Learning how to do more with less is one of the most important skills of an entrepreneur. It’s not always easy, but the mindset and characteristics can hone you to become a stronger entrepreneur
An individual is typically said to be bootstrapping when he or she attempts to build a company from personal finances or from the operating revenues of the new company. Essentially, bootstrapping means self-funding, whereby the business is built out of very little or perhaps virtually nothing. “Bootstrappers normally rely on personal income and savings coupled with low operating costs and cash generation from sales.
If you have just started out bootstrapping your company, what advantages can you get from the journey and how should you go about it?
Learn the value of money faster
When you realise that you don’t have a bulk of money in the bank account, you spend money more cautiously and frugally. In general, this can actually be a positive trait as an entrepreneur. Understanding your financial stage and being fully aware of it can be a natural motivation for you to implement the lean method when building your startup. Learning how to do more with less is one of the most important skills of an entrepreneur. It’s not always easy, but the mindset and characteristics can hone you to become a stronger and resilient entrepreneur.
Focus on building your product and executing ideas
Bootstrapping forces an entrepreneur to pay particular and focussed attention to what matters: product, time, customer. There are simply not enough resources to experiment with features that do not immediately deliver increases in customer value, especially in the first few weeks and/or months of development. Bootstrapping gives you far more control over your own business in those critical early days.
Testing that “leap of faith”: do you truly believe in what you do?
When you are bootstrapping your startup, you are on a crusade. You believe that you are tirelessly working on something because you are passionate about your startup to the point where you are willing to take, in some way or another, personal financial risks. This might be the right time to ask yourself: would there be anything else you would rather be doing? A passionate founder will have more determination which will eventually differentiates him/her than the ones that are building a venture for the sake of money or other material rewards.
However, is bootstrapping the right approach for you?
Not all startups can be bootstrapped. If you are building a product with low capital commitment at the beginning, bootstrapping may be a feasible option.
Perry Tam, Co-founder and CEO of Storm8, advises that if bootstrapping seems viable for the nature of business you are in and if it is the quickest way to get your startup off the ground, by all means take the chance. In fact, most transaction- and subscription-based mobile/Internet services startups fall into this category.
However, if you are building a more capital-intensive startup, bootstrapping might help start your journey but it can only go so long before you need external funding to accelerate growth and battle competitive threats. Fundraising and ultimately securing funding from external investors can also provide market validation, set valuation, open up opportunities and network from experienced mentors (read: your investors with industry expertise) and find potential strategic partnerships.
The value of mentorship and connection with people that can help you get ahead in business and in life as an entrepreneur will take you far as you continue the journey, particularly as an early-stage startup.
This article first appeared on The Quad.
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