While startups are the ultimate dream project of an individual or group to revolutionize the world; some startup ideas never even see the light of the day for the sole reason of not appearing attractive to investors. And thus, startup owners nowadays invest more time in appearing great than building something great.
However, one can win over investors with great presentations, but marking a solid place in the industry is still dependent on the quality of the product or the service building.
Great startups are still built off a vision of changing the world, an idea to solve an existing problem, the sheer belief to make it work, the right resources to accelerate building, and the essential means(funding) to actualize this dream into a reality!
While most successful startup stories convince you to go the Venture Capital way, many still resort to using personal resources to finance businesses.
In simplest terms, bootstrapping means funding your startup from your resources. It could be through savings, selling personal assets, or taking on debt. The critical point is that you are not seeking outside funding from investors or venture capitalists.
There are several reasons why bootstrapping your startup can be beneficial:
This has to be the most crucial reason to bootstrap your startup. When you’re not answerable to anyone but yourself, you have the freedom to make decisions without having to worry about what investors will think. You can also avoid giving up equity in your company, which means you won’t have to give away a portion of your profits down the line.
Bootstrapping forces you to be frugal with your spending, which is a good thing. You’ll learn how to get by on a shoestring budget, which will stand you in good stead when scaling up your operations later.
As much as Venture capital backs up a startup in the initial days, it becomes a burden once you lag behind the target. Venture capital gets unspared even once if you miss the profit-making side, whether in recessionary business conditions or industrial fall-out.
Sometimes you have everything to get your startup going, but the bad times do not even spare a good time. At such a time, when all you have is your idea and your belief in its capability, only your savings and funds can transpire that idea into a new reality.
Example: Steve Jobs and Apple
Steve Jobs bootstrapped Apple for the first 7 years of its existence, selling his car and using the proceeds to finance the development of the company’s first computer, the Apple I.
Studies have shown that bootstrapped startups have a higher success rate than those that take on venture capital. This is likely because bootstrapped startups are forced to focus on generating revenue from the outset rather than buying out time through investors, giving them a solid foundation for building their businesses.
Example: Atlassian
Australian software company Atlassian bootstrapped its way to success, generating $10 million in revenue within the first few years of operation. The company is now worth over $3 billion.
They have been in the real market from day one, fighting to gain customers’ attention and interest rather than that of the investors.
There are many ways to bootstrap your startup, but here are some of the most popular methods:
This is the most common way to bootstrap a startup. If you have some money saved up, you can use this to get your business off the ground. Just be sure not to dip into your emergency fund – you don’t want to be in a position where you have to put your business on hold because you can’t afford to pay your rent.
Another option is to take a personal or business loan from a bank. The benefit of this is that you won’t have to give up any equity in your company. However, you will need to be able to repay the loan, so make sure you have a solid business plan in place before you apply.
If you don’t mind giving up a portion of your company, crowdfunding can be a great way to raise money for your startup. Platforms like Kickstarter and Indiegogo allow you to pitch your business to the masses and get people to invest in your venture.
One of the most significant decisions you’ll need to make when bootstrapping your startup is to go it alone or bring on a co-founder. Both options have pros and cons, so weighing the decision carefully is essential.
If you bring on a co-founder, try to find someone who shares your vision and whom you can trust to help you grow the business. Laying proper ground rules & expectations in the beginning always helps the future. Make sure you have a formal agreement first and then involve money in the business.
Howsoever solid and reliable a business you plan, there will always be uncertainties and loopholes here and there, be they internal or external. It is never prudent to leave the job first, nor does it make sense to bootstrap with credit cards. A steady income is not only necessary to keep your business workings going, but a means to buy more time for your business.
Of course, when the time is right, when the business can support itself, you’ll need to focus on your business full-time, but in the early stages, it’s a good idea to keep your day job.
You can’t afford to spend months or even years developing a perfect product when you’re bootstrapping your startup. You need to get something out there quickly and start generating revenue. This means building a minimum viable product (MVP) that contains the core features of your product but is still usable by customers.
Remember perfection can cost delay, and you do not have time and money to seek that. You need to fly the aircraft while you are still building it. Leverage the power of feedback from your audience to build better.
One of the best ways to get your business off the ground is by leveraging your personal and professional network. Talk to your friends and family about your business and see if they’re willing to help out in any way. Perhaps they could be customers or even evangelists for your business. And don’t forget to reach out to your professional contacts – they could be a valuable source of advice and introductions.
