Tighten Your Bootstraps: Funding Your Business, Yourself

Posted by Ventures Online on Fri Oct 09 2020
Over the past 20 years Silicon Valley start-up culture has spread to all regions of the world. The formula is standard: come up with an idea, make sure it’s scalable, look for an investor and become the new Mark Zuckerburg. Most founders think that sourcing funding is a key element in building a business, and in some cases it is. Some, however, fall into the trap of believing attracting funding is the goal, never even considering the option of bootstrapping their way to success.

Bootstrapping is using your own resources to build your business, without outside funding. The process may require a founder to have a full-time job whilst building their enterprise in their own time, generating start-up capital by selling under-utilised assets and goods or taking out loans from family and friends. When people speak of hustling, the life of a founder bootstrapping their business, stretching their resources to limits they didn’t know were possible, is what immediately comes to mind.

Although it can be difficult, there are some key advantages to choosing bootstrapping over investor funding. For one, it allows you as a founder to keep 100% of your business. This means that you can maintain and direct the vision of your business as you see fit. When a founder takes on investors they need to answer to said investors. Bootstrapping allows founders to avoid the stress that can be involved in trying to balance the wants and needs of their funders and the purpose and vision they have carved out for their business.

Secondly, bootstrapped businesses are often partly funded by the sales they make. This means that businesses which are bootstrapped enter the market sooner and are thus validated quicker. This allows the business to begin engaging with its customers early on, thus building their business for their customers and in conjunction with their customers. Additionally, bootstrapping forces founders to become more savvy with their resources, more decisive in their decision making and more focused in their pursuits due to having limited access to resources.

Most businesses will at some point need to be bootstrapped, as investors are often hesitant to invest in anyone before seeing any real traction and although there are advantages to bootstrapping it can be a risky undertaking. Moreover, it must be noted that growth is often dependent on sourcing additionally funding. However, a business with a record of strong customer support built using bootstrapping principles lends a founder more leverage even in negotiating deals with investors. Thus, as a founder open your mind to alternative means of funding and remember, attracting investors isn’t the only way to build your business.