Funding is costly: A lot of startups seek funding from early stage investors too early. Every round of funding (especially the first!) is going to dilute your precious ownership. Accepting $20,000 from angels for 30% of your company may help in getting you off the ground but it may not be the best thing for you and your co-founders’ pockets when the time comes to exit.
How can you avoid heavy, early round dilution and still have the resources to get what you need done? The answer is bootstrapping.
Bootstrapping is cheap: Bootstrapping is building a company from the ground up using one’s own (limited) funds.
We may know about the concept but the reality of it can seem mystifying – building a company that will make you rich, without having to spend much or sacrifice a lot can seem a little optimistic.
There are however a lot of tools available for you to get started. Some are free and some are very low cost. Unfortunately, the one cost you can’t avoid is staff. Managing your staffing requirements without a cash injection isn’t as scary as it sounds- thanks to marketplaces like the one I run, PeoplePerHour.com, that connect entrepreneurs and small businesses to freelance talent.
Now this doesn’t have to mean outsourcing to people on the other side of the world, that have no idea about the market you’re targeting. Local and semi-remote freelancers are extremely cost effective; you are using them on an as needed basis and you can still set a budget that meets your financial constraints.
Freelancers are your cost effective online workforce – Here are five ways your startup should be using them
1. Business Plan – if you’re starting out, the first thing you need is a plan. How is your company going to make money? How many years is it going to take you to be profitable? Where in the current market does your product fit? If you have your idea, but haven’t put the proverbial pen to paper and spelled out just exactly how to make your vision a reality, there are thousands of online freelancers at your fingertips that can formalize your vision and help define your strategy.
2. Website – depending on the nature of your startup, the complexity of your website is going to vary. There are thousands of developers out there who are able to customize a free Content Management System (CMS) such as WordPress or Joomla! for you into a fully functional website for well under $1000. Finding a developer you can trust and come back to on an as needed basis is remarkably simple and nowhere near the price of using an agency.
3. Smart Phone Apps – it’s undeniable that the need for a smartphone app is becoming more and more important. Some businesses have been successful even as an app only product (need I mention the recent billion dollar sale of instagram sale to Facebook!). With the opportunities available today via online freelancers, you don’t need to be a developer. By using online talent you can produce a smartphone app for your product for around as little as $500.
4. Content – keeping your website/app/blog/social media up to date and relevant is important and incredibly time consuming. As a founder, you are not going to have the time to manage your content and focus on what’s important. Developing a relationship with a good freelancer who is able to manage your content for a few hours a week is an important step in your early stage growth and marketing.
5. The Virtual Assistant (VA) – Today, many VAs are multilingual and able to manage a wide range of tasks, handling everything from customer enquiries and market research to helping with your PR and marketing efforts. Using a VA to handle the many ad hoc tasks that need doing in your growth phase can be a make-or-break component to your business.
My tips on how to find the best freelancers
Freelancers can be a vital tool in helping you bootstrap your company, but it’s important to know what you’re looking for when hiring online. When posting a project on a freelance marketplace like PeoplePerHour.com, you’re going to receive a number of bids from freelancers across the globe. Here are my tips on distilling down the hiring process:
1. Give clear instructions when you post your job – the more detailed the better
2. Ask for samples of past work
3. Conduct an interview process, just like you would with someone on the ground (ask lots of questions to ensure the freelancer you’re talking to is the right fit for you)
4. Look for positive feedback from previous clients
5. Don’t always opt for the cheapest bid – your online workforce is already going to be cost effective, go for quality over low cost
Xenios Thrasyvoulou is the founder and CEO of PeoplePerHour, a site that connects entrepreneurs and small businesses to freelance talent from across the globe in an environment that fosters accountability and trust. 88 percent of the work completed on PeoplePerHour.com gets a five-star rating by the client, validating the fundamental belief on which the business was founded: that talented professionals, when working for themselves, have both a cost advantage but are also more motivated, productive and accountable to the quality of their work, delivering better value to the client all round.