Do you have a bright idea that can translate into a successful startup?
Congratulations on your light-bulb moment! You’re probably excited to start your entrepreneurial journey, but there’s one thing getting in the way – financial resources.
Bootstrapping is feasible for most people, especially those new to the business world. It’s all about starting your business from scratch or from the revenue a company can generate.
It has its fair share of benefits and, admittedly, drawbacks.
If you’re thinking about bootstrapping a business, keep on reading.
What is Bootstrapping?
At its core, bootstrapping is all about self-funding. You’ll be using your financial resources to build your entrepreneurial dream.
For most, it’s about self-reliance and using savings to build a startup. Need extra funds? Find side hustles if you still have the luxury of time. You might even want to consider selling assets.
However, you can also use money from your family and friends.
You might be lucky enough to have loved ones who believe in your bright idea to the point that they’re willing to lend you money.
Another standard route for raising money for a startup through bootstrapping is from the initial sales. For example, you can launch a pre-opening promo, offering your product or service at a discount in exchange for early support.
It will let your customers enjoy more affordable offerings. At the same time, you can raise money to sustain your financial needs.
While you don’t have to use traditional business loans from banks, you can consider using personal loans, or you could borrow with CreditNinja.
Further, your credit cards can also provide a lifeline to save you from your financing woes.
Reasons to Bootstrap Your Startup
From a dog-treats bakery to an eco-friendly shop, a bootstrapped startup can offer many benefits, including the following:
Freedom in Decision-Making: Because you’re using your resources, you’re not compelled to answer to the demands of your investors. It provides the ultimate space in terms of the way you want to run your startup.
Motivation: The only way you can compensate yourself for expenses is to make your startup profitable. You can bank on this pressure to work harder without being responsible to external investors.
A Sense of Accomplishment: The sense of satisfaction that a founder can experience when a startup succeeds is unmatched. It can be a validation, knowing that you built a business yourself.
A Word of Caution
While the benefits might make bootstrapping an attractive funding route, it’s also crucial that you’re aware of the potential drawbacks.
Carrying All the Risks: While it’s a good thing you gain complete control of your startup, it also means that the burden is a cross you need to carry on your own. This is not one thing that you share with investors.
Slow Growth: It’s challenging to achieve exponential growth with limited resources. Nonetheless, this could be one of those instances when taking things one step at a time can be beneficial.
Can Hurt Reputation: You might not be as reputable in the eyes of the public as the startups funded by angel investors and venture capitalists. This can impact how your startup grows over time.
Tips for the Success of Your Bootstrapped Startup
One thing’s for sure – success won’t be an overnight achievement.
Remember, most startups fail. But do not let this deter your dream. Instead, you can take this as an inspiration to rise and prove how you’re worthy of success.
Create a Business Plan
While it’s true that you don’t need to pitch to investors if you’re bootstrapping your startup, it does not mean that a solid business plan is unnecessary. It’s essential to have one as it will be your blueprint.
It will dictate the things you’ll need to reach your goal.
For instance, it will indicate how you plan to handle your marketing needs. While it may seem cliche, you plan to fail if you fail to plan.
Set Your Priorities
There might be many things you want to do and achieve, but the harsh reality is that you can’t have them all.
As such, you’ll need to set your priorities straight. This will involve goal-setting so you can identify what it is that you want, and consequently, you can work on it.
For many bootstrapped startups, limited financial resources are one of the biggest challenges.
Live with it by being frugal. Know how much you have and stay within budget. You don’t have to rely on traditional marketing platforms when their digital counterparts can be equally effective.
Use Your Network
One of the most essential principles of bootstrapping a startup is leveraging existing resources. And in this case, resources aren’t just about your finances.
They also involve people, not necessarily employees but others, who can propel your startup to the top. Keep in touch with your industry contacts.
Find a mentor. Attend trade and networking events. Utilize every opportunity to meet other people to introduce your startup to the world.
Build the Right Team
Self-funding does not mean you have to run your startup as a one-person team. Like any other entrepreneurial venture, your people are your best assets; you don’t have to be alone.
Hire growth-ready people who are willing to scale with your startup. Even if you’re hiring contract or freelance workers, it doesn’t mean you need to compromise human resources.
Yes, bootstrapping can be challenging. Funding your business using your own money can be risky and complex.
A proactive approach is crucial, which includes having a solid plan, operating within your means, and investing in talent.