Bootstrapping is the new black. Well, sort of. While ideally, startups want access to capital in the form of investors, it doesn't always happen that way. Sometimes, we find ourselves bootstrapping by either using our own money or using a portion of the business revenue that comes in over time.
Does that mean a business is doomed to fail? Of course not! There are lots of successful entrepreneurs out there who bootstrapped their way to success. I've bootstrapped my business every step of the way (and never even carried over a credit card balance). Many of my colleagues have successfully bootstrapped six and even seven figure businesses.
Advantages of bootstrapping a business.
Truth be told, bootstrapping has certain advantages. Namely, we don't have to answer to anyone except our clients and customers. We also hold creative control. For those of us who have also managed to avoid taking on debt, it frees up a lot of mental space you can use toward creating innovation through your business.
What to expect from bootstrapping.
The key to bootstrapping is you need to realize it takes time. In fact, it may take much longer to grow your business than you probably want because you don't have as much access to capital.
I would make the argument that this isn't necessarily a bad thing. This is especially true for individuals (like myself) who are learning to run a business as they go. Had I had access to insane amounts of capital when I started my business I would have had no earthly idea what to do with it.
That being said, if you also happen to be bootstrapping your own business, here's how to do it without going broke.
One of the biggest mistakes businesses of all kinds make is scaling much too fast. This leads often times leads to more overhead and more headaches than the business can handle. And by the way, this happens to businesses who have investor backing all the time.
With bootstrapping you're forced to take it slow. Unless you somehow came into an inheritance or won the lottery, you likely don't have millions of dollars to spend. The good news is this allows you to build a solid foundation over time.
I like to equate it to The Tortoise and the Hare. At the end of the day, we all know slow and steady wins the race.
Focus on what brings in the most money.
When you're bootstrapping a business, much of the business revenue you earn goes right back into the business.
While bootstrapping my own business, I have found the Pareto Principle - also known as the 80/20 rule - to be extremely beneficial in determining where I should invest limited resources. I look at the tasks and tools that bring me the most money.
In my case, email marketing is definitely my bread and butter. That means I invest in the right email marketing tool because most of my sales for my coaching program come from my email list. It means I spend money on Facebook Ads and a manager for Instagram because these platforms perform best in growing my email list.
Take strategic risks.
While I've never carried a credit card balance over from one month to another (I personally hate debt), I've definitely used credit cards to make business investments.
Basically, I would put an investment on a credit card and then figure out a way to pay for it. Fortunately, I always have been able to figure it out because I was always pretty strategic. If I was putting an expense on a credit card, I'd probably come up with six different ways to make that money in my mind. Fortunately, I always did.
By the way, this in no way means credit cards are inherently evil. I also know plenty of business owners who've started very successful businesses courtesy of a credit card. I'm simply saying that if you are going to take a risk, just make sure there's some strategy behind it.
If bootstrapping your business seems to be your only choice, use these tips to help you do it strategically. Remember, plenty of successful businesses were bootstrapped. There's no reason why yours should be any different.