We had a dream – to one day open a brick and mortar store. But, we also had another dream. To do it on our own – without incurring debt – commonly known as “bootstrapping”.
So rather than jump into a $20-$50K+ loan, my sister and I chose to take a bit of a journey.
Our brick and mortar store, The Salvaged Boutique, opened in 2015. But, we started as a DIY blog first in 2013 – working out of our homes.
During the first 2 years of our business, we generated revenue and along the way, reinvested a portion of our sales, paid ourselves a little (and I do mean a little) and we saved the rest. This is what you call bootstrapping! A viable way to start a business without spending an arm and a leg. Here’s some tips on how to do it right:
1) Start with some of your own personal funds or a monetary gift from a family member. No matter what, you will have start-up costs (Invest what you are willing to lose. I am not being negative here, just real! We all know many businesses fail within the first few years – so you should be willing to part with that money).
2) Separate personal from business – first and foremost! Open a business checking account as soon as you decide on a business structure (Sole Proprietor or LLC) and get an EIN (an Employer Identification Number – you get this through the IRS for free). Why is this important? Because after your first year, you’ll want to run financial reports and know your numbers. What are your expenses? What are your COGS (Cost of goods sold)? You can’t do this as easily if your business and personal finances are blended.
3) You will have startup costs – for example, setting up your LLC, materials, products, website, logo, etc. – BUDGET wisely for these.
4) Do NOT go for perfect and beautifully branded – just START, remember being frugal is key when you start a business this way.
5) Believe it or not, pay yourself from the start! Now is the ideal time. This may seem counterintuitive but most shopkeepers will continue to reinvest and never find the “right time” to start this habit. It helps with your mindset, trust me. So, start it now! Immediately reserve a certain percentage of sales to pay yourself – even if it’s 1-5%.
6) Use profits to gradually begin paying for additional equipment, tools, online upgrades. If you have bigger goals like opening a brick and mortar, you don’t want to spend ALL profits. You’ll want to build a nest egg to prepare yourself for a move, inventory and build-out expenses.
7) If you’re looking to open a brick and mortar, you may want to start online like we did – selling through social media, market events, and Etsy. We signed a lease 1 1/2 years after launching our blog and running our business online but it could take longer.
Here’s a list of some of the things my sister and I needed to start our online blog and business, and the expenses we incurred (prices and costs may vary depending on the state or country you are in – do your research):
Business Name – Free
Logo – $50 (We used Etsy)
Business setup (EIN, LLC) – $100-150
Business checking – free (no fees!)
Website Design – Free
This was self-taught (Amazing what you can learn from Google, research, Youtube videos). For the first version of our website, I found and used a free WordPress template.
Website Domain & Hosting – $140/year
Our domain on GoDaddy cost under $20/year and hosting on HostGator was approximately $10/mo. Note: Once you build your page views, you can add Google ads to your website and blog. The money generated from ads on our blog now pays for our domain and hosting every year. It’s not much, but every bit helps!
Social media accounts – Free
Graphics – Free (Facebook cover photo and other graphics made in Canva)
Used DSLR Camera – $50
At the time, phone cameras weren’t as advanced as they are now. So, I bought a used DSLR camera from a friend and paid $50 for it. He gave me a quick 10-minute lesson on it. He taught me how to use it one way and that’s all I did. Great images are extremely important and this made a huge difference for our blog posts and social media. Well worth the $50, but an iPhone camera can now do the same thing.
Etsy shop – Free (There are fees to sell your items, but it’s a great way to start and the fees are nominal compared to the income potential)
It’s been over 5 years now and I am happy to say we are still debt free! If you choose to take the bootstrapping path, just remember the most important trait you’ll need is PATIENCE. Yes, you will want to do more, buy more and grow faster. But, if you want to be debt-free, you will need to take things nice and slow.