When starting off with your business, you may see many shortcuts to success – one of many, and the most widely preferred is taking money from investors. This kick starts your business idea but your business model is not unique to you anymore. Are you interested in paving your path to success like that? Here is a well-researched playbook for you to understand it all.
Every business starts with an excellent, market gap-filling idea and empty pockets – for you, this may not be right at the start but soon enough. This phase is a part of every business cycle and hinders growth, and that’s right where bootstrapping comes to use. Start building your business from scratch and utilize resources you already have – sell off what you don’t need and invest your expertise. In bootstrapping, it’s all about what you have to offer to the business, no one else. Undoubtedly, this is tough and such entrepreneurs are a rare breed but it has its own set of privileges to enjoy.
Almost always, entrepreneurs that bootstrap their way have little or no capital but are overloaded with enthusiasm, sound work ethics, and great dedication and this goes a long way. The initial years are tough but you get to enjoy the sole ownership of your talented business idea – in simpler terms, your business idea is unique only to you. Taking an example from some of the greatest entrepreneurs to understand it better, Sam Walton and Steve Jobs have bootstrapped their way to success. Having an insight into its effectiveness, this model is flexible and encourages simplicity which helps entrepreneurs work at their decided work pace rather than rushing for a goal to impress the investors.
Bootstrappers are always relying upon sweat equity rather than inherited capital, customer finding rather than investor funding, personal debt rather than people loans, and personal savings rather than parents’ money. This does give rise to cash flow issues and personal stress right in the initial phases but it works with time. Thus to say in a nutshell, all you need is a good business idea and one can always bootstrap their way to success, it will be slow and steady but it will surely work out. This self–sustaining business idea has the potential to grow and is taking up the market.
Bootstrapping is an approach in businesses that refers to the process of using your existing resources to kick-start your business or helps it flourish. But what existing resources and how can one utilize them? Is this thought on your mind too? Let us explain to you!
Existing resources mean everything that you own or can be used by you, including personal computing equipment, an empty room in your house or your garage space, or your personal savings. All in all, anything that can be a ladder in starting or growing your company. Whenever an individual works on finding or building a company from personal finances or from the operating revenues of the new company – it is known as bootstrapping.
There are various bootstrapping methods that can minimize the amount of funding you take from investors or any outside debt and one may go for any approach they like. These include:
i.) Owner Financing: In this type of bootstrapping, the owner uses personal income and saving to help start the business or make it flourish. These may be any little savings that one may have over their life or from a jackpot.
ii.) Personal Debt: In this type, the entrepreneur incurs a debt on his/ her credit card and has a sole responsibility to pay it off. This type of personal debt has a limit and has to be paid off in a certain time window.
iii.) Sweat Equity: This is the direct result of hard work by the owners, in which they may yield profits by selling off or offering services to the clients. This sweat equity helps in investing more into the business and making it flourish.
Talking about history, bootstrapping started off in the 18th and 19th centuries when it was considered impossible to make money out of nothing but with time and new inventions, blocks have been built on this phenomenon.
You’re the only boss of your business and your business idea is unique to you – that’s the biggest benefit of bootstrapping. Apart from this, there are several other reasons why one should consider bootstrapping for their business.
a.) Control over your decisions:
Considering that you have opted for a bootstrapping approach for your business, you don’t have to work on keeping the investors happy. One can work at their own pace and has better control over their day-to-day business decisions.
This helps in being more focused on your business and building a strong foundation without worrying about the losses in the initial business cycle. This helps in more sustainable business growth and less interference in business ideas.
b.) Freedom to experiment
Bootstrapping gives one the freedom to play around with product ideas and business offerings to achieve that right mix that is well suited for the business and its target audience. You may change your product design, bring out product variants or sell at a lower price – whatever suits well to your business.
This makes you more invested in discovering through exploring and not worrying about the go-ahead from anyone else.
c.) No more hefty loans
The constant thought in your mind to make enough from the business to pay off the incurred loan hinders creativity. Isn’t it so? Fostering creativity, and bootstrapping takes you off from the worries of having funding from loans and bill payments on credit cards, even if there are any, they are limited in amount and are paid back simultaneously.
d.) Low cost of starting a business
Bootstrapping is cheaper than any other available options and working with your own money means you are more focused and super-efficient. Thoughtful of the costs involved in day-to-day business, the business model is quicker and comes with an approach to getting things done as fast as possible.
Starting with whatever resources one owns helps in not having the burden of a perfect startup garage but rather going with the flow and perfecting as the business grows.
