The Bootsrapping Guide to Jumpstarting your Business
In a culture dominated by spending and keeping up with the Joneses, finding a band of penny-pinching entrepreneurs is like looking for a needle in a haystack. Instead, what you would find are savvy bargain hunters – professionally skilled and trained in making a shopping purchase like it was an Olympic challenge. Because of this, our communities have seen a growing Chinese Merchant community that has been integral in our development as a nation. In recent years, a growing number of Indians are migrating here because of a stronger consumer market. Ask my neighbor. 🙂
Finding a level headed entrepreneur is a treasure. But once you find one, it isn’t hard to find a lot of them. Not all businessmen become successful at their first venture and each startup are filled with challenging traps and pitfalls which all the more gives the reason to be cautious with our hard-earned finances. This brings us to bootstrapping.
The Investopedia defines bootstrapping as a “common strategy of an entrepreneur in starting his or her company with little capital”. This involves a lot of things from utilizing personal finances like savings to actively reducing one’s living expense costs. Some businessmen also “bootstrap” by drawing from the operating revenues of the new company. Bloomberg Businessweek defines bootstrapping as: “The typical response of relying on savings, early cash flow, and penny-pinching rather than looking for external funding through loans or investments to fund a startup company.”
We have heard a lot of stories of businessmen who started with limited resources but through wise decision making and tight budgeting, have succeeded into growing a global brand. While it is encouraging to hear similar stories, most people shudder at the thought the sacrifice and the risk of losing it all – time and money. Handling the affairs of business is stressful enough and add to that the responsibility for financing your business. But bootstrapping has its advantages, including taking full control of the business and its corresponding earnings, whether modest or enourmous.
Here are some thoughts that might help you before plunging into a long-term belt-tightening long-term-slimming exercise.
1. Create a Business Plan.
There is a saying: “It doesn’t matter how hard, messy and crazy the game is, as long as I know where the goal/finish line is.” Understanding the goal in its depth: time, resources and money allows you to mentally prepare, assess yourself in your progress and motivates you to persist into your goal. Knowing the endgame is a simple satisfaction.
2. Assess your Resources, Realistically.
Nothing is more common in business failures than ventures that began well but lost steam over time or whose owners lost interest after the excitement of the startup stage. Todd Beeler in his book “The Seven Hidden Secrets of Motivation” reveals that most people overestimate their resources.
3. Consult Professionals Early On.
Most small entrepreneurs make the mistake of taking in only advice from friends, family and only those supportive of their idea. While it is also not advisable to listen only to critics, it is important to have a balance assessment of your plan. We will never see the weaknesses of our position, our ego and emotions create blindspots that are dangerous for business.
4. Have and Early Evaluation and Testing for Your Products.
Developing a perfect product will take forever. What we need is a process to create a contact with our market as early as we can. Take the time to understand the potential need your startup might fill. Then, reach out to prospects to gauge their interest you are offering and to try it out. This will allow you to make adjustments before your market has totally left you out. Listen to feedback and see what they like and, more importantly, what they are missing.
Starting up a business-on-a-string can be a risky venture, and like all businesses, there are no guarantees. The decision whether to start your business will not an easy one. But if you apply wisdom, you may find that the joy of owning and running a profitable, thriving and prosperous enterprise might not compare to working a full 8-hour job. Use caution and plan ahead—and who knows what world awaits you for your coming business venture.
Have you successfully bootstrapped a business and have advice for others? Share it with us!