Bootstrapping – that is, self-financing your business through organic growth – has been the mainstay of successful entrepreneurs for a very long time. Highly successful companies such as Apple, Microsoft and Coca-Cola began as small, bootstrapped start-ups, each with a motivated entrepreneur behind them.
The idea of incurring possible personal debt perhaps makes bootstrapping a daunting option for many potential business owners, but approached in the right way, it can open the door to launching a business without the need to seek external investment.
So, how can you make bootstrapping work for your business?
Working smarter with your capital
Even without external funding, growing a successful business will still require enough working capital to get an initial vision or idea off the ground. With bootstrapping, this might mean using personal savings, taking out a line of credit, or selling off assets to raise enough funding to launch the business. Without the financial security of external investors, entrepreneurs who take this route need to get comfortable with taking a lean approach to the business and knowing when and where to cut costs.
The key to successful self-funding is maximising how far that initial capital takes you, and getting revenue flowing back into the business as quickly as possible, while reinvesting wisely to establish steady, sustainable growth.
Building the right skills
Inexperienced business owners can develop a huge amount of real-life experience without risking external funding, as well as both hard and soft business skills. Making a self-funded business a success requires an entrepreneur to develop their own personal skills.
Perhaps more importantly, self-funding also means being able to recognise areas where the business requires outside expertise. This might be web development, accounting or some other core function vital to the success of the company. Entrepreneurs who recognise when they need help are far more likely to succeed.
Taking a business-first approach
Entrepreneurs who decide to self-fund their business often develop a very particular mindset. They tend to retain a much closer knowledge of the day-to-day running of the business, along with a strong grasp of the numbers and, crucially, the profits.
Getting into this mindset early-on is key to making a bootstrapped business work. With little in the way of funds, especially at the initial stages of the business, self-funded entrepreneurs must get creative if they are to be successful. Similarly, the business must inevitably be structured in a cost-effective way. While these may sound like limitations, these restrictions make for a highly resilient business long-term.
Setting the pace for growth
Perhaps one of the most appealing factors to bootstrapping is retaining equity and control of the business. With no external investors, the business remains undiluted, giving the founder/s complete autonomy in direction, pace, and decision-making, ensuring the business conforms to an initial vision and set of values. Retaining full control allows owners to set a pace for growth that makes sense for them and the business, without the external pressure of rapid, unsustainable growth.
Having a strategy or plan in place for sensible, sustainable growth is important for keeping both yourself and the business on track, and ensuring you are expending your limited time and energy in the most productive ways possible.
Becoming customer-centric
Self-funded businesses, without the cushion of external investment, must naturally start turning over a profit as quickly as possible. Customers are the de facto investors for your growing business, and as such a bootstrapped business must become customer-focused if it is to succeed.
As a bootstrapped business, you rely on your customers from a funding perspective, so customers should be placed firmly in the centre of day-to-day operations. Investing in better customer service, providing real value, and building genuine connections with your customer base is key.
Final thoughts
While it takes a great deal of dedication, hard work and sound judgement to bootstrap a business, the ability it offers to shape the direction and pace of both your business growth and your own personal growth as an entrepreneur is unmatched.
Taking this path means developing and perfecting the business basics early-on, and having a keen eye for new and creative ways to improve and grow – without ever having to compromise on your business vision.
Rob Stone
Founder & Director of Instaloft
Rob is a highly driven and determined entrepreneur, whose rags-to-riches story has seen him create and grow the Instaloft brand from a small start-up, to a £14 million turnover empire in just 7 years.
With invaluable expertise in business development and people management strategies, Rob is now on a mission to double the firm’s revenue to £30 million within the next three years, whilst taking the time to ‘give back’ to the business community by helping aspiring entrepreneurs on their own journey to success.