Where bootstrapping is an excellent initiative to start or grow your business, it isn’t very easy to practice. Taking a lot of determination and keeping patience levels high, comes with its set of disadvantages. These are some of the most frequently faced disadvantages:
a.) Abrupt Cash Flows
Having a lack of capital, one has no idea when its business may do really well or may not. On the days when the business is not doing that well, the operating costs are still there and you need to pay off the bills and reimburse salaries.
This leads to day-to-day issues and one may not have enough money to develop new products leading to issues in the long term.
b.) Less Credibility
Without having investors at the back, your business lacks credibility which means it’s harder to find connections and convert them into clients. Less people are interested in what your brand has to offer as they have a thought in their mind that the business may go bankrupt and one may not have enough money to fulfill the orders.
It’s more struggle for the entrepreneur on this end as they have to develop a customer base and find collaborators without any investor funding, little or no guidance, and limited capital – which means not having much to invest in brand marketing and brand recognition.
c.) Risk To Lose It All
In bootstrapping, one invests all they have and there is an obvious risk that you may lose it all. It’s usual that business may take a hit or a miss and that will impact your financial standing directly.
Self-funded businesses come with a great worry having a higher risk of an abrupt cash flow and running out of any money you have, all together.
Here’s a guide to help you bootstrap your app startup – it’s easy and gives you a detailed insight on how you can start off bootstrapping for your business. Cannot kick off the business idea or are you stuck in between? This or that – we got you sorted!
Step #1: Do a Solid Market Research
It is essential that your business has a specific idea that fills the market gap in order to attract potential clients. For this start off with doing solid market research, by understanding what the customers need and how you can fulfill that gap by offering something unique.
A good way to do market research for your business is to identify and define a problem that the customers are facing and start off with a statement of research objectives. What your business aims to achieve and next off planning the research design and studying it thoroughly. Further on, plan the sample and go off with the data collection, and then comes the data processing and analysis for your business. Follow these steps of thorough market research and ace your goals.
Step #2: Find a like Mind
Go on with finding a like-minded person that can partner with you in your business, this will help make the process smoother and easier. This step is not too essential and you can skip this if you are willing to go for a one-man show. But this is the time that you weigh the pros and cons of both situations and decide how you would like to progress forward.
Make sure you go for partnering with a person who is on the same page regarding funding and business offerings, this will help avoid conflicts in the later stages and make the process smoother.
Step #3: Build an Audience
Understand what your business is aiming to offer and who your business is targeting. This helps in building an audience that can increase profits and make sales. It is essential to focus on your audience preferences and team up with complementary businesses to design a marketing strategy. This is one of the sales drivers and ensures that what you offer is needed by the customer base.
A great way to go by building an audience is to start off by making a broad description of who you think is the ideal customer for your business. This will help have a clear-cut idea of who you think your customer is. The next step is to research your potential customer demographics and check out similar businesses and create insight into their offerings. Next up is identifying the needs and problems of the target audience. Lastly, determine where customers will find you and curate those social media platforms with the best of your business.
Step #4: Learn to Code
Coding helps businesses have an online presence and are the touch point with a significant customer base. Learning coding will help you cut up on this cost and you can create your own online website and applications.
But if you think you cannot learn to code, that’s okay it is not the end of the world. There’s always more to it.
Step #5: Find Affordable Developers
There are talented developers all around the world – it is all about just finding the right talent. It’s a remote first world today, go online and find developers in countries such as India and get your work done.
Step #6: Go the Cross-Platform Way
These include Flutter and React Native which can help your business have a smooth flow and handy operations. This framework allows developers to build mobile applications without going into too much hassle with a single codebase and programming language which makes it easy for beginners to work too. This capability makes building both iOS and Android apps simpler.
Step #7: Build an MVP first
Make sure you start with building an MVP, a product with enough features to attract early adopter customers and validate your product idea. This will help create a workable version of your new business concept.
There are seven important steps to go by for a Minimum Viable Product. This starts with market research, then comes the value addition of your product, then map out the user flow, next prioritize the MVP features, next up is the launching of MVP, and then comes the most important aspect exercising the B.M.L which is built, measure and learn.
Step #8: Generate Revenue
Last but not the least, but the most important is generating revenue. Start off with generating revenue by advertisements on platforms that suit your target audience, paying for premium features, and much more.
A great approach is to pitch to clients that are taking services from similar businesses and give them value addition at comparatively lower prices. Also, make sure you offer sale promotions off and on, this really helps.
These are some steps that can help you bootstrap your way to a great app – try out and see yourself excelling.
Many big businesses we see today have flourished through bootstrapping and are earning great revenues today with millions of users worldwide. These include:
The insights mentioned above would have made you aware of how an idea can be turned into a successful business via bootstrapping. With a detailed guide in hand and examples about big businesses having been used bootstrapping, it’s your time to kick start the process.
What are you waiting for then? Now is the time as you will never be fully prepared!