Bootstrapping: Build Your Business Now, Don’t Wait For Investors

You have a great idea/concept and a burning passion to build it, so you wait and bide your time until you can convince some outside investors to front you the startup capital to get it going. A good move?

According to Greg Gianforte who is the author of the insightful book ‘Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money‘ waiting for outside money to show up before starting your business could be a big mistake. With credit markets in shambles and the VC industry in full contraction mode, there has never been a better time to bootstrap your business to success.

Got a brilliant idea, but can’t afford to launch your own business? Whether it’s a high-tech start-up or a corner bar and grill, here’s how to bankroll a business without risking it all.

Where most guys would see a receding hairline, Todd Greene saw dollar signs. A 30-year-old Web designer working for GeoCities in Los Angeles, Greene’s answer to hair loss was to shave it all off. But he found that conventional razors were hard to use on the top of his head. So at night, after work, Greene designed an exotic new device he dubbed the HeadBlade. He spent two years perfecting the Zamboni-like contraption, which comes complete with a tiny wheel and suspension. It kept his pate shiny, so he started looking for a deep-pocketed partner who was willing to put up the money to mass-produce his invention. Gillette and Schick swatted him away. Venture capitalists, fixated on finding the next Yahoo!, laughed in his face.

Greene could have given up there, as do many wannabe entrepreneurs. Instead, he scrounged up just enough cash from his father, two friends, and his own savings to manufacture 500 HeadBlades. He quit his job, strolled down to Venice Beach, and sold them out of his backpack. They went quickly. Ten years later, HeadBlades are on the shelves at Wal-Mart and CVS.

Outside capital does have its advantages, most notably giving you ample resources to get your product from concept to market quickly. However, with outside capital comes outside influences from both people and economic conditions, both of which are just as capable of killing your venture as much as helping it.

In ways that really matter, bootstrapping your startup can force you to stay frugal and keep your laser-focus on building the product that best suits your target customer.

Having no money, no staff, no equipment, and above all, no product is a tremendous bonus to a Bootstrapper. Why? There are dozens of good reasons, so here are just a few:

1. You are forced to produce the product or service that the customer wants, and wants most. It won’t be the product you were craving to sell them – it’ll be the product they’re craving to buy.

2. You can’t lose out. If no one in the world buys your offering, the Bootstrapper parts with nothing but some time and a phone bill. Your slim resources are all still available for your next idea or for an amended product.

3. The process of Bootstrapping is nothing less than the fastest and most efficient way of telling you whether you have a sound product and a strong basis for a business.

4. It compels you to be creative. Only an open mind, applied imagination, and a good listening ear will get you where you want to go. Bootstrapping is the purest and clearest of test beds for your busienss idea.

5. It is the best opportunity to build the sort of business that makes your target market tick. Even better, if it’s successful, you will own most or all of it. It could be your future ‘job for life’, the ultimate security for you, your staff, family, and colleagues. You could finally be in full control of your own destiny – a goal for many a seasoned Bootstrapper. And because you have little to offer initially except a modest wage and a great future, you are likely to attract only the hardiest, most courageous, and enterprising people as employees.

Some of the world’s best businesses were started on a shoestring budget out of a basement or loft apartment. According to dot-com billionaire entrepreneur Mark Cuban, sweat equity is indeed the best equity and avoiding outside investment could be a very wise move as mentioned in Mark Cuban’s Three Rules for Building a Company.

Rule 1
Sweat equity is the best equity. “Taking money from someone else kills more start-ups than anything else does. Do everything you can to avoid taking money. If you must, your best prospects are potential customers. You have something they want, so if they invest in you, it can be a win-win situation.”

Rule 2
Don’t lie to yourself. “If you find yourself describing your idea or business with words ending in subjective words such as ‘cheaper’ or ‘faster’ then chances are you don’t have a business that is differentiated enough that one of your competitors couldn’t do the same thing.”

Rule 3
Don’t drown in opportunity. “Once you have started your business, there will always be one more new thing to try, one more idea you just had. The problem is, new businesses don’t have enough bandwidth to do them all well, and they can drown trying. Know what your core competencies are and be amazing at them.”

The big takeaway here is that waiting for other people to help you start your business may only serve to short-change your dreams.

Make no mistake about it, ‘small’ is the new ‘big’. With some tough personal financial choices, you may be surprised what you’re capable of pulling off. The process of bootstrapping could be a key competitive advantage that helps birth a company that is agile, resourceful and most of all, sustainable.

Related News:
Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money
Mark Cuban’s Three Rules for Building a Company

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