I have had the opportunity to bootstrap my business from the ground up. Most of the businesses I have ventured into have been self-funded. Most of the time, people wonder how I do it. I can say that from my experience, it can be done, but it takes diligence and determination. Bootstrapping is for the strong-willed; it is not for the feeble-minded. Bootstrapping is not for anyone who cannot forfeit the trivial pleasure of the present for a lasting future reward.
How you fund your company is one of the early and critical decisions an entrepreneur will make – to self-fund or raise outside funding. I have invested heavily in my company and interacted with other founders who received outside funding; I believe that bootstrapping is the best option. It is difficult and needs self-discipline, as it will eat into your bank account. But when done properly, your company can be turned into a viable business.
First off, bootstrapping means an entrepreneur starting a company with little cash – e.g. personal finance and operating income of the business. The advantages of bootstrapping are enormous; from the freedom to the profitability.
Advantages Of Bootstrapping
It gives you freedom, as you are not accountable to outside voices intent on securing their investment. Bootstrapping gives you control in those early years when you may need to experiment to get the right business model.
Bootstrapping teaches you to start small. This way, you are forced to test every assumption before scaling up. That way, you can learn about your products and services and understand your customers better. In case of mistakes occurring, they will be small in scale and have minimal impact. Bootstrapping makes one a more vigilant entrepreneur.
The stakes are high on both ends – failure and success. Especially when you succeed since you are your own company’s shareholder. Bootstrapping keeps things manageable, and no investors impede the rapid decisions needed in the early stages of your startup.
You Learn To Be Conscious
Bootstrapping makes you a smart decision-maker. Naturally, we are not as conscious of other people’s money as we are about ours. Because you invested your money, you will become conscious and make do with what is available. For example, I was able to organise a dinner party with less than N100,000.
Better Profit Margin
There is a better profit margin with bootstrapping. This does wonders for your profitability and valuation because you are operating lean. Companies that operate on low overhead have better profitability.
Minimal Outside Interest
There is minimal outside interest in your business. Raising funds attracts a lot of attention when the deal is highly publicised, especially when the funds are coming from high-profile investors. It also means that the company’s founder will be on public news. Bootstrapping, on the other hand, lets one operate in secrecy for a while. This can make a difference in manoeuvring the competition and building a great product.
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Bootstrapping is a lesson in hard work. To succeed, you have to be flexible in the things you do. In my founding of ReDahlia and talking to people and reading, these are tips on how to bootstrap a company
How To Bootstrap A Business Successfully
Choose Your Team Wisely
Choose your co-founders, team, and staff wisely. Most of the work in bootstrapping is done internally. Teams need to complement each other, so hire for skills you really need and keep expenses low.
Develop A Business Model
Develop a business model that generates cash quickly because not every idea is worth investing in or bootstrapping. Your business plan should allow you to generate money quickly before the reservoir in the bank is exhausted.
We have always emphasised on this platform the importance of having a revenue-generating model from the start of the business because your ability to receive money from clients is what validates your business idea.
Watch Your Expenses
Watch every expense like a hawk. Open a business account, transfer the funds to be spent on the business, and keep records of what goes out of or into it. Cut down personal expenses.
Eliminate the posh or luxurious lifestyle when starting your company. Consider every purchase before they are made. Entrepreneurship is not rosy, but it is worth it.
Learn New Skills
Keep learning new skills. Don’t hire or outsource a job you can do. You will be increasing costs and wasting an opportunity for the organisation to learn a new skill or experience. There are tons of free online resources to use in learning new skills, don’t be afraid to learn new things.
There Is Always A Free Option
Look for free options of services and products (open source) first and see if it suits your need instead of going for the paid versions. Free versions of Quickbook and DropBox are recommended to keep expenditures down and can serve your initial need. Exchange services (resources) with your clients to reduce your spending. Saving on little things counts, so do not underestimate it.
Structure Your Business
Incorporate your business and secure your domain name. As you gain traction, people can lock your brand down, which will be expensive to acquire in the end. For your company registration and brand incorporation, contact ReDahlia to sort them out for you.
Your Network Determine Your Net Worth
Network and build personal connections with your partners. This way, you can get the resources needed by startups without breaking the bank. Don’t be afraid to be out there. I have realised that shyness will not get anyone anywhere.
Never Take No For An Answer
You will hear nah countless times. It does not mean you should stop knocking. Keep knocking and pushing until you find someone willing to open. Do not be scared to reach out to people. Most people will be willing to give you a voice, an ear, or a piece of advice. For some of us, mentoring makes us fulfilled.
Giving up is not an option when you have passion for what you are doing, as it takes passion to overcome the thoughts of giving up when faced with disappointments and other obstacles.
Bootstrapping is not for the dim-witted; it is difficult but believe me when I tell you that it can be done.
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