from those cans and buy food and other stuff with the remaining 70% (remember to buy from desperate sources so as to stretch every dollar further). Use the 30% to invest in advancement. Invest as you purchase everything else: by stretching every dollar through selective purchase from desperate quality sources.

Take care and do not forget to comment.

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