OK, you need some money to get started, but you can seriously reduce the amount if you take advantage of some of these suggestions. Every one of them worked for us:
- Start in the garage, a spare bedroom, even the laundry room the way we did. Go anywhere you won’t have to pay rent.
- Get your family to help. Retired grandmas, aunts and uncles would love to make a difference in your life, and they’ll probably be thrilled to do something new and help the family business get started. Who knows, they may do a lot more for your start-up than just add manpower. They can also provide objective opinions and common sense insight. Bonnie’s mom came up with the term,”Barefoot Bubbly”.
- Assume someone else’s excess inventory. Find a way to sell or repurpose unsold merchandise. When you do, you’ll find sales cure-all ills.
- Outsource everything except quality. With outsourcing, you usually pay only when the product is produced – and produced to your quality specs. Oversight is critical. What little money you may have is better spent on marketing than production facilities.
- Use ‘Worthy Cause Marketing’ to advertise your product or service. Find and support a non-profit that resonates with both your core values and your target customer – their members will have a social reason to buy your product. Help them by getting the word out about their cause through your distribution channels, and they’ll help get the word out about your product.
- Trade the goods and services you have for goods and services you need. Many start-ups besides yours, especially in their early days, will prefer this option to spending money, just the way you do. So find other start-ups that have what you need and need what you have.
- Forge strategic growth alliances with suppliers. You help them grow their business when you become a bigger and bigger customer. They help you grow by extending terms and providing special discounts. Get your suppliers to extend your credit because they like the way you pay your bills. Call them as soon as you know you will be unable to pay on time and give them a workable payment plan.
- Give discounts for cash and large volume purchases. It will put you ahead of your bills. Your buyers will sell your products faster putting them on special and advertising them to quickly recover their warehouse space.
- Sell your product overseas. Most international transactions are cash sales based on a signed ocean-going bill of lading through a letter of credit. It’s kind of like an escrow account where you get paid when they take possession.
- Produce just-in-time inventory – a product that is ready just in time for the sale rather than filling a warehouse with your product. Ideally get the Purchase Order first. If that’s not practical, operate with the minimum inventory you need to satisfy your customers, assuming a reasonable growth factor that you reassess every month.
These are just a sample of the cost saving measures Barefoot Wine used to survive and grow in its early days. Being undercapitalized was one of the things that forced us to be resourceful and think creatively – just some of the advantages of being broke with a good idea.