Want to get accepted into the entrepreneurial hall of fame?
Admitted. We haven’t actually checked if there is such a thing as a hall of fame for entrepreneurs. But these days it sure can seem like fame, fortune and funding have become the largest measures of success for startups.
As a result, many aspiring entrepreneurs believe they should go raise impressive pools of funding as soon as possible. And while it may get you some attention and perhaps some much needed mentoring, getting funded is not all beer and skittles. It also means giving up some of your company, both in terms of control and in terms of equity.
Instead, you should consider bootstrapping. What’s that now?
Bootstrapping means funding your own business, and as a rule of thumb you should do that for as long as you possibly can. That way you’re the one calling the shots, and when it’s truly the right time to look for investors, you’ll be able to find the ones who are exactly right for your company and have some leverage left to work with.
When your done reading, you'll know
- Why you should bootstrap
- How to bootstrap your startup successfully
- When you should stop bootstrapping
Here are five ways to bootstrap your startup
A great entrepreneur is resourceful, moneysmart and hardworking, all of which you have to be, to successfully bootstrap your way through the startup jungle.
Besides letting you stay in control, bootstrapping will give you invaluable experience that you will benefit from further down the road. You will be forced to be smart about the money you have, come up with creative solutions to every single problem you face and put all your resources, knowledge and abilities to good use. Most importantly, bootstrapping will teach you the single most important skill you need to have as an entrepreneur. Working hard.
So before you take the final leap, ask yourself if your boots are made for walking the startup walk.
Here are five bulletproof ways to bootstrap your startup
1. Cut down your expenses
We know. Cutting down on luxuries and things you like sounds almost as enjoyable as realizing you just ate the last piece of candy without having been prepared for it. You know the struggle, right?
But if you’re serious about your startup, cutting down your everyday expenses is key. The more you cut, the more you have to put into your business. And while we’re not going to tell you to move into your parents’ basement for the next three years, we won’t judge you if you do.
2. Dip your feet before you quit your day job
If you still have a job, consider keeping it a little while longer. Building your startup as a side hustle will help you keep your head above water.
Use the time to test your idea, work out your business plan, do market research and all those other unavoidable tasks that no one will pay you to do anyway.
3. Find a co-founder
Are you a one-man army? Maybe you should consider bringing someone else on the trip. While finding the right co-founder can be a difficult task, for most startups it’s worth the effort. You can share the ups, downs, risks, workload - and the bootstrapping costs of course.
If you like the idea of a co-founder, this Partnering Up course is just what you need.
4. Hold on to your cash and spend them wisely
For most entrepreneurs it can be tempting to spend profits as soon as they hit the bank account. But don’t fall into that trap. Adding unnecessary expenses might seem like a good idea, but we promise you it’s not.
We bet you can go a little while longer without a new office space, the cool business card you had designed, or the website you don’t really need yet. Instead, only invest in things that will boost and grow your business right away.
5. Prepare yourself for a marathon
Building a successful startup will not happen overnight. If you’re looking for the quick big bucks, you’ll be disappointed. 90% of startups fail. Not yours of course. But succeeding takes blood, sweat and tears.
Prepare yourself for a marathon, and you’ll (almost) be ready for everything that lies ahead.
The pitfalls to bootstrapping
Bootstrapping is tough, and while it is generally a good way to get your startup going, there are some other pitfalls that you should be aware of.
It’s all on you
You’ll not have the money to hire someone to help you. Not even with the things you don’t know how to do. So you will need to hustle a lot, work way more hours and manage more roles and tasks than you might think is possible.
Lack of resources
One of the top reasons why startups fail is that they run out of money. Being smart about your money doesn’t just mean not spending them. It also means knowing when to stop bootstrapping and start looking for outside capital.
At some point, not having money to spend will hurt your visibility and your chance to spread the word about your product. This means that you’ll experience slower growth and that you’ll have less means to spend on serving your customers.
While we do recommend bootstrapping your startup for as long as you can, be careful not let it kill your growth. If you want to make it into the startup hall of fame, you probably will need funding at some point. Make sure you’re always on top of your financial situation and be smart about the decisions you make.
If you like the idea of bootstrapping, we think this will inspire you
Steve McLeod interviews startup founders about their businesses and discuss the different ways to make bootstrapping work.
Founders at Work
Ever wondered how successful entrepreneurs got to where they are? Did they struggle? Was it even that hard? Jessica Livingston asks successful founders to share stories from their early startup days.