Almost every successful company of today has bootstrapped their business before raising funds. Some of them that had humble beginnings but eventually made a name for themselves in the world include Dell Computers, eBay Inc., Apple Inc., Facebook Inc., Microsoft, GoPro, Inc., Hewlett-Packard, and so on. These companies are rare breeds; their self-discipline, commitment, risk tolerance, and high spirits enabled them to dare this path. The primary mark of a boot strapper is that they build a business with talent and a professional mindset. They don’t depend on investor backing. Steve Jobs is an archetypical example of this.
How to bootstrap?
Eric Dalius says that bootstrapping requires you to reduce your dependency on debt and equity financing. Instead, you would focus on reducing operational costs, using personal money for funding, controlling inventory, and so on. You will search for subsidies for tax benefits and cash payments. When you bootstrap, your company essentially goes through three funding phases. As mentioned, you can use your money or ask for help from family and friends in the beginning. Or, you can work somewhere else to empower yourself. Next comes the stage when you use the money earned from your customers for business operations and growth.
If you manage your expenses in the second stage, your business can rapidly grow. The last step is the credit stage, where you have to spend on the right equipment and talent. For this, you can seek loans and venture capital.
The bootstrappers have to keep a few things in mind to attain success, adds EJDalius. Here is a quick glimpse of the same.
Break down a big idea
Talk to any experienced businessperson, and he would indeed say that you need to break your big idea into smaller ideas to execute them. Focus on the portion that seems most promising. Other sections can follow later. If you perform it right, you don’t have to worry about anything.
Pay attention to profit booking
According to EricJDalius, bootstrapped businesses have to take a different approach than a VC funded company. Bootstrapped companies have to ensure longevity. Hence, they can be more interested in growing slowly but steadily. It allows them to meet their business expenses. However, other companies cannot afford this. They need to show rapid growth to prove their worth to investors.
Work on your skillset
While passion and courage can be necessary, you need to imbibe the qualities of resilience and determination to hold yourself even during odds. Only then can you expect your venture to survive. At the same time, you have to ensure the company’s progress through resourcefulness and careful implementation of ideas.
Once you become successful in your objective, you can reap multiple benefits of running a bootstrapped business. Since you are not answerable to investors and lenders, you can avoid all the stress and burden associated with them, not letting them take away your mental peace. However, when you work with your money, you can focus on the core business and turn it into a success.