Bootstrapping is not for every single individual business, because there comes a time where you just need to expand and you can not do that at a fast pace unless you bring on some investors.
However if you are just starting your business then I believe there are a wide range of factors you can limit in order to ensure you can keep the business going and keep 100% ownership for the time being.
One of the top reasons people choose to bootstrap is the freedom that they have with their business and their goals, however once they are burdened with investors they start to lose sight of those goals because of the interference that comes with investors. So here are some crucial ways which can help you avoid giving up your ownership and still grow a profitable business.
#1 Plan, Plan, Plan!
The first thing you need to do is create a plan. How long can you last once you start your business? What are you going to do if you start having trouble attaining customers, do you have enough capital to last at least a year? as not many business become profitable on the first day.
There are several other questions you could ask yourself, however having a contingency plan in place is the biggest advantage you can have in the business world because you have assessed every likely outcome and have backed it up with a possible solution.
#2 Cut Expenses
You need to cut almost every single unnecessary expense you have, this includes the stupid mindset that you must have the best office as that will make you work harder, NO! thats wrong. What will make you work harder is the light you see at the end of the tunnel, your determination for what your trying to get out of your business; whether it’s money or a long-term legacy it does not matter as long as you have that motivation that is required to keep you going even when times are low.
So this means if you have to work in a house for the first year, then so be it. You can’t just think to yourself, well if I get investors then we will have a proper office and then will be a legitimate business. That once again is a stupid mindset, because it’s your idea and how your going to follow through that is the money maker, not wasting capital on a flashy office on your first year.
#3 Do Not Leave Your Job
This seems like something obvious, however it is funny how many people end up leaving their day-time job because they simply think they do not have enough time to focus on both their business and day-time job. The first thing you should be doing is receiving a stable income so that if worst comes to worst you still have your job. By having a job, you can always invest money in your business as it grows and have enough money to enjoy life as you are bootstrapping.
To the issue of I don’t have enough time? That is just an excuse you hear everyday for almost anything and everything. The key solution is to make time, if you work 9-5, then you have from 6-12, that’s 6 hours of hard motivational work each day. You have to understand that it’s not easy otherwise everyone would be doing it, however the reward at the end is priceless.
#4 Get a Business Partner
This may seem like a bit of odd advice, however it makes sense so bare with me. Most business individuals have a business partner for several reasons. Firstly if you are both bootstrapping the business then that means both of you can invest your day-time job earnings.
This also means that you can both work 6 hours a day, which adds up to basically 12 hours a day. The most key advantage is the motivation that business partners can provide when times are low and you are not achieving your business targets and you can bounce ideas back and fourth, so you are consistently getting a different perspective.
#5 Don’t Tell Everybody What You Are Doing
People seem to think that since you’ve started a business that you must somehow automatically become a millionaire overnight. why do they think that? because they are stupid. You do not need negativity like this as you need all the motivation you can get, so just simply don’t tell anyone until you are where you want to be. People will soon start realising it anyway, as you start becoming succesfull.
#6 You Do Not Need Investors
This is the most important fact. You just DON’T need investors when your first starting your business. You can start an online business these days for around 500 dollars. That just seems too cheap but it’s true. The way to go is to try and get a business partner that is compatible in web developing, which means you control a certain side of the business and they control the other. This saves money and you can grow your business steadily with 100% ownership of your business.
The reason you do not need investors so early on is because you will get less than you should for a certain percentage of your business. You will also get them interfering in your business, which will make you lose sight of the goal and the business could just flop. You need to focus on the main goal of your business and not worry about trying to get investors until the time is right. For the time being focus on your customers.
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Bootstrap Startups just have that freedom that people need, and the main disadvantage is the interference that you get with investors because they want to know they’ve invested their money wisely. If you have a plan, cut, have a job and a business partner, then you should be on your way to creating a good startup business without the need for investors.
Do you have any suggestions to make it easier for entrepreneurs to bootstrap their business?
{ 4 comments… read them below or add one }
outstanding article here, Lee….
and you are spot on with each point.
Back in the day I made mistake #3, but for a different reason. I thought it was the honorable thing to do. Certainly you owe your best effort to they guy paying you, but you don’t owe them everything. As a mentor of mine put it (he was a sailor) “one hand for the boat, one hand for yourself.”
I’d caution care with #4, but it can work exceptionally well. years ago my wife and I were in Tahiti and one evening we wandered down to the beach to a little place on the sand for dinner. Out in the bay were several beautiful sailboats.
While we were having drinks another couple arrived by dingy from one of the boats, walked up the sand and took the table next to us. We got to talking. They had sailed over from LA.
Turns out this guy had two partners and the there of them owned two things together: That sailboat and a business in LA. On a rotating basis two would be in LA running the business while the third would be playing with the boat. this might be the sweetest deal I’ve come across.
My last thought, there is boatloads of money out there looking for good people and ideas. if you follow all these suggestions as your success builds, should you choose, you’ll find them standing in line.
Thanks for taking the time to comment. You’re absolutely right about #3, you don’t owe them everything, were only human after all.
When starting young, I believe a business partner is what is needed to motivate the business into success. For example one person starting a business can get discouraged, however when there are 2, there is always ways to bounce ideas of each other and even be at two places at one time.
What you just outlined, seems like a perfect business partnership, and there are ways to achieve that. People seem to suffer too much negativity that they don’t even end up trying. However what sets a rich man apart from a poor man is possibly dedication.
Thanks again.
Very good article Lee.
It reminded me about #4 which was for me most difficult part. I have to add to your article one more thing, and that is finding RIGHT business partner, because wrong one can cause you big trouble. I’m saying this from my experience. Wrong partnership may cause beside financial troubles, also loss of motivation and goal. It took me lot of time to recover. So for now I rather choose to work alone until I find right person.
Hello Ana,
Thanks for taking the time to comment and pointing that useful point out. I seem to have somehow missed it, I should have put: “Find The Right Business Partner”.
Your completely right, the only way it is ever going to work is if you are both thinking of the same end goal. You both have to be motivated and be on the same page when thinking about your business. Some people lose hope too quickly because they don’t see profits, so they end up just giving up and do not care about the consequences. That’s a business partner you can stay without.
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Thanks again