When having the desire to start your own business, many people are stifled because they lack the capital needed to initiate their startup. This is the main reason why the phrase “Bootstrap your business” was created. This phrase refers to the 19th century high-top boots that were pulled on by tugging at ankle straps. Basically, the overall meaning is doing something very hard and challenging without all the resources readily available.
In business, bootstrappers typically rely on savings, early cash flow, and penny-pinching to fund startup companies, rather than seeking external funding in the form of loans or investments. When bootstrapping, entrepreneurs try to line up customers and suppliers early while taking little or no capital for themselves.
Given the difficulty of raising money, entrepreneurs are back to bootstrapping, that is, paying their own way until they have something to show venture firms. When starting companies using the bootstrap method, entrepreneurs are willing to make personal sacrifices to acquire their ultimate goal. They operate by doing first things first. The entrepreneur will take a major idea and down size it into several smaller ideas in order to work towards their initial bigger idea. Some might look at this as lowering expectations, but in actuality it’s not. Think about it, isn't it better for someone to start out small than to start out big and run the risk of running out of money and other resources.
Don't think that starting a company in a limited way is an admission of defeat. Years of steady revenue and profits can help entrepreneurs save up enough to invest in their business once they have built a long list of loyal customers. One strategy used by bootstrapping companies is offering discounts to early customers. By using this strategy you can create immediate steady cash flow. As a result, "You get a reliable base of cash flow that will cover overhead and put money in your pocket right away.”
When cash flow is steady it allows for the company to pay overhead and support staff. It also minimizes the need for startup capital. You enlist early customers who love your product or services to provide your company with testimonials and referrals to get other clients who will be willing to pay full price.
Although it seems as though bootstrapping your business is an unconventional way to starting a business, it is worth the effort. It is very difficult to raise all the money needed for your start up from the traditional venture capital, so bootstrapping is becoming more and more popular. So what are you waiting for? Go ahead and move forward with that great idea! While you are at it, check out our simple yet effective Cloud Accounting Software for your business. You can begin with our free 60-day trial by entering the code "LP1MTH". For more information, visit us at weteak.com