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10 Reasons to Bootstrap Your Business

Posted Under: Capital, Entrepreneurship, Financing

Getting your startup off the ground takes cash. There are a number of ways to raise funding for your business, but with every investment dollar you accept you sell a piece of the startup’s soul. You want to be able to focus on building a great product, not on balancing the ideas and priorities of a pool of investors.

That means bootstrapping. Bootstrapping opens up a whole new set of possibilities that you just don’t have with investors. Here are some of the ways bootstrapping can help your startup shine:

Bootstrapping tells the world you’re committed. 

Anyone can go out there and convince angel investors to part with capital. It takes quite another thing to put your own personal financial well-being on the line. If you’re committed to the startup, your employees (and eventually your customers) will be, as well.

Bootstrapping is faster than investment.

You can chase investors around for a decade without ever having a product to show for it. Depending on your field and your product or service, you can have a bootstrapped product to market in less than six months. You might even start to turn a profit within the first 12 months.

Bootstrapping opens the door for better investment.

Investors are more likely to put capital behind your business if you’ve already got something to show for it. Your bootstrapping can get your business out of the gate, opening up opportunities for investment. That’s called “leverage,” and it will let you get more investment in exchange for less equity in your startup.

Bootstrapping tests the market.

Getting a product to market quickly via a rapid prototype process (funded by bootstrapping) lets you see what your customers really want and what they’ll buy. This lets you come back and build a product that’s even more in line with customer demand, creating a much wider market.

Bootstrapping creates positive pressure.

By having your own funds and your own financial well-being on the line, there is even more incentive for you to get out there and do what needs to be done. When you’ve got venture capital behind you, it’s not truly your own neck on the line. If you get to the place where you believe “this startup must succeed or I’ll lose my mortgage,” you’ll work your butt off to make it succeed.

Bootstrapping gives you flexibility.

When you have investors, there are immediate expectations. Investors like things to be done in a certain way. In many cases, investors will tie you down to methods and models that are proven effective. While that can be good, it can also stifle creativity. By branching out on your own, you might revolutionize your field.

Bootstrapping bypasses the approval process.

If you want to make changes to your business model on the fly, you can do it when you bootstrap. When you have investors, there’s an approval process you need to follow instead. You can make a decision one day and implement it the next.

Bootstrapping puts you in touch with every aspect of how your business works.

By putting all of your business in your own hands, you’re going to know how it works all around. When the time comes for you to bring in someone to do marketing, you’ll fully understand what her job should be like. The same goes for business development, production, and other business areas.

Bootstrapping lets you keep all of the profits.

We’ve talked a lot about the risks involved in bootstrapping. Bootstrapping also lets you get all of the gain, however.You can be making money from day one.

Bootstrapping brings in committed, talented people.

People who go to work for a bootstrapped startup have an immediate incentive to work and to work hard. They know that their livelihood depends on the success of the company. They’ll work hard and long to make sure that you get off the ground. Best of all, they won’t come to work for you in the first place if they don’t believe in your company. That kind of faith shows through in every aspect of your business.

Bootstrapping isn’t always the easiest way to fund a startup. Indeed, for some businesses it may not make sense at all. If your business can be funded with bootstrapping, however, give it some serious consideration. Not only will it pay off in the near term with a better product and more freedom, it will pay off in the long term with a greater share of the profits.

About the Author:Greg Muender is President of of Ticket Kick, a California company that helps drivers to reduce speeding fines and/or get speeding tickets, and other traffic tickets dismissed by helping drivers through the trial by written declaration process. The company, which formally launched in 2010 after providing similar services since 2006, is the leading company in this space and growing rapidly.

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