Startups are high-value, high-return businesses. Behind every startup lies a story and a purpose—an intention to address a problem.. Apart from these, there is also your passion, dedication, and love for the work that fuels the journey of the startup. While starting a startup business may sound fun, there are a lot of obstacles that you may have to face. After finalizing the idea, funding is one of the most common and challenging obstacles. In this blog, we will help you overcome this struggle. We will discuss how you can bootstrap your first startup and why or why shouldn’t you do it.
Bootstrapping your startup means starting the business without getting help from others, starting it all with the bit of investment you have. Instead of seeking funding from investors or VC firms, you own 100% of the company, and you solely get to decide what happens and what does not with the company.
Talking of the benefits of bootstrapping, the first thing that comes to mind is Independence. It gives you complete control over every operation of your business. It allows you to make whatever decision you feel is suitable for your business. Apart from that, there is also the financial freedom. As the name suggests, bootstrapping means no debt or equity ownership to repay. So stress-free operations, no rush of paying off debts, and maintaining strict promises to your investors.
If you are bootstrapping, you learn to do a lot with very few resources. This resourcefulness is a very important skill that will help you throughout your startup journey.
As bootstrapping is a risky path, apart from the high chances of failure, there are also a few disadvantages that you should keep in mind. As you are competing with competitors in the same field, you may often face challenges in hiring, marketing, and expansion. If there are already established companies in the field, it becomes tough for bootstrapped startups to scale and compete with them. Also, as you might be using your personal funds, bootstrapping may get really stressful. Your personal finances could be at risk if the business faces difficulties in making money.
Almost everything in this world comes with its pros and cons. Bootstrapping is no exception. If you are really passionate and want to start out, do not take a step back despite the potential disadvantages. We are here to help you in bootstrapping your first startup.
Begin with a simple and small idea. Avoid making it too complex. Break it down into small goals and determine the main issue you are addressing and focus on solving that initially. Then build your first product or service accordingly.
Starting small also gives you risk-free chances to test out your business model. You can see the potential chance of growth or risk by going small. Because, even if you fail, you don't have that much to lose, right? You can experiment with different strategies and check for yourself which works the best for your startup. Upon analyzing them, you can make necessary adjustments to the plan, products, or services.
Choosing and building "The Right Team" is crucial and very important. Bootstrapping means you are tight on your budget, and on a limited budget; you face two problems. One is that it is very hard to hire the best people on a limited budget. Second is ensuring every member you hire with limited resources is capable enough to handle the operations and align your vision for the startup.
Look for individuals who complement both your strengths and weaknesses. Try hiring people who have worked in startups before. As a startup is not like regular businesses, those people will be able to face the unique challenges that come with starting up a bootstrapped company. Startups can be unpredictable. You need to ensure that you make your team with people who are flexible and adaptable enough.
You always need to remember that, in a business— every penny counts, so make sure you are utilizing it properly. For example, if you are running a food truck business, you might need to buy a truck, cooking equipment, and ingredients. These are all the necessary equipment that will help you get started with the business but do not spend extra on unnecessary (at first) things like fancy decorations or advertisements in local newspapers or magazines.
By cutting off unnecessary expenditures, you will be able to stretch your resources further. All of these little steps combined increase the chances of the success of your business. Only focus on things that really matter in your startup when you are bootstrapping.
A clear overview of your company's budget will help you in many ways, which is why budgeting is very important. You need to keep your eye on the data and have a clear idea of what is happening with your money. By analyzing the expenses and revenue, you need to also ensure that the business is going to be sustained in the long run.
For budgeting, instead of going for expensive money management software, go for free tools like Google Sheets or Trello. This will help you to distribute your resources wisely. By budgeting properly and cutting off unnecessary expenses, you can use that extra money for something that will actually bring value to the journey of your startup. Use free/low-budget resources.
There are high-quality, efficient software available in the market, but most of them are going to cost you a good amount of money. Sometimes, it may seem like a little, but when bootstrapping this little extra expense, you can use it somewhere that is more beneficial.
We recommend you go for cloud-based free services so that they become more accessible to you, and your team members can access these remotely from anywhere they want.
Networking is a very underrated skill many founders miss out on in the early stages. It is even more crucial if you are bootstrapping. As a founder, having the ability to stay connected with mentors, advisors, and prospective clients helps you a lot to grow your business.
Networking will allow you to get connected with like-minded entrepreneurs in the industry who may have faced the problems you're facing. You get to take advice from them. You can try attending startup events and conferences; these will help you make connections that can lead to potential partnerships or collaborations.
If you are not that comfortable going out or socializing, just use LinkedIn. It is a great tool for rising founders to get connected to like-minded entrepreneurs. You can also join relevant subreddits of your startups on Reddit; this will help you get other people's perspectives on the industry, including customers.
When you are bootstrapping, it can be tempting to prioritize quick growth over profitability. You should always remember, at the end of the day, your ultimate goal is—profitability.
For instance, imagine you have started a bakery in your area, and you want your branches to spread nationwide as soon as possible. To be able to do that, you need to rent locations, hire employees, and so on. All these things translate to more and more debt. When you are bootstrapping while scaling up and growing your business, your one major goal should also be not getting stuck into the debt loophole. First, focus on doing small and make sure you're profiting.
When you are running your startup all with your very own resources and money, it's super challenging to stay motivated, as good results take time to show. Setbacks or slow progress breaks one's mental strength, which is absolutely fine.
Maintain a positive mindset and focus on the bigger picture. This will help you stay on the track. Our suggestion is to set small achievable goals and track your progress towards them. Celebrate small victories along the way and use them as fuel to keep you pushing forward. Also, try to surround yourself with supportive people who trust in you and your vision. While taking care of your own physical and mental health, look after your team, too. Because all of this affects your business. Do not stop if you fail; instead, try different strategies. If you are passionate and strategic enough, you can do it too.
While bootstrapping your first startup can be challenging but rewarding. It's a risky but effective strategy for maintaining, controlling, and avoiding debt. Try to follow and implement the tips given in this blog. Best of luck setting up your very first startup.
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