A plan in hand steers off many follies automatically. So before you start bootstrapping your startup, you need to determine how much money you need to get started. Realistic figures and pictures will always take you far, reduce the chances of burnout, and also will not overextend you with debts.
This will vary from business to business, but it’s essential to have a clear idea about:
PRO TIP- Be conservative now, for the future holds better!
Building an audience before the launch could involve creating a blog or social media account and sharing interesting content related to your business. By doing this, you’ll be able to generate interest in your business and get people talking about it before it even launches.
PRO TIP- Target the right people – not everyone’s meant for everything.
Marketing can make or break your idea. Finding cost-effective ways to get the word out about your business can be tricky, but if done right, it can change the face of your startup into a brand in just a matter of time. There are plenty of free or low-cost marketing channels you can explore, such as social media, content marketing, and email marketing.
It’s also essential to A/B test everything. This will help you fine-tune your marketing efforts and ensure you’re getting the most bang for your buck.
Play on your strengths and do the more critical tasks. Time and money are essential; choose wisely among the tasks and make the most of your time and skills.
This practice will help you determine what tasks you should outsource and what you should focus on.
One of the best ways to generate early revenues is by selling services and getting your name out to the public from the beginning. Build a reputation as a thought leader first, deepen your relationship with the audience, and do not merely restrict yourself to the offerings.
Help the audience by offering consulting services, freelance work, or even teaching classes. Once you have some money, you can use it to fund the development of your product.
Remember that what comes easy also goes easy. Keeping a long-term perspective
means making decisions that will benefit your business in the future, even if they don’t have an immediate payoff.
For example, you might choose to invest in developing a solid brand identity or building a loyal customer base. These are the kinds of decisions that will pay off in the long run and help you build a successful business.
Burn rate is the rate at which you spend money relative to the revenue you’re generating. It’s essential to keep an eye on your burn rate to ensure you’re not spending more than you’re bringing in.
You have no Godfather in here, all you have is yourself, hence tracking results at each step becomes all the more necessary.
Finally, you must be prepared to pivot your business model if necessary. This means changing how your business operates to better suit your needs.
For example, you might need to switch from a subscription-based model to a pay-per-use model. Pivoting can be challenging, but it’s often necessary to bootstrap your way to success.
As much as an idea can drive you, setbacks can seriously dent your confidence time and again. Bootstrapping a startup is not easy and it will take much hard work, dedication, and, most importantly, time.
It is not humanly possible to stay motivated for years straight, so consider joining a bootstrapping community.These communities are full of like-minded individuals working on bootstrapping their businesses.
PRO TIP- Never lose sight of the WHY you started this.
Prepare yourself for a marathon, not a sprint!
It is scary, let’s put it out there.
But beyond that point, there is a rapid feedback process that can build your startup like others. It is a great way to generate interest and excitement around your business, enabling unparalleled trust and transparency within the audience.
It enables a process of continuous, on-the-job progress from the current stage.
#BuildInPublic
Bootstrapping a startup takes time and you need to be patient. It’s essential to track your progress to see how far you’ve come. This will help you stay motivated and focused on the task at hand.
These metrics don’t give you an accurate picture of your business’s progress.
For example, your number of social media followers doesn’t necessarily reflect your business’s bottom line. Instead, focus on more meaningful metrics, such as revenue, profitability, and customer satisfaction.
Beware of vanity metrics- Hollow metrics only generate hollow results!
One of the best advice for bootstrapping a startup is to do things that don’t scale. This means focusing on activities that can’t be easily replicated or automated.
For example, you might need to focus on generating word-of-mouth buzz or building relationships with key partners. These are the kinds of things that will help you get your business off the ground in the early days.
Although you should not have a Plan B if this idea is what is your calling. But, it is always crucial to have a Plan B when playing with fire.
When bootstrapping a startup, you should always explore various funding opportunities, even if you are not planning to use them. Why?
Because when the time comes, and your business is not doing as well as you wanted it to, these funding opportunities could be your savior.
KiwiTech can be one of those potential saviors for your bootstrapped startup. Our team helps startups in various stages with strategy, product development, marketing or funding.
We have a vast network of VCs, angels, and corporate investors that we can connect you with. So, contact us today if you are bootstrapping your startup and looking for some help. We would be happy to chat with you about your business and see how we can help you grow.