Bootstrap Your Startup to Success
Startups are usually most efficient during their initial stages when entrepreneurs are brimming with confidence and trust their ability to conquer the market. Among all possible challenges that they can face on their journey, the one that stands out is that of funding.
Bootstrapping is a situation where the entrepreneur relies on his personal income and savings to fund his business. While bootstrapping, there is a considerable learning curve involved which can benefit startups in the long run. Here are reasons why you should consider bootstrapping your startup:
Independence in Decision Making
Bootstrapping allows entrepreneurs to take business decisions on their own, which is highly appealing to them. Independence is usually the very reason most founders like to set up their own venture in the first place. While bootstrapping, generally no other stakeholders (other than founders) are involved, which means that startups are not burdened with the responsibility of satisfying someone else’s interests. Rather than giving investors an expected exit or return, the focus remains on the profitability of the firm.
Independence pushes entrepreneurs to make informed decisions because they will be responsible for the consequent outcomes. It also allows them to hone their leadership skills and take charge of their team.
Boosting Creativity and Innovation
The biggest challenge faced by bootstrapped startups is dealing with scarce funds and resources. Entrepreneurs and their teams are pushed to think out of the box and come up with solutions that will
extract maximum value and utility out of every resource. It is a well-known fact that necessity drives invention, and it is no different in the case of bootstrapped startups.
It is also easier for these startups to align the goals of the team members with those of the company.
Ensuring a Tighter Check on Costs
When there is a free flow of money, you have the luxury of spending as you wish. However, when an entrepreneur is using his own savings, he is wary of not burning a hole in his pocket. Any cost that cannot be recovered, or will not add value to the company’s operations is automatically avoided. Being financially responsible is the key to being a successful bootstrapped startup.
Regardless of how small the expense is, the entrepreneur must ask himself if it is worth spending that amount. Even if there is an iota of doubt, it should be deferred until it is necessary.
Retention of Ownership
With bootstrapping, you remain the owner of your business, and that has its perks. Even if you share the stake with a co-founder, you will be at ease knowing that they have the same interest in the company as you do.
Diluting your business’s ownership among a group of unknown people may not appeal to you while you are still early in your operations. The fact that you have 100% ownership of your company also means that you will be 100% responsible for all your actions.
Ease of Raising Funds in the Future
Whether you were unable to raise money for your startup upfront or chose not to, by successfully running your company with bootstrapped funds, you can increase your chances of later convincing investors when you need to.
You can show them that you were able to create a product that was accepted by consumers and that the company has the potential to grow substantially in the future.
It also reflects well on the part of the entrepreneur who holds confidence in his product and decisions and backs himself to prove his mettle.
As an entrepreneur, you can bootstrap your startup for as long as you deem it to be necessary. However, before you decide to raise finances, you should ensure that your product is accepted in the market, and there is enough potential for growth. There are plenty of successful startups to draw inspiration from, some of whom are bootstrapped till date!
