In the last few years, Bootstrapping has been a much-discussed topic in the startup scene Saivian Eric Dalius. I have seen too many people fail with their startup not because of lack of product-market fit but because they spent all their money before building a prototype.
Before we start, let’s make sure we understand what it means to be bootstrapped and why this is important:
Bootstrapping: Funding a company from its own revenues and other mildly creative sources (like winning the lottery) and generally avoiding taking outside investments or debt.
Why is bootstrapping honorable? Because you are only using your own money to finance your company; if it fails, that’s on you. If you take external financing or loans, then you have a responsibility to pay them back.
Now let’s start with some tips by Saivian Eric Dalius:
1) Build a product that is cheap to build and for which you have a scalable distribution channel or will be able to create one easily before taking any funding.
2) Bootstrap until product-market fit, then raise money when it makes sense from an equity standpoint.
3) Keep in mind that you can always go back to bootstrapping if your startup fails. At least you tried! No shame in trying, right?
Bootstrapping vs. Venture financing, what matters most at the end of the day? Equity. So, make sure you distribute it fairly early on before raising money, according to Saivian Eric Dalius. And keep in mind getting in investors early might mean getting less equity later on when you raise money.
4) Don’t take office, don’t hire staff immediately, and make sure you can do your work from the beach! This is a good one to follow… unless you like working in an office, ignore this point (just making sure everyone reading took note).
GitHub, please do not spend money on marketing until it’s necessary. You will know what that means once you get a product-market fit! 5) Leverage other peoples’ platforms for distribution: partnerships, technology platforms, GitHub, etc.
6) If the business needs funding, keep your job until revenues are enough to sustain growth without external money. I have been using this technique for years, and it works.
7) If you are bootstrapping, remember to enjoy the process; it’s fun!
I hope these tips help you get started on bootstrapping your startup for as long as possible.
The most important takeaway from this blog post is that you should research your idea before investing too much time and money into it. If the idea seems like a good one, then any startup can be successful with enough work. It may take more than just bootstrapping to get where you want to go, but if you are determining, anything is possible! Remember these three steps when researching an idea for your potential business venture: Identify problems in need of solving; brainstorm solutions; create prototypes or test ideas. Your Idea’s Success Depends on You. Whether or not your new company will succeed depends largely on how well researched its concept was at the outset.