A bootstrapped business is one in which you use your own money and savings to build the company without taking out any loans or investors to finance it. The business owner controls the business exclusively because there are no other shareholders, and they avoid going into debt over unpaid loans.
It’s a business model that works well in certain industries, and marketing is one of them. Marketing agencies are good candidates for bootstrapping because they:
- Require little upfront investment
- Offer quick payment returns
- Allow you to work part-time at first and scale as your client base grows
Bootstrapping your marketing agency makes good business sense. The essential tip in bootstrapping your agency is to keep tight control over the enterprise’s finances. Here’s how you do it.
Work from home
In our post-pandemic world, working from home is no longer a novelty but a reality for many marketers. Take advantage of this new acceptance of the work-from-home model to save your fledgling digital marketing agency the costs of running an office – rent, commuting expenses, office supplies, and utilities – by working from home.
Don’t be in a hurry to acquire office space, even when your funds allow it. Good bootstrapping practices dictate that you put every available cent back into growing your business, and working from home frees up lots of cents that would otherwise be spent on rent and running an office. Not only are offices no longer physically needed for a marketing agency, but your clients also don’t expect you to have one. So you may as well save that money for other areas of the business.
Plug the holes in your skill stack
If you’ve just started working in marketing, or if you’ve only ever worked in larger organizations in the past, your marketing skills may be pretty niche. For example, your experience may be only in social media marketing or copywriting but not in email and SMS strategy.
However, as a marketing agency owner, you’ll be expected to be a full-stack marketer with skills in email and SMS marketing, PPC advertising, website and graphic design, copywriting, and web development.
You can fill those holes in your skill stack in a few ways:
- Complete online courses and receive certification from major players like Google, Hubspot, etc. The Digital Marketing Institute offers a range of certification options.
- Look for partnership opportunities with other marketers whose skills complement yours. Starting a business can be lonely, but it can be more rewarding if you have a trusted partner to share the burdens and complete your skills.
When you’ve grown your agency a little, you may be able to hire freelancers to perform your least-favorite aspects of the job. But wait as long as you can to outsource as you’ll need every cent of your profit to grow your business. When you don’t have even one minute to spare for a task, you can start to consider outsourcing for that task.
Watch your cash flow closely
One of the advantages of bootstrapping your digital marketing agency is that you have complete control over your finances with no oversight from shareholders. But that can be a problem, too, if you’re a person who naturally tends to be a bit spendy. As a business owner, you can’t afford fiscal frivolity. Keep these rules in mind:
- Absolutely refuse impulse buys. No matter how much starting capital you have, you cannot afford impulse buys. Don’t even allow yourself one as a “treat.” Just put a blanket ban on them.
- Think hard about purchases and only buy what you need to perform your work, like software licenses. Many software providers have moved to a cloud-based subscription service, so you don’t need to purchase the full license. Find free versions of the software you need when possible.
- Pay yourself a paycheck, but make it a small one. It’s important to give yourself a salary to keep your personal finances separate from the business, but make it as small as possible to leave money in the agency account to cover expenses.
- Insist on immediate payment from your clients. There’s a way to do that professionally and tactfully, and most business owners will understand that you’re a small company that needs to watch funds closely. So don’t feel awkward about asking for payment as soon as the work is complete.
Keep receipts and use them to balance your bank account weekly, which means going through the expenses and payments posted in your online account to be sure they match your receipts and payments.
And don’t forget about taxes!! Yes, even though yours is a relatively small operation, the IRS still wants its cut. You’ll need to pay taxes at the end of the year on every dollar earned, so you must keep accurate accounts of your expenses and your invoices. Hiring a CPA (like us!) may be a smart outsourcing move if you’re worried about doing your taxes right and on time.
Plow money back into your business
If you’re a digital marketer, you clearly know the importance of a solid website and smart digital marketing strategy. You need to build those assets for your company as well as for your clients, even though it takes time away from your client work.
Starting a digital marketing agency is the easy part. Growing a digital marketing agency is another matter altogether. You won’t grow if you don’t invest some of your profits back into your business.
Make a business plan that outlines how you’ll use your funds to expand the business. Your business plan should be a daily guide on spending your money wisely, investing in your company’s growth and avoiding those impulse buys we talked about above. 😉
If you need a business plan, talk to us. We can help you define a manageable budget for your marketing agency so you can be sure you are hitting the right numbers each month to grow your revenue.
Incorporate your company
It may be small, but your marketing agency is still a business. It’s a smart move to incorporate your company so that you cannot be held personally responsible for any legal actions taken against you.
Incorporating your company protects your personal assets and makes it easier to enter into contracts with vendors and employees as your company grows. If you need help incorporating your business, call us!
Time is on your side
As you watch other startups grow quickly, it will be tempting to ramp yours up to keep pace. Investor startups have legal requirements to grow fast, but your bootstrapped marketing agency can play the long game. If you try to do it all at once, you’ll risk burning yourself out. Grow at a steady pace that is sustainable for your personal life as well. And yes, you should retain a personal life, even while starting a business.
We mentioned above that a CPA is often the first outsourcing port of call for small business owners. There’s great relief in knowing that your finances are in order and great freedom in using that time to focus on your business instead of the bank account.
Not to toot our own horns, but at Lloyd & Hodge, we offer helpful and actionable business advice as well as sound accounting services.
If you need a business plan, budget, or accounting services, call us (817-831-0097) or complete our short contact form. We understand the needs of small businesses because we are one!