You don’t need money to make money; just a solid idea, concept or product, some dedicated employees, a growing community of clients, and a strong shot of determination with a resilience chaser! Bootstrapping is a business term derivative of the 186 year old idiom to “pull oneself up by one’s bootstraps” meaning to succeed without outside help. So put on them Timberlands®, we are about to get to work!
What Exactly is Bootstrapping
Simply put…bootstrapping is an organic concept based on taking a solid foundational belief in your product; that is then combined with that $500 or so from your saving account, some sweat equity, tapping into available balances from personal credit cards and other resources (hint hint: family and friends), add some dedicated employees and a growing community of clients…and there you have it, Bootstrapping at its best! According to Forbes Companies that use their own resources to start and grow are often stronger and more dynamic. With only 1 percent of the 30.2 million small business in the U.S getting a portion of the $614 billion invested in 2017 of venture capital dollars as reported in a press release by Pitchbook, a financial data and software company that promotes transparency in capital markets; it’s a lot of Bootstrapping going on.
Why Consider Bootstrapping
Many start-ups don’t have the access to, or wish not to take on big financial burdens; and this lean start-up approach allows for the financing of your business by taking all that you have to get what you want. Some bootstrapping ventures that may ring a bell include: SPANX; GoPro; Mailchimp; Wayfair; and GitHub, who was bought out by Microsoft for a whopping 7.5 billion, just to name a few.
Bootstrapping Pros, Cons and Strategy
Bootstrapping will require a business model that encourages cost minimization. Surviving and thriving off of success promotes simplicity, flexibility and will yield a cost conscious foundation of which all else can be built upon. Like all business decisions, the commitment to Bootstrapping comes with its pros and cons, a few of which you will find here followed by responsive and strategic mitigating tactics.
- pros: 100% ownership; you answer to you; less/no dilution of direction, focus or creative control; no pressure to satisfy or concede to external investment sources; and the priceless ability to look back and say “I built that”
- cons: personal financial risk; potential cash flow shortages; sweat equity intensive, especially if a team of one; limited visibility and connections; and potentially slower growth
Whether intensively concept driven, heavy equipment reliant, or the innocent simplicity of that refreshing childhood lemonade stand on a hot day; Stringent Funding Practices and careful budgeting in business is a must, and integral to a successful Bootstrapping strategy.
There is something to be said about going into your neighborhood hardware store and asking someone in the paint department about drill bits and they show you exactly what you need. From its uses to its limitations, know your product inside and out. The strong and prompt delivery of Product Knowledge will instantly classify you as an expert, eliminate the need for client research and secure timely sales; when you know, you grow! Knowledge that exudes from leadership down aids in swift client and stakeholder decision making and buy-in.
When marketing dollars are short, Business Relationships will pick up the slack. From getting new customers and retaining current clients, to managing and enhancing the company’s image and reputation, and pushing your business plan essential Mission and Vision forward; relationships are resources that through cultivation often become priceless.
As you scale up, should seeking a venture capitalist be the next step; Bootstrapping will demonstrate the execution of a strategic management style built on providence, resourcefulness, and accountability; illuminating just how business savvy you are! In a world of successful big business, many relish in the grass roots of Bootstrapping as it secures organic buy-in from all involved.
Whether by choice or limitation; if the boot fits, lace it up, wear it and Let’s Connect!