There’s an old saying, “put your money where your mouth is”. And that’s exactly what bootstrappers do. Yet sometimes it’s the starry-eyed capital-raising young startups that seem to attract more attention than the brave bootstrappers, who are backing their idea with their own savings.
Dispelling the myths
As a bootstrapper of two businesses (Matchboard and FindaConsultant), let me start by dispelling some myths: if you think companies that have self-funded their way to success are “not serious”, you’re wrong. From iconic brands like Apple and Patagonia to today’s tech darlings, Mailchimp, Campaign Monitor and Atlassian, there’s a list a mile long of brands who bootstrapped much if not a good part of the way.
Myth number two is that bootstrapped companies are interested in profits rather than top line revenue growth. The truth is that they are interested in both, even though growth may be slower initially, as sales and marketing activity is often paced in line with reinvestment of profits back into the business.
Consider this before you go down the bootstrapping path
Bootstrapping is not for the faint-hearted: when it’s your own money at stake, the pressure to succeed can be high and the stress at times overwhelming. That’s why timing is everything: the ideal time to bootstrap is when you have enough money to be able to afford to take a financial risk for a year or so, during which time you can validate the potential for your business and, hopefully, start acquiring customers. If things don’t work out, you don’t want to be in a position after a year where you can no longer afford to repay your mortgage or support your family.
Speaking of family, or friends for that matter, their support is critical if you’re bootstrapping. There will be many highs and lows, but they are so much easier to ride when you have a strong network or supportive partner.
Funding a business with your own money, or that of friends and family, is a significant, potentially life-changing decision. Before you take this leap, do everything you can to ensure you have a product or service which customers will love and use or pay for. You want to be confident you are on to a winner before throwing in your life savings! And when you’re asking people’s opinions of your business idea, don’t make the mistake of asking those close to you – identify strangers in your target market and ask them for a likely more honest opinion.
What the bootstrapping mindset teaches you
In order to bootstrap, be prepared to get creative finding ways to get things done at minimal or no cost. From the outset, I learnt the power of partnerships and contra deals, and the art of sending a LinkedIn post viral and securing free mass media coverage. There are times when you have no choice but to adopt this lean mindset in order to survive – until you have more profits to fuel paid growth initiatives.
By necessity, bootstrapping teaches you strategies to get more for less, to be sharply focused on getting the best possible deals from suppliers, and to choose any talent you can afford to hire with absolute precision. You simply can’t afford to get key hires wrong.
Bootstrapping also teaches you to be a jack of all trades, mastering many skills because you don’t have the cash to bring on specialists to do everything for you.
Networking and hustling is a must for bootstrappers – even if you don’t think that sounds like you, it will become a skill you rapidly acquire simply to make the connections you need to develop the business.
Even if you do decide to raise money at the next stage of your business, the bootstrapping experience will have laid the foundation for success: you will have learnt to be shrewd in commercial and hiring decisions, to survive and grow on a shoestring budget, and you will have gained an understanding of every aspect of the business, from finance and I.T. to sales, marketing and customer service. All this will stand you in excellent stead, for the rest of your working life.
In business, there’s nothing more noble than putting your money where your mouth is, so let’s give bootstrappers the respect they deserve.