To employ the definition from Entrepreneur, bootstrapping means to finance your company’s startup and growth with the assistance of or input from others. Effectively, it is the notion of starting a business with no – or, at least, very little – money. What it certainly means is that your business is set up without the help of venture capital firms. Instead, the money earned from your customers is immediately ploughed back into the business.
The term is derived from the age-old idea about ‘pulling up by your bootstraps’. In business, bootstrapping generally means that you will be doing something difficult and on your own.
Here we break down how you can make the bootstrapping attitude work for your new business.
Stick to something you know
You may think an idea for a startup has great potential. However, if you have no experience or expertise in this area, it is a seriously dangerous decision to start a new business within it. It’s an unwritten rule of business that you need a special or insider knowledge of your company’s area, so stick to a business domain you know and love.
Be realistic with your plan
Planning is a crucial part of any business, and entrepreneurs who embark upon their start-up without one waste a ton of money. Equally, plans which are too ambitious and fail to account for your budget can be just as disastrous. Rather than focusing on your dreams for the business, build your business plan around your budget and realistic expectations.
Don’t rush into an office space
All too often small businesses assume that they need office space to go about their work, which is a very costly misconception. Remote startup teams are becoming more and more common, with companies taking advantage of smartphones, high-speed internet, and conference calls. Offices cost upfront money, require equipment, and constant staffing. Fight your urge to find a space until you have a steady customer base.
Offer team members equity
When hiring employees for your startup, make it clear to them that you are all in the same boat and working towards a communal goal – employee failure means the failure of the business. Team members joining a startup shouldn’t expect money up front. Instead, find team members who will work for equity rather than cash. This will save company money and assure the commitment and focus of your staff.
Try VoIP technology
VoIP (Voice over Internet Protocol) is the technology which converts your voice into a digital signal, allowing you to call directly from a computer, VoIP phone, or another data-driven device. This is useful because VoIP can turn a standard internet connection into a free phone call environment – meaning you can bypass phone company charges entirely. VoIP can be great for your business, slashing your costs and centralising your communications. Bootstrapping is all about utilising and stretching your existing resources as far as you can, and VoIP systems can generally run using your standard computer equipment.
To read more on topics like this, check out the business category.