5 Tips for Bootstrapping Your Own Startup

Bootstrapping a company is an entrepreneur’s dream. When you bootstrap a company, you take an excellent idea and start a business from scratch using very limited resources. Ideally, bootstrapping a company requires almost no financial investment from either yourself or other investors. Instead, a bootstrapped company is able to grow based on its own merits.

1. Use Your Skills

Bootstrapping only becomes possible when the business owner can use many of their own skills to promote and develop the company. Mark Cuban, the co-founder of HDNet, stated, “Sweat equity is the best startup capital.” Business owners with skills in marketing can focus on marketing while business owners that have technical knowledge may want to focus on the development of a product or the technical side of their company. Unless you play towards your skills, you may find yourself being forced to hire employees early on. It can be almost impossible to bootstrap a company that requires significant amounts of labor.

2. Grow Slowly and Remain Agile

When you bootstrap a company, it’s best to do it slowly. Ideally, you will be able to invest the revenue made back into the company. This also means that you probably won’t be making any money personally until the company has been developed. Companies may be able to grow a little faster with an infusion of cash, but a truly bootstrapped company will instead develop on its own merits. Another benefit to growing slowly is that smaller companies have greater agility. As you work on your company, you may need to course correct many times and you may even need to completely change the focus of your business. A small company is very nimble and can adjust as desired, while a larger company would need to be broken down and rebuilt. You should change your company as much as you need to during these early stages, as finding the right niche is what will help you succeed later on.

3. Take Advantage of Funding

There are many funding sources available to the entrepreneur today. Whether going into crowd funding or seeking an angel investor, alternative sources of funding may make the entire process of building your company much easier. When seeking funding you should always have a comprehensive business plan, a valuation of the business and a proof of concept. If you cannot produce these three things, many investors will be extremely hesitant to work with you. Regardless of the way you choose investors, you need to avoid the extremely common mistake of undervaluing your company, especially when offering equity. Undervaluing your company can eventually cost you millions of dollars once your company truly takes off. If you need to, you may want to consult a professional regarding the valuation of what you have so far and what you expect to have in the future.

4. Cut Your Costs

When building a startup in this fashion, you often can’t control your income initially. Garrett Camp, a founder of StumbleUpon, says that entrepreneurs “have to be ready for hard work and frugal spending to get the idea off the ground.” You may even have to go without income entirely for some period of time. What you can control, however, are your expenses. You should focus on decreasing your expenses as much as possible throughout the process. You can purchase supplies online, do your marketing on your own, build your own projects, outsource rather than hire employees and more. The internet offers many wonderful opportunities for cutting costs that won’t inconvenience you in any significant way. However, you do need to know exactly when and where you can cut costs. At this stage in the game, creating a sub par project out of less expensive supplies is likely to hurt you more than it will help you, as you still need to develop your business and your brand.

5. Don’t Quit Your Day Job

If at all possible, you should avoid quitting your job to run your company until you’ve already built up momentum. This doesn’t mean that you won’t be putting hours into your company, but it does mean that you will still need a steady stream of income. Without this, you may not be able to support both yourself and your business while you develop it. When the time comes for you to quit your day job, you’ll usually know. Until then, you may have to put in 80 hour work weeks.

Not all companies can be bootstrapped. Bootstrapping is better suited for specific industries; tsoftware industry is very well-suited towards bootstrapping while any company that requires an inventory or a product will usually require an initial investment. Talent-based enterprises can also be very well-suited to bootstrapping as long as significant resources aren’t required. Alternative funding sources can make bootstrapping easier, but certain industries will always be more difficult than others.