For the young, hungry entrepreneur who has a great idea and just wants to get out there, bootstrapping has become the go to way to fund your startup. Building capital for your startup without debt is great -- it saves you the hassle of VC funding, leaves you in complete control, and can increase your later valuation later -- but it requires nothing less than a deliberate and measured approach. In fact, it may even be that a founder needs to be even more careful with how they approach their startup, since they will likely have a great deal less cash than if they were traditionally funded.
Freelance Switch has compiled insights from some very successful bootstrappers in a new article, including folks like Chris Guillebeau, Eric Ries and Derek Sivers.
Boiled down, the keys are:
Be Smart When Planning Your Venture
Because you don’t have a deep well of VC funding to tap when you find that a fundamental idea isn’t working, you have to plan extremely carefully. Note that we didn’t say “obsessively”! Bootstrapping is a reaction to the endless pages of business plans and pitch decks that a founder usually spends countless hours on for traditional funding. The key to planning smart is finding what Chris Guillebeau refers to in The $100 Startup as “blatant admitted pain”. Find a niche that you know needs you -- through first-hand knowledge, talking to people in the market or a sharply honed sense of need-sensing (more on that under experience, below).
Start Small and Move Quickly
One of the most important things that a bootstrapped startup can do is be nimble and humble. You’re not going to start with millions of dollars and fancy offices, executive assistants and pools of subordinates, so you have to understand what you can do well. A small bootstrapped startup can pivot more easily -- and can take advantage of a change in the market or fix a miscalculation more quickly.
Being humble in this respect just means that you have to keep your ideas in line with reality. The experts in the article encourage founders to “start with one customer”, “don’t expect miracles on launch day”, and “be honest and sincere”. Focusing on building a great product instead of big splash right off the bat can help you build a stronger bootstrapped business.
Experience (and Often Failure) Are the Best Ways to Succeed
A lesson for all businesses, this is especially true for smaller, bootstrapped ventures because you need to build such a finely-tuned instrument for sniffing out business opportunities that can be bootstrapped. “Practice, practice, practice,” insist the experts. There are many areas in which you will build an almost sixth-sense intuition about your venture: when to pivot, what opportunities to pursue, how to grow. All of these are built with experience.
Take it from Shane Melaugh, co-creator of SECockpit and one of the experts who weighed in:
The products I create now are vastly superior to even my brightest ideas three or five years ago. Why? Because I kept creating, testing and launching new products.
Perseverance is the name of the game. Keep building, tinkering and pivoting until you find a vehicle that works.
These ideas are discussed in depth in the article A Brief Guide to Bootstrapping (from 10 Wildly Successful Online Entrepreneurs)
If you’re interested in bootstrapping, don’t miss the other articles in this Freelance Switch series: An Introduction to Bootstrapping Your Online Business and How To Bootstrap Your Business and Turn Ideas Into Action