4 Things You Need to Do When Bootstrapping Your Startup
| 4 minutes read
Far more founders appear to be shooting for the stars and going for the diamond to raise capital to fuel their startup ventures taking the guerilla-style bootstrapping path. It’s never been easy to roll all the money back into the startup rather than your pocket. If you are thinking of bootstrapping your startup, consider these four tips to help you reach your goals. But before we go directly to the point, let’s understand the meaning of bootstrapping, we are sure some readers might not know about it, and we (unboxing Startups) never let any readers go back with any doubt.
1. What is Bootstrapping
Bootstrapping means starting your startup and building it using your own money, managing day-to-day life from the operating cash flow. In this, you keep investors or stakeholders away, which means that you don’t have to incline up to someone else’s expectations, nor give away any part of your business in exchange for money. Everything will be operational from your money without any external help.
Money can come from any number of places; some are;
- Monthly income from a day job
- A personal loan
- Credit cards
2. What are the benefits of bootstrapping
There are several benefits to bootstrapping for startups. Some are listed below.
As soon as you block external funding — with the possible exception of rewards-based crowdfunding — you surrender some of your control or lose the ability to work freely. Since you accept the external financing, you will most likely give up equity or give up some other crucial decisions. Whereas, Bootstrapping allows you to make the decisions as per your business situations.
2- Learn as you go
Bootstrapping allows you to learn the ropes as you move forward. Without anyone to answer, you can work at your own pace and strategy, enabling you to learn more about the market and grow your business.
3- No repayment terms or conditions
Your funding won’t be subject to the same challenging repayment conditions as external funding when using your savings or income.
Self-funding is always flexible, and you need not have to worry about other financial procedures like external faces when an investor invests in their startup. You can bootstrap for your startups to a limited time. Then you may seek external investment or expertise at a later point if you think it’s necessary.
We hope you must have gotten an idea with the above information on what we are talking about, and let’s focus on those things that need to be done when bootstrapping for startups. So let’s find out.
1. Limit overhead by using a coworking space.
We feel that some startup entrepreneurs focus on the things that need not be required at the beginning of a startup. A fancy office space and a pool table might sound cool; we mean it’s a good idea if you’re an established brand. Don’t get me wrong, but during the initial days, it’s not a good idea.
You can use that money for customer acquisition and marketing, for example. To reduce costs dramatically, consider using a coworking space. Aside from the monetary savings, there are multiple additional benefits of it.
You should consider a coworking space, even if you have the funds to spring for a busy office. Working in a coworking environment can help you become a good decision-maker. To move into your own office space, you will need to quickly identify your minimum viable product (MVP). These spaces offer an environment that allows you to focus on one thing at a time and allows you to build a building without the stress of long-term commercial office rent.
2. Avoid credit card debt at all costs.
Do you know Credit Cards are one of the worst investments unless you pay them off every 30 days?
Even then, please don’t do it. When time is put in a crunch financially, one of the easiest ways to assuage the situation is to break out the plastic. Credit card debt can quickly add up and impact you negatively, including ruining your finances.
The significant advantage of bootstrapping is that you retain your ownership of your own company, and since you are not raising capital, you want to remain as debt-free as possible. Getting into credit card debt is the fastest way to get in a hole, which might then require an investment to bail you out. If you wish to pursue ownership of your entire business, avoid credit card debt.
3. Learn how to be a publicity magnet.
Some outstanding PR firms out there create a massive buzz and exposure for startups, but if you are bootstrapping for startups, a $5,000 or $25,000 (approx) monthly PR retainer will dig your pocket.
There are multiple ways to generate valuable publicity for your business if you want to roll up your sleeves and do the work. Take some additional time to reply to regular queries through free services like HARO (Help a reporter out), and network with as many journalists that focus on publishing content related to your industry.
When you have a limited budget and don’t have an extra budget for PR, it all comes down to hustle. You have to depend on your current network and not be afraid to reach out to new leads. Sometimes the only obstacle between your business and free publicity is your own fear of rejection.
Avoid emails. Journalists may distract you with their emails daily, and yours will likely blend in with all the others. Instead, you may be active on Twitter and try to get your foot in the door that way. Twitter is a social network that almost all journalists monitor daily for breaking news.
4. Evaluate every expense carefully.
When the money is rolling in, some expenses become an after-thought. If you uplift the barrier of expenses and start freely spending, it can cause a problem down the line if business slows or faces a challenge.
You should never take anything with ease, especially when reviewing your outgoing expenses — that wasted money could be better utilized if it were put toward an emergency operating expense fund.
You should also develop a business survival mindset when you are frequently cautious about expenses. Bootstrapping for startups is one of the most crucial stages an entrepreneur goes through. When every single expense is scrutinized, one should find an unconventional way to solve complex problems.
Let us wrap up quickly with what we believe is the main upside of bootstrapping that makes up for all the struggle of doing it all on your own. It goes beyond fame, money, and success — which might be easier to get through outside funding. It’s the better person you become after you have overcome setbacks and delusions. It’s more painful, but trust me, it’s worth it.