Bootstrapping is not just another coinage from the entrepreneurial world… behind the term is the concept of initiating and pursuing a project with your own means, and minimal external financial assistance. The goal is actually to use the income generated from your first customers to fund each new step of your project. It might sound counterintuitive or difficult to achieve (and justifiably so), but “bootstrapping” your project can be a powerful accelerator for its success!
Most importantly, you should be aware that bootstrapping can be used in all business areas and at all maturity stages of a project. It isn’t only useful when you are first starting-out. Bootstrapping is more than a few techniques and best practices: it’s a mindset you can cultivate and apply throughout the life of your business.
The advantages of bootstrapping
As a bootstrapper, your project will have a number of advantages that will make you a better entrepreneur:
- You’ll become more of a fighter: you will face many challenges as you travel down the road of entrepreneurship, some unexpected. And you won’t always have the chance or time to call up the right person to help. By relying on yourself and your own skillset to work through issues, you will learn to do things for yourself! Luckily, there’s a wide range of free tools you can use for help in all areas. And you’ll improve your tolerance for stress in the process – a key factor for starting-up and managing a company.
- You’ll become more creative: the lack of resources will urge you to find alternative solutions you would likely never have thought of otherwise. This will develop your sense of innovation, a quality that can hugely impact the future of your business: better products/services, more creative communications, optimized costs, etc. This approach has a name: Jugaad. With roots in India, Jugaad is a “frugal” approach to innovation enabling the creation of new products and services when resources are very limited.
- You’ll be able to focus on the essential: the difference between a project that fails and one that succeeds is the paying customer. Period.
When you’re launching a business, your top priority is to ensure there’s a market willing to pay that will make you profitable. Seeking outside funding prematurely is a trap many, many entrepreneurs waste a great deal of time and energy on. Bootstrapping forces you to focus on the elements that are vital to the success of your project. Your sway and credibility will be all the greater when comes time to apply for external funding.
How to apply it to your project
No one said bootstrapping was easy! It requires rigour and a decent amount of preparation.
Here are a few tips for effectively putting it into practice for your future business:
- If you’re partnering-up, choose co-founders whose skills complement your own: it sounds obvious, but the more complementary the team, the less you depend on external providers or employees. Keep in mind that hiring employees requires a solid cash flow. Taking on employees too early in the game can put a strain on company finances in a jiffy. Stating out, it’s often best to find associates who are willing to invest their efforts at your side. If you do not know where to look, build your network. Platforms like Meetup are brimming with events around entrepreneurship and other themes relating to your project: there’s definitely a chance you could meet your future associate(s)!
- Don’t rush to get your project off the ground: a project should never be done in haste. The temptation to follow your instinct and pursue a promising market opportunity “pronto” can be pressing… but you must resist! The risk: making rushed decisions and throwing your money out the window because of them. Conversely, if you have a job as a paid employee, take your time and save up a max of money. Keep your job and start working on your project on the side. Try to think forward to the administrative procedures required to launch your business by getting in touch with the House of Entrepreneurship, for example. Create your legal structure once you’ve completed the pre-creation phase and validated your project’s viability. This will allow you to defer launch costs as much as possible and avoid committing funds to a project with potentially high risk of failure!
- Always keep learning: it has never been easier, faster or more affordable to educate yourself on all topics imaginable. Between the video tutorials, blogs, MOOC platforms, webinars, etc., there is no lack of content out there for picking up new skills! Plus, you’ll undoubtedly learn things that will be useful once your business has begun to grow.
- Be wise about subcontracting: starting out, you will have a lot to do on your own. But the goal isn’t to be able to handle all tasks relating to your business from A to Z. Once your project begins to grow, the challenge will be choosing what to contract out, and to whom. For instance, if you know nothing about accounting, make a point of learning at least the basics so you can deal with day-to-day operations, but get assistance from a professional as soon as possible. Luckily, it’s now very easy to find freelancers to help via a number of specialized platforms.
- Develop a content strategy to attract customers: such a vast matter, it alone could be the topic of several articles! Any way you slice it, implementing a content strategy is an excellent way to enhance your reputation, get through to customers and potentially generate sales, and all this without spending thousands of euros on pricy ad campaigns. According to a study conducted in the United States, 70% of customers prefer to come into contact with a company via an article rather than an ad. In short, content has become king for bringing in customers. To look into this further, this free short guide will help you set up a content strategy for your business.
To sum up, “bootstrapping” your project will give you a certain number of long-term advantages: boosting your profile as an entrepreneur (versatility, fighting spirit, ability to learn quickly, etc.), better financial credibility (it’s a real peak to approach banks and investors having financed most of your project yourself), improved judgement in choosing service providers, etc.
Placing your focus on validating a business model that brings in money via your customers means you won’t be desperately dependent on external financers. It’s not a simple exercise by any means, but your efforts will be rewarded with the resilience of the businesses you develop.
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