Metaphors about “bootstraps” are often rooted in admiration. They recognize someone’s pluck or resolve in the face of a seemingly impossible challenge. Originally born from necessity, bootstrapping a business — or launching without external capital — has proven to be an agile way to build an enterprise and turn a profit.
But you shouldn’t confuse bootstrapping for simply cutting costs or corners. Focusing solely on counting pennies can lead your business down a dead end just as quickly as overspending. While budgeting is certainly part of bootstrapping, this methodology is really about developing a laser focus on how you invest, make your offer, and gauge the market’s response.
Key Benefits of Bootstrapping
Readily embraced by startups (and made popular by bestselling books like “The Lean Startup” by Eric Ries), bootstrapping has transitioned from necessity to methodology. Applying this strategy to your business allows you to do three critical things: conserve cash, act swiftly, and be autonomous.
First and foremost, bootstrapping safeguards your funds until that proof-in-hand moment when your concept is viable. To get there, create what Ries calls a “minimum viable product.” This is your product or service in its purest form — no bells or whistles included. Then, you can let your customers tinker with it and provide feedback.
All in all, this will save you time and money. If you’re wrong about the market’s interest, you can respond quickly. If there’s a positive response, you have the information and cash you need. Your customers will tell you when they want something, and you’ll be in a position to give it to them.
And that’s the beautiful thing about bootstrapping: It gives you full control over your company’s ideas, goals, and culture. Relying on your own capital lets you focus on your business’s needs, not your investor’s, which means you can pivot and get more information or shut it down and live to fight another day at your discretion.
Navigate the Dangers of Bootstrapping
However, when bootstrapping, it’s easier than you think to be caught flat-footed. Be sure to plan for a few different scenarios before you go to market. It’s possible to bring something to market at just the right time. In fact, that’s your target, so have a contingency plan in place in case you hit a bull’s-eye. By all means, make a single perfect pitcher of lemonade (i.e., your MVP) with 20 customers in mind, but have a back-up plan to make 100 more if you need them.
Five days after my business’s website launched, we received more than 100 orders in a single day. That day was the “be careful what you wish for” moment that all entrepreneurs dream about, but in reality, playing catch-up was stressful. To fulfill these orders, we needed dozens of site features built out immediately, which was impossible. If we had tested before launching, we could have tackled them before the orders rolled in.
Be sure to test with employees, friends, and trusted partners, and have that contingency plan in place for a big hit. Above all, knowing where to invest and where to cut costs can make or break you.
Here are five things you need to keep in mind:
- Outsource to create cost efficiencies. You may have to kiss a few frogs first, but you can outsource web development, graphic design, or marketing to a reliable source at a fraction of the cost. However, keep in mind that working with third-party partners successfully hinges on good communication.
- Plan for mobile and desktop equally. Mobile traffic is only increasing, so building a responsive design and mobile app is key. Optimize your shopping cart for mobile — easy checkout is critical. Smartphones are always-present appendages, so plan accordingly.
- Trust the system. You may have to make some sacrifices, but bootstrapping can grow your company. Most importantly, you’ll do it without venture capitalist money and the strings that come with investors. The greater your autonomy, the greater your reward.
- Test, test, and test some more. Don’t be afraid to test a lot of ideas, but only test incrementally. Run A/B tests before you commit to anything, and if you can’t test it, don’t do it.
- Gather enough feedback. Testing yields entrepreneurial gold in the form of feedback. You can’t act intelligently without feedback from your customers. Use SurveyMonkey, Crazy Egg, and other tools to see what’s working and what’s not.
Embrace the bootstrapping methodology, and you’ll uncover a shortcut to ROI that can be invested in growing your venture and serving your customers — not in repaying investors. Those same investors may come knocking down the road, but you’ll be in a position of strength to negotiate terms and new relationships.