Bootstrapping Your Way to Success
Bootstrapping is a rewarding approach that allows you to maintain control over your business and minimise debt, but it has its share of challenges: it means sacrifices and hard work in the short term. But the long-term benefits can be substantial: greater financial stability, flexibility, and satisfaction as an entrepreneur that you did it yourself without anyone’s help.
This blog shares the strategies for bootstrapping your way to building a sustainable, scalable and profitable business while retaining control and independence.
Today, businesses have more financing options available to them than ever before. From personal savings, to grants and bank loans, crowdfunding or seed and angel investing, it might seem great to be spoilt for choice, but every funding option comes with its own risks and rewards. No matter which external funding option is chosen, it inevitably comes with obligations, or demands for collateral or a share of the business equity in return. It’s not surprising that entrepreneurs can feel a loss of independence or decision-making over their own business.
Many entrepreneurs mistakenly believe that they can only succeed with outside investment and give up control of their business in the process. But bootstrapping could be the answer. Self-financing not only ensures the entrepreneur retains full autonomy over the direction of the business, but it also means profits don’t have to be divided up and handed over to external investors.
How to decide if bootstrapping is the right route for you
Bootstrapping refers to building, launching and running a company from scratch without any external funding from outside investors or other sources. Sure, it can be risky route to pursue – many bootstrapped businesses have failed at an early stage, but this can be due to many factors beyond a business owner’s control. But it’s possible to bootstrap a highly successful company that thrives in the long term without having to tap outside investors. Microsoft and Apple are two of the best-known bootstrapped companies.
Bootstrapping can be done in a few ways:
- Using personal savings
- Selling assets to raise funds
- Selling products or services and immediately reinvesting any earnings
- Taking out a line of credit from a bank or other financial provider
As a business starts to grow, some bootstrapped business owners may choose to go into the customer-funded stage and use sales revenue to fund further growth. With further growth may come the need for more capital.
Whichever option you go for, bootstrapping comes with many responsibilities and the need to make financially viable decisions with limited resources to draw from. Entrepreneurs who decide to bootstrap their business will need to develop a very resilient mindset as they will likely encounter some unforeseen challenges on the path to business growth.
The key to successful bootstrapping is being able to stomach risk, resolute belief in yourselves, managing a level of uncertainty in the beginning, and knowing how to fully streamline operations and costs to maximise funds available to you. If taking out a loan or line of credit, there is the risk of incurring debt or losing collateral secured against the business or personal assets. Once revenue starts coming in, it’s about reinvesting those profits in the right way to ensure sustainable growth over the long term.
The benefits of bootstrapping in building a successful business
Business owners who go down the bootstrapping route can undoubtedly gain from having a much closer hands-on grasp on their business, including oversight of daily operations and visibility into every penny going in or out. Crucially, it can also mean they become well-versed in more aspects of the business than if they were to hand decision-making or control over some processes to outsiders.
With cash being king and customer funds being the lifeblood of the business at launch, bootstrapped businesses very quickly learn the value of great customer service, how to market products and services effectively, and learning how to do more with fewer resources. Bootstrapping can be the ideal bootcamp, teaching determined entrepreneurs the tips and tools early on that will pave the way for success. What’s more, it will help to build the character, and resilience, that business owners will need to depend on to see them through challenges that might come their way.
Zaki Farooq and Manpreet Haer of PayFuture are proof that when approached in the right way, bootstrapping can prove to be a viable route to success. Since launching in 2019, with no financing from external investors since we wanted to prove our model was scalable and profitable, we’ve enjoyed triple-digit growth as demand for our technology soars. That’s because we knew our proposition and unique approach to solving payment problems in emerging markets would pay off. Today, we’re a trusted payment gateway solution, having helped hundreds of merchants to serve emerging markets and make payments flow seamlessly and securely.
If you’d like to know more about our bootstrapped journey to success and how we can help your business follow the same route, get in touch with us today.