It’s an apt term for sustaining your business without outside funding.
The term bootstrapping originates from a fantastic story I read as a child about ‘The Surprising Adventures of Baron Munchausen” where the Baron pulls himself out of a swamp by his bootstraps. However, wikipedia asserts the term ‘to have originated in the early 19th century United States (particularly in the sense “pull oneself over a fence by one’s bootstraps”), to mean an absurdly impossible action’.
It does sound impossible but for every budding entrepreneur, the term has entered the modern business terminology. If you can’t raise any external funding other than your own, then bootstrapping makes sense to pursue your vision and develop the business.
Here are 10 key actions for bootstrapping your startup:
1. Focus on cash – cash is king and you must work out every cost detail and then stick to it. Work out your monthly cash burn and how many weeks or months you can survive and keep doing that. Keep the sales cycle short and collect customers debts fast. Forget about the ‘big sale’ and focus on getting as much volume in as short a time as possible.
2. Don’t wait for everything to be perfect – get the product out and achieve as much sales as possible. Perfection takes time and will come.
3. Make realistic targets – don’t make up sales targets that are unachievable – keep it real and get on with it.
4. Offer consulting services – you are the expert, why not sell some consulting services in your field whilst you’re finishing your product?
5. Hire what you can afford – at this stage go with staff you can afford and be understaffed but not all the time. As the business grows, make sure you have enough staff.
6. Network – get the word out and spend as much time as you have to in networking and attending industry events. If you don’t have an advertising budget, who better to sell you product than yourself?
7. Keep costs low – negotiate on everything from supplies to sales and get the best deal you can.
8. Go for ecommerce – go direct as much as you can and use social media to hype your product.
9. Price it right – make sure you price your produce/service right and undercut the leader. You’re not trying to be Apple at this stage or even Samsung.
10. Pick your battles – make sure you choose where to fight, you can’t afford to fight on all fronts. Don’t buy anything you don’t really need on day 1.
There are probably many more ways to bootstrap but the objectives to grow you business at your own pace rather than some outside investors’ and keep the ownership to yourself.