Bootstrapping simply means funding your business from personal savings/finances,family,friends and from revenue generated by the business . Bootstrapping a business can be tough but is highly rewarding ;it develops great discipline and creativity that can bring out the best in a company. With bootstrapping ,almost everything is done internally to keep costs low. Some businesses can not be bootstrapped especially capital intensive ones.
|photo credit : www.sba.gov|
To bootstrap a company successfully,its important to know what it takes. There are 3 stages of bootstrap
The best time to consider seeking investment would be stage 3, you can decide to create a budget for each of these stages,this lets you keep your spending in check.
The aim of this post is to aid you through the process of bootstrapping. Here are tips and benefits of bootstrapping a business
– Define your focus at every point in line , define milestones so you are investing your limited resources on the right things.
– Keep your personal expenses low.
– Design your business model to generate cash quickly but be careful not to compromise on the big picture;without cash inflow ,the business will run out of cash quickly.
– Keep a close watch on your cash flow.
-Start building brand equity from day one.
– Encourage a lot of cash transactions (or quick turnover) to enable you plan growth.
-Listen closely to customers,this provides insight on creating products that suit them.
– Be accountable,do not do it alone, engage with other “bootstrappers”,build a community if you can, have accountability partners.
– Reinvest returns back into the business,consider spending some of the profit on finding new business.
– Do not be quick to hire full time employees ;Lower hiring costs as much as you can,you might have to wear more hats to save hiring cost and learn about the various aspects of your business.
– Create sustainable structure and processes ,improve on them as you go along.
– To generate extra cash along the way ,you can incorporate selling stuff related or in line with what your business is primarily about.
-You get to retain complete control and ownership of your business.
-It teaches you to focus on cash flow.
-Develops great discipline and creativity that brings out the best in the company.
-It is a consistent way to gain traction which provides leverage when seeking investment from investors.
-Because you are involved in various aspects of your business,it gives you the organizational experience which will be vital in developing the company.
– It helps you realize the talent and capacity you have so you attract the right people and find the right partners as you scale.