Bootstrapping a New Business

While the pull of outside business investment in the form of a venture capital partner can be enticing – especially considering the high cost of launching certain types of companies – it pays to be cognizant of what you give up as an owner when pursuing this particular financing route.  If you are concerned about losing control over your company over the long term, or being forced to accept terms which could put your business in a straightjacket, then you might want to consider bootstrapping as an alternative form of growth.

If you choose to go down the road towards bootstrapping, you’re in good company.  Most businesses aren’t in a position to attract the attention of venture capitalists, or are even interested in that type of investment.  This method of expanding and nurturing a company’s business is as old as time itself, and relies primarily on the discipline, hard work, and innovation of its founders and employees.

The first and most obvious step towards bootstrapping your business idea from fantasy to reality is to do as much research as possible on the market you will be serving and the product or service you will be providing.  This can be an expensive and time consuming proposition, and you might end up heading in a different direction than you originally intended.  A strong knowledge base is an important part of building a firm business foundation that will support later growth.

Next, actually sell your product.  You’re not really a business until someone reaches up and takes whatever you are offering off of the shelf and hands over their hard-earned money for it.  This might seem like something that doesn’t need to be pointed out, but in the era of digital companies with shaky monetization strategies it’s important to keep in mind that you can’t bootstrap to the next level without sales feeding the financial engine at the current one.  In addition to providing cash, customers also spread the word about your products and open up the potential for fresh markets you might not have considered.

Once the money starts rolling in, it can be tempting to just start spending it, whether on the business or on yourself as a reward for all of the hard work you have put into your company.  Unfocused spending, however, is a great way to drain the corporate coffers and reduce the chances that you will be able to capitalize on any new opportunities that might present themselves.  You need a strict financial plan and the discipline to stick to it in order to fund your company’s growth internally.  This means setting goals, meeting those goals, and investing your revenues in ways that will help you earn even more money in the future.

A big part of bootstrapping means making continual improvements to the products and services you sell, as well as how you market them.  Investing in higher quality materials, better training for employees, and advertising campaigns with a greater or more focused reach are all excellent ways to keep a company’s momentum moving forward.  Spending in these areas – as long as it is part of an overall strategy – is a great way to enjoy the fruits of your labor and plant seeds for future success and growth.  Keeping the lines of communication open as well between customers and your offices will enable you to keep a close watch on the pulse of your market and avoid the disconnect that can spell an early end to your bootstrapping efforts.

Bootstrapping involves a lot of hard work and a willingness to see things through even when the going gets tough.  By sticking to your plan and adapting where necessary, you can enjoy the rewards of business growth that this type of approach has to offer.