Beyond that, bootstrapping means you assume all the risk: your money, your time, your resources. And while bootstrapping is a great way to test your idea, even if you're successful enough to finance operations through the revenues you generate, an infusion of capital may be necessary to effectively scale your business.
But that means convincing other people that your business is worth investing in.
Especially if you're focused on the wrong metrics -- because there's a tremendous difference between "ego" metrics and metrics that truly tell the story of your business -- and its potential as an investment.
Ego metrics impress people -- but not the people you really want to impress. Ego metrics are "surface level" metrics. They tell a story, but not the story. That's what operational metrics do: they indicate growth. They indicate excellence. They indicate profitability. They tell the story investors want to hear.
Here are a few examples
Customer Growth Rate versus Customer Acquisition Cost.
Maybe you did add 2,000 new customers last month. That sounds good but it doesn't tell the whole story. What did each customer cost you to acquire? What is the long-term value (Customer Lifetime Revenue) of each customer you acquire? What is your customer retention rate?
It may be that you're adding new customers, but at too high of a cost when weighed against the lifetime value of those customers. And because your churn rate is too high.
Your neighbors might be impressed when you say, "We landed 2,000 new customers last month!" An investor will want to know more. A lot more.
Downloads versus Active Users.
Plenty of people download apps, software, guides, etc. and then rarely or never use them. Getting people to download an app is fairly easy.
Building an app that people want to use, over the long term? That's incredibly hard. Users -- active users -- like the product. It solves a problem for them. It meets a need. It makes their lives in some way better.
That's what successful businesses do. That's what investors look for.
Customer Service Response Time versus Failure Rate.
Plenty of companies tout their customer service response time. And their multi-channel approach that allows them to "connect with the customer wherever the customer prefers." And there's no denying that great customer service, especially when a customer needs help or has a problem, is a key to business success.
But great customer service can hide a more fundamental problem: the fact that something, somewhere, is broken and requires a person to help fix. Maybe a customer purchased an item that is out of stock. Maybe a customer purchased an item that didn't ship on time. Maybe a customer purchased an item they can't install without outside help.
Or maybe it's a "poison" problem: a customer experience so poor the customer will never return.
Good businesses fix problems. Great businesses find ways to eliminate problems so they no longer need to be fixed.
Basket Size versus Repeat Transactions.
Some e-commerce businesses love to tout a relatively high average sale per order. But not Amazon. In fact, that's one of the key levers on the Amazon flywheel: free shipping makes customers buy more often. (I don't need to wait until I can make a "larger" purchase if shipping is free.)
That's one reason Amazon Prime members typically spend $1,400 per year, while non-Prime members only spend $600.
One-time customers are great but repeat customers build the foundation for a healthy business. They're loyal. They're advocates. They help prove that your business can build a customer base not just through marketing and advertising but by delivering on the promises it makes, time and time again.
Which is exactly what potential investors want: to know that you will deliver on the promises you make.