The Business Benefits Of Bootstrapping


Are you planning on starting a business, or already well underway in the process? If so, there are a few facts you need to understand about startups. Firstly, 82% of businesses fail because of cashflow problems. Secondly, it’s hard to raise external funding when your business idea is untested in the real world in any way. And finally, if you do find funding at this early stage, you will ultimately be seen as a significant risk, and the chances are you will be forced to give away a significant proportion of your business.

Bootstrapping could be the answer. It’s a term used to describe the process of starting a business with a minimal amount of resources or external help – as lean as you can get, in other words. If you do bootstrap, you can expect to be challenged – a lot – but if you look at the history of almost every successful company, the strategy forms a huge part of it. With this in mind, we’re going to go through some of the benefits of bootstrapping your startup – let’s take a closer look.

It Makes You Think

All businesses have resource problems, whether you own a Fortune 500 company or are a one-person startup in its earliest stage. Bootstrapping means you take great care in learning how to do more with less, and it’s the perfect introduction to how all businesses actually work. Bootstrapping also gives you an instant understanding of your current financial state – another vital piece of knowledge for any business leader.

It’s Cheap

When you don’t have much money, you are forced to cut costs in almost every area. A lot of startups look to impress and invest heavily in the smartest, trendiest gear and equipment, or expensive office spaces. When you bootstrap, however, you only buy what you need. That goes for buying cheap ink cartridges all the way through to using a spare room in your home as the hub of your business. You’ll reduce your costs by a significant amount and give yourself a frugal platform that not only impresses potential investors but also gives you higher chances of survival.

You Get To Test Your Idea.

Be honest – if someone with a lack of real-world business experience approached you and asked to borrow some money, how confident would you be of getting it back? Banks, lenders, and investors tend to favour experience and a successful record of entrepreneurship over anything else, and it’s unlikely you will find anyone willing to take a gamble. Bootstrapping gives you the opportunity to gain valuable experience and also gives you time to prove your idea works on a minimal budget. If you can succeed with virtually no resources, you will demonstrate to funders that you are more than capable of even more success with a little investment.

Bootstrapping Is Fast

Finally, if you need to raise funding to start your business, you could spend six months, a year, or even multiple years trying to find it. Bootstrapping gets you out of the blocks super fast, and as soon as you start making profits, you can pump them back into the company.

Have you started a bootstrapped company? Why not share your experience in the comments section below?


About Author

Ben is a follower of Christ, a rabid computer geek, small business owner, and breaker of things. He is married way above his station in life and has three wonderful children who have made driving him insane their mission in life.

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