There is one question that we always get,
How can I start or grow my business without taking external funding? The simple answer is BOOTSTRAPPING!
Bootstrapping is nothing but using your savings to start a business. Entrepreneurs do not seek funding from venture capitals or investors, which eliminates the pressure from external sources and keeps the link between the founder and his clients direct and accountable. Bootstrapping happens with little or no investment, which means the founder is the only funding source behind the business.
Any Bootstrapping business starts with an idea and some personal capital, from savings or borrowed funds from family or friends.
When you get funded by an investor, you need a detailed plan of fund-allocation that includes marketing, crew management, transport etc. In bootstrapping, you start small and take baby steps according to your situation. The company thus depends on the cash flow from clients/buyers to expand the business, where a bootstrapped firm’s priority remains to get clients and ensure stability in business growth. With every successful milestone, the company takes a step towards expanding the business. This process works well if you start with a limited budget and are focused on strengthening the current firm at your pace. Bootstrapping will demand a lot of your time as the company will need to spectate every traction taking place.
Some simple steps to get started
Table of Contents
1) Research:
A mandatory step before starting any task or business. An entrepreneur needs to research his idea well, check for statistics and compare your business model to other companies in your niche. You should be able to answer some of the questions below,
- Where do you see your business in 5 years?
- What is the business plan?
- How can I start with limited capital?
- Budgeting ( Client targeting peers and friends than spending on marketing)
2) Find Seed Funding:
Seed funding is the capital you require at the starting of a business. You can use your savings or borrow them from family or friends just to get started! You can invest and reinvest the capital you generate from your current business or other side hustle.
Remember, taking bank loans or getting investor funds is NOT bootstrapping. You start small where you try to sustain with your capital. here are 8 different ways to fund your startup.
3) Grow Your Business:
The next step is to use the funds to establish and grow your business. Here, you will brainstorm all available ways to boost your business with strategies that need little to no investment. It can be using your friend's empty garage to work or using your free social media account to promote your product or services. The smarter you work, the higher you will grow!
4) Tackle The New Business Challenges:
Every business goes through some hardship to remain stable. And a bootstrapping company has its challenges like limited capital or no external support, which can make the journey tiring and hopeless at times, but understand, it is only the glitches before you start successfully operating. The focus should be on keeping the clients and generating capital whilst reinvesting the money earned in sustaining the company. It is a slow process that needs a massive amount of patience and dedication. Know that it will yield the same or better outcome as any investor-funded firm would result in the long run.
Examples of Bootstrapped businesses
- Apple - Founded by Steve Jobs and Steve Wozniak in 1976. Apple's original headquarter was a bedroom and then a garage at the suburban home of Steve Job’s parents.
- Dell- Started by Michael Dell in 1984 when he studied at the University of Austin, Texas. He founded the company from his dorm room, eventually dropping out of university to work full time on building the company. Dell got started with a capital of 1000 dollars taken from his family.
Several other brands such as Van Heusen, GrabOn, Zerodha have had humble inception before becoming successful enterprises.
It is crucial to know that a business requires some capital to grow but, it does not have to be huge or affordable. If you are a budding entrepreneur with a great idea, all you need is some hard work, time and a massive amount of dedication to explore and strategise ways in which you can boost your company with limited resources.
