Not familiar with bootstrapping? Investopedia defines it as attempting to build a company from personal finances or from the operating revenues of the company.
Bootstrapping is serious business — it requires dedication, creativity, and a lot of hard work. So what’s the secret to it? You’d think that there’s probably a common theme within the world of bootstrapping that allows successful business owners to bring their ideas to life, right?
Wrong. I asked around to find out if there was a common secret that successful bootstrappers knew about—and was fascinated by all of the different responses they gave.
Use Your Skills as Currency
Brandon Baker of Loveletter Cakeshop said that using your skills as a form of currency is the key to bootstrapping successfully.
_“Master a skill and use it as currency. Cash isn't the only payment that most businesses will take in exchange for their services. The key is to learn how to do one thing very well so that it costs you very little to execute, and leverage that skill to acquire what your business really needs,” he said. _
Brad Farris at Anchor Advisors works with all kinds of business owners who ask him this very question. His best tip for bootstrappers: Spend wisely on things that make you more efficient and effective (and that you can't do on your own.)
'Spend on things that buy you time,' he said, 'But spend judiciously.'
Reinvest Your Profits
Keeping your profits invested within your business can be difficult—especially when funds are tight. But Bill Fish of ReputationManagement.com said that leaving the profits in his first business for at least 12 months was essential to its success.
He said, “Leaving the profits in the business for at least 12 months is a must. It lets the business breathe and allows you to have capital when the need for strategic investments arises. It will come in handy down the road.”
Having a few large clients often becomes constricting — they have more influence and can direct you to change the course of your company, which means you lose the ability to follow your original vision, says Aytekin Tank of JotForm. Therefore, he suggested that bootstrapped companies should focus on a smaller client base instead.
Ditch the Office
Unnecessary costs (like having an office when you don’t really need one) can be a huge drain on your limited financial resources, according to Marc Prosser of Fit Small Business. As a bootstrapped company, success depends on your ability to get crafty—and to spend money where it really needs to be spent.
“If you don't have employees, you really don't need an office in nearly all cases. If you need to meet people, there are places you can meet by the hour, including some high-end locations that will impress your clients. If you need to get out of the house and work, there are coffee shops and co-working spaces that are far less expensive than renting an office,” he said.
Be Creative with Solutions
Zack Stiefler of Bunglaow Insurance explained that since you can’t just throw money at your problems, making smart, well-planned decisions is essential to bootstrapping success. There’s also no room for knee-jerk decision making when every dollar counts.
“Part of what makes bootstrapped companies great, in my opinion, is that they are hungrier and more resource-constrained, which leads to creative solutions that better-funded companies might not be able to pursue. If you’re bootstrapping, embrace this and get creative! Do things your well-funded competitors can’t!” he said.
Be Realistic and Think About Scalability
Bootstrapping has to happen around what you can do now with the people and resources you have at hand — without the help of investors.
Cassandra Rosen at FK Interactive said, “Staying lean and scalable means that you can bootstrap indefinitely. Don't create something that you can't scale without investors. You'll end up pulling your hair out, and in the end, you may not need them, especially if you stay lean.”
The Secret to Bootstrapping? All of the Above.
Unfortunately, there’s no single answer that makes bootstrapping a cinch. The good news, however, is that you can bring all of these tips together for maximum success. With hard work and a little creativity, bootstrapping can be extremely rewarding.
What’s your best piece of advice for bootstrapping a business?