Bootstrapping Your Business

Bootstrapping Your Business

You may have heard stories of a poor hungry child who buys a bottle of water for 30 cents and sells it for a dollar on the street, then buys two bottles and sells them, then more and more until he has a thriving business.  Or the man that starts with a paperclip and continually makes trades until he owns a car and eventually a house.

These are extreme examples of “Bootstrapping” and when looked at from a business perspective, the success of these relatively small enterprises is extraordinary, not only in the achievement, but also in the lack of debt that they carry, and the simplicity in which they run.

Bootstrapping a business is the process of starting and growing a company with very limited resources. A bootstrap entrepreneur will often rely on their personal finances to get started, instead of investment from venture capital firms or angel investors. Bootstrapping can be an option for some business models with low costs or self-sustaining processes. It can also be a practice of funding growth with the business’s own capital. Bootstrapping can provide autonomy but also challenges.

Some of the advantages of bootstrapping are:

• You have more control over your business decisions and vision
• You do not have to share your profits or equity with investors
• You can focus on satisfying your customers and generating revenue
• You can be more flexible and agile in responding to market changes
• You can build a loyal and committed team that shares your passion

Some of the challenges of bootstrapping are:

• You may face financial risk
• You may have limited resources and opportunities for growth
• You may have to sacrifice your personal life and well-being
• You may have to deal with competition from well-funded rivals
• You may have to learn many skills and wear many hats

If you want to bootstrap your business, you need to have a clear vision, a viable product, a lean operation, a profitable business model, and a loyal customer base. You also need to be creative, resourceful, diligent, and resilient.

Some examples of successful bootstrapped businesses are GoPro, Facebook, and Amazon. They all started with humble beginnings and grew into billion-dollar companies.

The term “sweat equity” comes to mind as these entrepreneurs may have lacked capital but made up for it with their extraordinary effort and determination.

Whether using Bootstrapping to start a business, or to grow the business the lesson offers the same advice: take what you have in abundance i.e.:

• Good Ideas
• Special Skill(s)
• Excess Inventory
• Smart People
• Great Location(s)
• Abundant Connections
• Valuable Intellectual Property

And turn it into what you need i.e.:

• Cash
• Inventory
• Sales

Bootstrapping is the very essence of business in its most simple form, but sometimes we forget how simple it should be in order to work properly.  We needlessly complicate our business with unproven expenses, partners whom are not personally invested, employees needs/wants, and government compliance and thereby lose sight of the very thing that makes our business successful.

As we near the end of our first season of Biz Easy Podcasts, I think it is important to remind ourselves that we have an obligation to keep our business focused on the simple things that make the business work profitably and remember that everything else is just noise that distracts us from our mission.

The lessons of Bootstrapping should apply to ALL businesses, even the ones with deep pockets and plenty of resources.  All businesses have an obligation to make as large a profit as is practical.  That is achieved by eliminating waste and bringing in every sale possible.  Every minute dealing with the “noise” takes us one step further from our mission.

Keep it Biz Easy and Lemon Squeezy

Skip Williams

[email protected]