BUSINESS
Bootstrapping Your Business Is the Most Important Thing You Can Do Right Now
Startup decisions that you make today can dictate your destiny
If ever the was a time to bootstrap your business it's now. Are you bootstrapping your business or just thinking about it?
Whether you’re a startup or an established firm, bootstrapping your business has lots of benefits.
On the other hand, venture capitalists (VCs) have plenty of money to invest. A lot of cash.
Is it worth it?
Before you get caught up in the dream, read on.
Entrepreneurs dream about reinventing, dominating or conquering markets. The one thing that stands in the way of these dreams and making them become a reality is … capital. Or so we think.
VCs promise a better tomorrow with cash today.
At this moment Entrepreneurs envision their company accelerating. Growth and profits soar in their mind's eye. The days of struggling, self-financing capital, to just stay afloat, can be a distant memory in the stroke of a pen.
The only thing standing in the way is … signing on the dotted line.
It’s decision time:
- Bootstrap, or
- Usher in the cash-laden VC-master
What to do?
Decisions Decisions
From my experience, there is no right or wrong answer.
What I do know is that by not bootstrapping your startup, you miss out on experience — valuable life lessons.
Business lessons.
Lessons that may unlock the biggest self-discovery of your life:
Who am I? Am I an entrepreneur or did I just get lucky?
Hungry for more? Keep reading.
Bootstrapping Benefits
Bootstrapping your business today retains your control for tomorrow.
Yes, VCs will tell you that you’re better off having a smaller slice of a big cake rather than the whole of a small pie. They’ll even tell You that bootstrapping your business will impede growth and profits.
Are they right?
The answer can be either “yes” or “no”, depending on where you are on your journey.
VCs do have a time and place. Somewhere down the line. They have no place at the start or in the middle of your journey.
Tasting VC money too early means you have to give up control of your startup. Fact. You have to divide up the pie. A small pie in the early stages.
Industry giants today started out bootstrapping their business. Think of Airbnb, Intercom, even Apple or Microsoft.
Here’s what you could miss out on by selling out too early:
- You learn that resourcefulness trumps resources
- Profitability means survival, you make it work
- You deliver big results from a small team
- You hire team members for a mission, not money
- Do whatever it takes to eat again tomorrow
- Every customer counts
- Every employee is part of the sales team and customer service team
- Offering everything is the only thing
- Bootstrapping long-term starts to look like a viable option
- Your exit strategy is your office door
Bootstrapping brings one thing to the table that VCs can’t:
Control over your company.
Far too many Entrepreneurs share ownership, relinquishing control of their fledgling startup too soon.
If you think VCs have come to the table for a small slice of the pie, so you can retain control, think again.
Strings Attached
Remember, strings are attached any time you accept money from others. Not that there's anything wrong with this. Arguably, smart money is when you spend other people’s money.
But at the right time.
Operating a thriving startup business is challenging in and of itself. Adding other stakeholders into the mix, with different agendas, ties your hands. You have to deliver their objectives too.
Your control is gone. At least in part for now.
Control
Control of your company gives you control of your future.
It’s that simple.
Bootstrapping keeps you in the cockpit. In Control.
Bootstrapping protects something much more valuable than money. The one thing money can't buy. The thing that allows you to learn, conquer and win in your space.
What’s this one thing that bootstrapping protects?
Time!
Bootstrapping your startup keeps your time focused on growing your baby.
Chasing external money steals your focus and time away from your startup.
Your full-time job becomes something new — meeting with banks, investors, lawyers, and accountants.
These investors will want to know how you do what you do. Along the way, you’ll spill your “secret sauce”.
It's likely that you’ll have the same meetings with lots of different people.
Like groundhog day.
Time spent chasing outside finance means that you have less to invest in other things, better things.
Like what?
Like brainstorming the next problem. Solving or creating market disruption.
Investing Time
Time is fixed. An equilibrium. It levels the playing field for all. You can spend time chasing investment or chasing consumers, clients, a key account to grow your business.
The output is the same = Cashflow
When you focus on your startup, you acquire clients, grow your business, your market share and increase profits.
When you chase outside investment, you do none of the above.
Oh, don’t be fooled into thinking that when you get outside financing you can refocus on your business again soon thereafter.
Nope.
Other people’s money means rules:
- Meetings
- More meetings
- Reports
- More reports
- Meetings and reports
- Reports and meetings
- Presentations, reports, and meetings
Investors want assurances. They want to know exactly what you’re doing with their money. Is it protected and is it growing?
Weekly, monthly, quarterly and annual reports, presentations and meetings are the trade-offs for external money.
You’ll drown in financial reports if you’re not careful.
Creating presentations will consume your time too.
Three words of advice: Don’t do it.
At least not yet!
Easy Street
Bootstrapping a business isn’t easy.
Doing what’s right rarely is.
Bootstrapping your startup though means that your resourcefulness today will feed your offspring tomorrow.
“You must gain control over your money or the lack of it will forever control you” — Dave Ramsey
Neither solution is perfect. Bootstrapping or external finance.
Gains from outside finance is a trade-off with control. Pie-sharing.
VCs are always very clear — their money gives you what you need to gain market share to win.
VCs aren't shy either. No, they're forthcoming telling you all the things you gain with their money.
But you have to do the work.
The same VCs are eerily quiet when you don't deliver, or worse, fail.
VCs are in business to win. Period.
Don’t be surprised that VCs want their money, with interest plus a pound of flesh. Although your sanity will do. All within three to five years.
External finance means that VCs, not you, the founder, dictate how your startup grows and exits.
Make it Count
Statistically, the likelihood of creating another successful company is slim to none. One that VCs drool over.
You have one chance to get it right, so make it count.
As I said, doing what’s right isn’t easy. With your future in mind, bootstrapping a startup is the right thing to do, initially.
Bootstrapping gives you one thing that you won’t get from VC cash.
Full ownership of the pie — control.
Control over your startup, your actions, your destiny.
Your time.
Bootstrapping your startup brings peace-of-mind. VC funding removes peace-of-mind.
That said, there are no guarantees in life or business.
The same holds true by bootstrapping your business. It brings challenges and risks. That’s par for the course, so be prepared to suck it up.
But navigating challenges build character, leadership, and a skill that you can only learn by doing — Entrepreneurship.
You’ll still have sleepless nights. I guarantee that, but bootstrapping your business means that you succeed or fail on your terms.
There are no regrets. Period.
Risk and opportunity is the cross-section where your destiny resides.
The choice is yours and always will be. Certainly to begin with.
When it comes to building a business, you have one chance to get it right. Of course, you can start again, but you still have one chance with each venture.
Don’t blow it by selling out too soon.
Final Thoughts
When it comes to starting and running a business, you have a choice. One that determines your future. Your destiny.
You either bootstrap or seek outside finance. Neither is perfect, each has downsides.
Thousands of entrepreneurs, fall under the VC trance, to their detriment.
Bootstrapping instills resilience and resourcefulness, true entrepreneurial traits.
As with all things in both life and business, there’s a time and a place for everything.
So, who are you? Are you an Entrepreneur?
Know this — Bootstrapping a startup today sets you up for tomorrow. Your success empowers you to invite external finance on your terms, down the line.
Here’s the best part — The how, when, where, what and why is up to you? It’s in your hands.
I know you can do it. Here’s to your success.
Your Biggest Fan!
Paul
