Digital Strategist and Consultant, Growth Hacking Specialist worked for both startups & big brands.
Have you ever heard about the old saying, “Pull yourself up by your bootstraps?” It means improving one’s situation or getting success through one’s own efforts, without outside help. Why am talking about bootstrapping here?
It applies to your startup, too.
Bootstrapping your startup means that keeping your business updated and on the growing stage with little or no venture capital or you can say without any external investment. In short, this word symbolizes the business owners typically relies on their own savings and revenues in order to operate and grow their business entity in the race.
It’s not easy to do, but the rewards of bootstrapping are incredibly worthwhile. Curious to know about how should you incorporate this strategy in your business goals and objectives?
Let me give you one example of a successful entrepreneur who has put his business off the ground just by inculcating the strategy of bootstrapping in his startup.
Nick Woodman founded GoPro by applying bootstrapping.
Well, Nick Woodman was doing the business of entertainment and promotions website FunBug. However, it didn’t do well and went bust in 2001. In order to overcome anxiety, stress, and failure in his life, he decided to have a surfing trip to Australia and Indonesia. While enjoying the experience of surfing, he noticed that the cameras used by surfers usually wrapped around their when capturing the moments.
Consequently, it ended up breaking loose. So, he decided to launch a camera that will capture not only their more active moments but also the passionate experiences. With personal savings and a $35,000 loan from his mother, Woodman launched GoPro (known initially as Woodman Labs) in 2002. Until 2012, he was continuously doing bootstrapping the San Mateo, California-based business. After that one tech manufacturer, Foxconn invested $200 million in his company. According to Bloomberg, Two years later, the company went public at a $2.96 billion valuation.
That’s a bootstrapped startup!
Now, you realized the importance of being able to respond quickly to change and bootstrapping the company. Great!
The first and foremost tip for bootstrapping your startup is to use coworking spaces. No matter how fancy office and ping-pong tables lures you while setting up the business, coworking spaces should be your first preference.
I am saying this because we all know that in the early stages of the business, we have to focus on every expense so that it will not lead to any problem especially the financial one. It is, therefore, better to use that money for the acquisition of the customers and marketing your business.
More importantly, monetary savings is not only one factor for incorporating coworking spaces for your organization, but there are many additional benefits.
Let me explain the other benefits with the help of an example:
Gary Vaynerchuk started Vaynermedia in 2009, but he didn’t rent an office in order to operate his business. No doubt, he was already rich at that time, but still, he bartered his time for that space so that he could eliminate that overhead in the beginning. He started his business in one of the coworking spaces of New York City, United States.
Working in a coworking environment doesn’t only help him to become a better decision maker, but also stay away from the stress of renting a long-term commercial office. Hence, even if you have the funds to spring for an elaborate office, consider a coworking space.
Another method for building your brand from bootstrapping your startup is to evaluate every expense deliberately. I have stated this statement in the first tip also that cut the maximum expenses in the early stage of your business. Well, if you are spending freely without giving a second thought, then it can cause a problem down the line when you face a challenge.
Therefore, being financially responsible is the perfect key for managing your business in the competition.
I have gathered some more information about this situation so that you can get a better understanding of my perspective.
Damon and his friend, Stephen has recently launched a tech startup. They are trying to get their digital marketing strategy iron out so that they can attract more customers towards their business. However, they are financially stable and have over a half-dozen tools and products worth $1,800 a month. What’s more, they are not using those products correctly and wasting approximately $21,600 a year, because of careless spending.
Therefore, bootstrapping is one of the most valuable stages a founder goes through. And when you scrutinized every single expense, then you definitely find out the unconventional way to solve complex problems. Rather than spending blindly, all the business owners are required to take care of their expenses so that they can operate their business carefully.
Avoid Credit cards for your business expenses? Really?
Yes! All business owners are strongly advised to cease from spending money through a credit card. No doubt, credit cards help business people to save their organization in the moment of financial crisis. In fact, in difficult financial situations, it is one of the easiest ways to alleviate that stress.
Only if you are paying them off every 30 days is this best option for you. Otherwise, credit card debt can quickly add up and impact you negatively, including ruining your personal finances.
So, the significant advantage of bootstrapping is that you are retaining the ownership of your company without raising any capital and maintaining your business as debt-free as possible. If you want to continue to own your entire company, avoid credit card debt. In this way, you will perform much better and be able to think much more clearly with that weight off your shoulders.
It is really far from that. I have come across several numbers of startups which raises a lot of venture capital money and then fail.
That’s why I am saying that no matter how much venture capital money will an excellent tool for your business, but it’s not proof the best way of setting up the company. On the contrary, Bootstrapping might result in a slower growth curve, but it often results in a much better financial outcome down the road.
Do you know several entrepreneurs prefer to invest their money in PR firms that creates a tremendous amount of buzz and exposure for the startups?
As a matter of fact, they help the business people to make their mark in the race by promoting their products and services among masses. But what’s the point of spending $10,000 or $20,000 monthly on PR retainers, if you can save them by bootstrapping your business.
If you are willing to roll up your sleeves and ready to do the maximum work, then bootstrapping will be the best perspective for your business. Firstly, dedicate your time to replying to daily queries through free services like HARO. Secondly, make a network with as many journalists that focus on publishing content related to your industry. Thirdly, try to use social media marketing platforms for monitoring breaking news regularly.
To conclude, I believe that bootstrapping a business is a complicated task, but its rewards are really gratifying. With the incorporation of coworking spaces, carefully examining the expenses of the business, and more importantly, avoiding the use of credit cards and venture capital money, bootstrapping is almost easy for the business people to reach their goals and objectives.
Eventually, bootstrapping is making an investment in yourself that will pay off for your company in the long run. In the end, I would like to conclude that if you do decide to bootstrap your startup, remember that you are not so much investing in your company, but investing in yourself for the sake of your company.