$300 in free advertising credits, at .10 per click is 3,000 visitors to your site…for free. Now that is bootstrapping.

So what do you do? You don’t want to pay the service provider(s) up front, and you do not want to start shelling out equity all over the place.

Deferred Compensation.

You tie their compensation directly to the success of the company. The web developer typically charges $100/hour and really loves the concept. You offer to pay the web developer $200/hour for his time, however, the condition is that you will only pay him once the firm achieves sales or becomes cash flow positive. He takes a risk, but receives a reward (in a higher rate) for his efforts. If you succeed, everyone wins. If you fail, the risk was spread a little farther out so no one individual is taking too big of a hit.

I have taken David’s advice to heart and have since added my own tips to this process.

Keep two powerpoint documents. One is an executive summary of sorts to show to people who are interested in your progress and want to learn more. This should include the problem you are solving, some mock ups, business model, mission, summary financials, etc. The other powerpoint document is for you and your close partners only. It is a place to hold all your ideas, thoughts, links to related articles and resources, next steps, etc.

Why is this bootstrapping? It is saving the entrepreneur time, money, paper, and formality. You are focusing only on the core necessities to make your business happen but still providing some documentation you can show to interested third parties.

Always remember:

“Bootstrappers don’t write lengthy business plans, chase deep-pocketed investors, or indulge in overly academic market research exercises. Instead, they focus all of their considerable energy, brainpower, determination and skills on creating a business that can actually succeed in the real world.”

-Greg Gianforte, CEO, RightNow Technologies

If those holds true in all scenarios. Than an entrepreneur who is attempting to bootstrap would have all low quality products and services and therefor would not be able to start anything valuable. However, we know that is not the case. The bootstrapping entrepreneur is able to do more with less.

This is what I feel is a more accurate economic depiction (completely thought of and developed by me, so this could be completely inaccurate) of the bootstrappers world. They are able to pay less to still get high quality products and services to start their business. The reason they can do so is they bring value and have a “bootstrapper IQ”. For instance, instead of paying $50,000 for the nice high quality car, the bootstrapper negotiates with the dealership and gets the car for significantly less (or free) because they provide a substitute value to the dealership (perhaps free advertising, services in kind, deferred compensation, or some other trick of the bootstrapper). Bootstrappers know how to leverage what they have in order to minimize the cash outlays they need to make to get their business off the ground, the real bootstrapper probably would realize they didn’t need the $50k car to begin with…

Why is this important?

When someone wants to start a venture, it generally requires capital. Oftentimes you need to seek that capital from other individuals or institutions that have their own mission, vision, and process that may not align with yours. By using the least amount of capital possible you can conserve the maximum amount of equity (read: control) and you are a more nimble and stronger company. If you take on debt you maintain ownership but then you have to handle the monthly debt service payments and what will happen if you miss a month? How far can bootstrapping take you? There are countless examples of successful entrepreneurs who have launched ventures with no money down up to as little as $5,000. Richard Branson started his first company with “pocket money” from his mother. Need another example? Subway was started by Fred Deluca for $1,000. Can you still do that today? How about you ask the guys over at Facebook.

This bootstrapping column will feature tips, techniques, resources, motivation, and examples of bootstrapping. It will serve as a transparent source of honest information from young entrepreneurs like yourself who are in the trenches and making things happen with less than you can imagine.

Success on your terms…

How do you do it? It is pretty simple. Just buy a professional looking website template and logo template that goes along with the theme you are envisioning. Customize the text as if this was the fully running website. Include links to the future functional areas just do not activate them. Take this site and begin showing it to select individuals, they will think you are farther along than if you just had a paper business plan and it is easier to show someone a prototype than a 50 page business plan.

How much would something like this cost?

• Domain $8.95 See: GoDaddy
• Hosting $10/month See: HostGator
• Site Template about $35 See: TemplateHeaven

So for well under $100 you have a mock up site that you can use instead of, or in addition to, a full business plan.

You will need someone with basic website design knowledge to install the template and edit the site text, sections, etc.; but that can be done by just about anyone or if you know how you can do it yourself.

Why is Entrepreneur Magazine great? It is filled with countless useful tips, motivational stories, facts, and relevant advertisers. Every issue I find at least a handful of things that either help my business, make me a better entrepreneur, or help someone I know with their venture.

Here’s how I read Entrepreneur Mag:

• Set aside 1-3 hours to read it from cover to cover (ideally, doesn’t always happen this way)
• Start from the back: The best articles are always in the later pages of the magazine and the classified ads are generally more valuable to take a look at then all the full page ads that are front loaded.
• Fold the pages that have something you want to check out further (either a website url, interesting fact, article you want to send to someone, etc.)
• Use a pen to identify the section on the folded page that was useful and leave a quick note to yourself as to why it was important (i.e. “send this to fred”, “check out this website for the blog”, “new business idea”, etc.)
• Read the heading and subheading of the articles, then the bold subtitles…if that article is interesting read more, if not then keep going.
• Make note of the authors and companies mentioned that peak your interest, do not be afraid to send either an email mentioning the article and why you found it worthwhile, it could spark a valuable future relationship.
• After you have gone through the whole magazine, now go back to the folded pages when you have time and check out the valuable websites, email the article to a friend, add a fact to your business plan, etc.

This may not be the perfect way for everybody but it has worked great for me so far. Also, be sure to check out their website for even more valuable resources in addition to the print magazine.

I figured I would share some of the core things you should keep in mind for your website in terms of search engine optimization:

Analyze related keyword traffic, use a tool such as the one at inventory.overture.com to see what individuals are searching for, then search that keyword to see how popular the top 10 results are. Find 1-3 keywords that are highly relevant, have a decent amount of daily traffic, and the competition is not all incredibly big sites.

You then want to optimize your main page for these 1-3 keywords. The key is to not be a spammer and just stuff the site with keywords, do it in an authentic way that brings value. Have the keyword(s) in the beginning of your title, in your meta tags, in your content, your site links, and at the bottom of the site.

Then try to build authentic links pointed towards your page from other websites (the more popular they are, the better). If you have to do reciprocal links try to put the reciprocal link on another page so it is not viewed negatively by the search engines. You want the link to have a keyword in it, as well as have some anchor text related to your keyword. Ideally, you want one way links pointed to your site on related sites that are popular.

Start with this simple strategy, work hard, deliver worthwhile and fresh content, and you are well on your way…who needs an SEO consultant

In all seriousness, SEO is a mix of art & science, I thought I knew a great deal before the course but now I have a much greater understanding and now understand the value a professional search engine marketer can provide.

I took a job in the fall of 2005 as an Analyst/Research intern at a market research firm. The job sounded interesting enough, the company sounded really interesting. They were involved in technology, marketing, research, cutting edge trends, etc…or at least that is what they told me.

They put me in a cubicle, my first time ever in the gray box as an employee. I was given an organization chart and that is when I noticed something strange…the entire company consisted of only VP of X and interns…that’s it! There were no employees? Odd. There was also about 3-5 interns for every VP. I thought this was strange.

They gave me some tasks that for the most part consisted of a lot of cold calling…not fun at all but it did discipline me because before I was afraid of cold calling.

They had me build an entire project from start to finish for a client. I did pretty much everything, all they did was tell me what to do and when. I noticed a document that was from the client that noted the tasks they requested (of which I was doing 95% of them) and the payment the company was receiving was $XX,000, I received $500 to do 95% of the project!!! I left a few days later and never looked back…

Moral of the story? You can create value as an employee or as an entrepreneur, the question is: Who is receiving the benefits of that value creation?