Bootstrapping, or in other words self-funding your business is the way most startups launch. If you have the necessary resources to execute your startup plan and a capital pool that can sustain you from getting drained out, then nothing can be better than a bootstrapped startup as you will enjoy complete creative and business freedom over your startup. No taking approvals for making business calls or making startup pivots. The go-to-market time is the shortest because once the founders decide; the next step is just executing it instead of convincing your board or investors.
The downside (or rather caution) is that the oxygen to this business is your personal finance. Unless you have a large pool of money, there are two ways to self-fund a bootstrapping business:
Take up service orders: We have discussed this in detail two weeks back. If you start as offering services for other businesses, you will be getting money in your startup account to fund your product initiatives.
Make a cash flow rich business: If you want to be in product business, then enter with a product line that goes out of shelves faster. (This might take some market surveys and hit and try from your side).
The quicker the sales, the quicker you will get your cash back and the quicker you will be able to invest it in your business. Price the products in a way that you will start relishing profitability once you hit a certain achievable scale (For eg. 500 units a month run-rate). We understand that by just selling few units you will never be able to recover the fixed costs and thus scale will be a key factor.
Now that we know how to self-fund a startup, there are three important pointers, you should keep in mind so that you do not exhaust the funds you generate from steps mentioned above.
Hire wisely — Under-staffing is better than over-staffing. People sitting idle and goofing off on your bean-bags is the last thing you want as a bootstrapped startup.
Let ‘hiring in advance for troubles’ be a corporate’s mantra not yours. Do not waste resources on a bad hire. If in doubt, start with as a freelancing project. If they perform well, then take them on-board.
Save and plan in advance — You might get unexpected hiccups and road-jams. Plan and keep aside some money to avoid these troubles. Keep evaluating feedbacks on your products, improve and launch the
newer version.
Happy Bootstrapping!
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