You may not know this but, thanks to Bootstrapping, you can start a business (almost) without money.
If you are going to embark on your entrepreneurial adventure with this method, you absolutely must know its principles and rules, as well as the advantages it offers and the challenges it exposes you to.
In this guide you will find a clear and precise definition of what bootstrapping is and the best tips for making it work best.
What is Bootstrapping?
The literal translation of “Bootstrapping” is very peculiar but, outside of metaphor, this word defines a particular mode through which you can start a business. In the next few lines you will discover in more detail what Bootstrapping means and how to finance a startup with this particular mode.
Definition, translation and basic principles of Bootstrapping
The word “Bootstrapping” literally means “lacing up your boots” or “pulling yourself up by your bootstraps“. In our context, Bootstrapping describes the situation in which you start a startup independently, that is, relying solely on your own resources, without relying on funds or investments from outside.
You should know that you may come to make this decision either out of necessity (you have not been able to find outside lenders or you do not have sufficient collateral to obtain financing) or out of your own specific strategy, aimed at having total control over your business.
Benefits and challenges of bootstrapping
The ability to have full control over the business and total decision-making power is just one of the advantages that Bootstrapping offers you. With a startup launched in this way, for example, you can tackle the initial phase of its life cycle more quickly. By resorting to this mode, moreover, you can focus all your attentions and efforts on the development of your product or service, without worrying about the search for external financiers.
The main challenge you face if you decide to start a business in Bootstrapping mode is, of course, to be able to build your business without loans, without financing, and without fundraising (at least in the initial stage). To be more clear, it means that you will have to meet all expenses yourself, without any outside help. The challenge within the challenge, in this case, is to avoid all kinds of unnecessary expenses. We will elaborate on this aspect in a few lines.
Bootstrapping strategies to start your business
Knowing what Bootstrapping is and how it works will do you little good if you do not know the best strategies to implement. In the next few lines we will focus particularly on four fundamental steps in this process.
Validate your business idea
Given that, with Bootstrapping, all responsibilities and expenses will be your responsibility, before starting a business you should verify its potential. You must, in essence, validate your business idea and, that is, ascertain the presence of market demand and, in more practical terms, potential buyers for your product or service.
If you already have a clear idea of what you want to market and the target audience for your product or service, you could create a landing page and drive traffic to it, so you can see whether or not there is interest in the audience (for example, by analyzing newsletter subscriptions or the times users have clicked “add to cart”).
Another useful method of checking whether there is a potential market for the product or service you intend to propose is to conduct keyword research, so as to analyze search volumes.
Market demand is not the only aspect you need to analyze before investing time and money on your business idea: in fact, you also need to consider existing and potential competition and the actual feasibility of the product or service you intend to launch in the market. The feasibility study is what allows you to see if your business idea is viable and profitable.
Create an MVP (Minimum Viable Product)
One of the most popular methods of Bootstrapping involves starting with what is called Minimum Viable Product (MVP), which underlies the lean startup method.
The MVP is the first version of a product (a kind of prototype), equipped with just enough features to be usable by the first customers, who can then provide their feedback on the product itself and contribute, through them, to its future development.
Without spending too much money, the Minimum Viable Product helps you understand the potential of your business idea (the basic questions are: is the problem you want to solve with your product real? Are there people willing to pay to solve it?), test the tastes of your target audience, and verify the product’s usage functions. All of this information is very valuable in drafting your financial plan: the next step, in fact, is to figure out how much money you need to launch the product in the market and start scaling.
Finding the first customers
Starting a startup with limited funds-you’ll be clear by now-is possible, but being able to find customers is critical. To get started, talk about your business idea with friends, family and colleagues. Send messages and e-mails and promote your business on social media. Word of mouth is key to finding your first customers and – why not? – potential business partners.
Some marketing strategies are more useful than others to those who want to Bootstrapping: we refer, for example, to Guerrilla Marketing or Outreach Marketing.
Managing finances efficiently
Starting a Bootstrapper startup, as has already been pointed out several times, you will have to rely solely and exclusively on your own economic resources. In such cases, money is often scarce and it becomes complicated to hire employees or buy all those supplies needed to get the startup off the ground. Managing finances efficiently, therefore, becomes crucial.
Pay special attention to cash flow: only by consistently monitoring income and expenses can you avoid overspending. In this regard, keep in mind that there are many expenses: some of them are unavoidable, but you can save on others. Every single euro can make a difference. Want to know what to focus your attention and resources on? Pointing the way has been provided by Guy Kawasaki:
“Bootstrapping forces you to think about the essentials and focus on pure customer value.”
Is Bootstrapping right for you?
In this guide we have explained what Bootstrapping is and how it works, and now you are now ready to become a Bootstrapper. There is, however, one key question you need to ask yourself before you get started: is Bootstrapping really right for you?
We have already talked about the advantages and challenges associated with Bootstrapping, and we have already made it clear that you can decide to start a startup in this way out of necessity but also out of a specific choice. Now there is one last aspect that you need to consider in order to make the best decision for you and your startup: those who choose the Bootstrapping route must know how to compensate for the lack of resources with their resourcefulness and, above all, they must know how to move by following very precise rules, avoiding spending money on non-essential activities or resources.
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