5 Common Problems a Bootstrapping Entrepreneur May Face

Saturday, September 1, 2007 at 11:00pm by Site Administrator

Entrepreneurs managing a startup should expect to encounter problems. Being prepared for them is what will help carry you through. Here are a few common problems that may crop up, and not just due to repeated business anti-patterns.

  1. Poorly defined partnership.

    Problem: Not making clear from the start the role of each partnership in a startup can result in an unequal workload between partners, or lead to someone slacking off, or some sort of unbalance.

    Solutions:

    1. Do not let things go on, because when you finally do tackle the problem, you’ll do it with contempt and/or excessive confrontation.
    2. Have weekly status meetings. These can serve as reminders to slackers that they’re not doing their share.
    3. Play dumb. Tell them seem distant and you’re worried about them. This approach is dangerous. If you’re not skilled at this method, it can seem disingenuous and be insulting.
    4. Be direct. Ask them why such and such task isn’t done, but expect confrontation or deflection.
    5. Buy them out, if you don’t see change coming.
  2. Flash success.

    Problem: One of the biggest problems about success is that it can sink you. Unexpected success results in accounts payable for supplies, etc., exceeding existing cash flow – at least until acounts payable come in. Now you have to decide whether to take investment money or not.

    Solutions:

    1. Collect on overdue bills.
    2. Offer a discount for immediate payment on new orders.
    3. Outsource some of the work, if applicable.
    4. Ask suppliers for credit, especially if you’ve been with them for a while.
    5. Pass on a big order. Just say you cannot accept it at this time.
    6. Refer the order to a competitor.
    7. Cut back on expenses.

    It may hurt your pride to follow #5 or #6, but sometimes it’s necessary.

  3. Requiring loans.

    Problem: If you do need an infusion of cash flow, where do you get it from? Bank, private loan, family, or Venture Capital?

    Solutions:

    1. Not every business can take or even get Venture Capital. And even if your business qualify, taking VC is equivalent to agreeing to eventually give up your business. But if it doesn’t bother you,

    2. A small business loan keeps ownership with you, though the requirements at times might seem as monumental as for getting VC.
    3. Unlike Santa Claus, private lenders do exist, but they expect a certain amount of ROI, in a certan amount of time.
    4. While taking money from friends and relatives is potentially harmful, it keeps ownership closer to the heart than other solutions.
    5. Get a 0% APR balance transfer credit card. But only provided you think that you can pay off the balance within the alloted time.

    Before you decide, consider all the ways you can finance your business startup.

  4. Hardware costs.
    Problem: While there are many options for free software, there is no equivalent for hardware, particularly computers. Computer costs are down, but if you have a staff that all need computers, those costs add up.

    Solutions:

    1. Offer flexible work schedules, with sharing of computers. If you set up each computer with network access and more than one user profile – or an Intranet-based framework running only web-based applications – anyone can use any computer that is available.

    2. Have remote teams, whereby employees use their own computers. In recompense, institute some additional profit sharing or private shares in the company.
    3. If you’re a software publisher, try extreme programming practices, where 2-3 teammates work together on a single computer. The practice is said to reduce errors and development time, provided teammates can get along, I suppose. (Hint: install a shower in the office – the cyclists among your staff will thank you for it.)
    4. Hire new employees only when absolutely necessary. Make sure that roles are clearly defined so that there is no duplication of effort – thus reducing the need for new employees and new hardware.
  5. Software support costs.

    Problem: Open Source software is often free, but sometimes support costs extra.

    Solutions:

    1. Choose your software carefully. Many Open Source applications have enthusiastic user communities where generous people will answer your questions free of charge. Hopefully, you pay it forward and offer help where you can – even if it’s at another such community.

    2. Learn on your own. If you have a bit of time, you might surprise yourself. I know many non-programmers who taught themselves the basics. These days, designers and bloggers might learn just enough to tweak Open Source code to their needs.
    3. Hire someone’s nephew/ niece on an affordable hourly basis, as necessary. If they know the software, they’ll likely be up to date on latest bugs, fixes, etc., simply because they’re young and have infinite energy to be learning such things.

Whatever legitimate solution keeps you from spending more than you have to is a bootstrapping way to do it. If you can, try creative solutions.


If you enjoyed this article, please bookmark it at del.icio.us »

AddThis Social Bookmark Button

No Comments »

No comments yet.

RSS feed for comments on this post.

-->

Leave a comment