Bootstrapping

What is bootstrapping?


Every single successful company like Coca-Cola, Apple, Dell, Microsoft has a common that is all these companies are bootstrapped. Bootstrapping is the act of self-financing by using your own money and no other equity. If an entrepreneur attempts to fund and build a company from personal finances or from the operating revenue of the new company is called bootstrapping. it means getting your startup going without the help of venture capital or an angel investment.
A bootstrapping startup will rely on the interval revenue only. In other words, the company spends what it makes. In early stage every company needs a little bit of funding so, a typical bootstrap startup relies on the founder’s saving or credit.
The term ‘’pull yourself up by your boot” was first used by the author of 20th century James Joyce, he uses this term to mean getting oneself out of a difficult situation on one’s own.
In short, Bootstrapping is a process in which an entrepreneur starts a company with the minimal amount of capital

Let’s look at some advantage and disadvantage of bootstrapping a startup.
Bootstrapping
credit: pexels


Advantage of Bootstrapping


You are the boss:

You will be your own boos and do not have to constantly explain or take advice from a banker or venture capitalist. If you choose to bootstrap you don’t have to give up equity. Bootstrapping provides you a wonderful “foundation of freedom” and the sense of freedom is priceless.

Focus:

By limiting the input of outside influencer you can focus on what your company does best. Moreover, you don’t have to spend time hunting out investment.

You become super efficient:

With no funding, you learn to manage to manage the company’s money efficiently, as humans we are more apt to take care of something extremely well when we have absolute ownership.
As all money coming from your coming from customers, they become you’re first not investors.
So, if you survive to bootstrap you will have a strong, efficient and customer focused company.
Business Bootstrapping
credit: pixabay

Disadvantage of bootstrapping

Own Risk:

As your own 100% of your company the risk will be also 100% bootstrapping means your entire startup rely on you. If you make a profit, that’s great, if you don’t you can easily end up in a lot of debt, the financial risk to bootstrapping is huge, so owners must have a plane for moving forward.

Take much longer to grow:

It can take much longer to grow a company without investment, sometimes you will likely not be earning any money for a long time. You can invest in resources once the money starts flowing towards you, but this will be slow, and you’ll have to adjust your goals.

Does bootstrapping work :

As I mentioned earlier that Microsoft, Apple, Amazon, all are the big companies that started in a garage with bootstrapping, so we can say that bootstrapping works. But many of these company did bootstrap in an early stage, later they took venture capitalist and investor’s money. They bootstrapped to established to produce a basic product and for marketing and sells when they established their basic business then they took funding to grow, moreover bootstrapping requires guts, passion, and skill plus bootstrapping brings out the best in Entrepreneurs.
By doing bootstrapping you established a customer base and cash flow before asking for a loan or investment.

Thank you for reading.

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