A couple of years ago, I shared my story of how I bootstrapped the purchase of my small business. Nearly a decade has passed since that moment in time and in retrospect, I am still so satisfied with my decision and that I was able to make bootstrapping work in my favor.
Sure, it might have been easier to take out a business loan for this kind of purchase, but I might still be paying it off had I gone down that route. Bootstrapping, though a lot of hard work and commitment, taught me what I was made of and what I was capable of doing.
Now, I’m imparting my pearls of wisdom to the next generation of entrepreneurs. If you’re considering bootstrapping to fund your business, here’s a look at lessons I learned along the way that allowed me to take control of my company.
Grow in small increments
Far too often when a startup begins to experience significant success, it is encouraged to start spending more money. Maybe you want to move your office to a swankier location or hire tons of new employees. Now that you’re here, you’ll always maintain this amount of revenue — right?
During your early years in business, a.k.a. the bootstrapping timeline, it’s key to avoid a sharp spending uptick. Focus on slow, steady growth even if you experience overnight success. Spend in small increments. Each year that you’re in business, increase those increments just a little bit. Whenever you’re ready to hire more employees, don’t bring on tons of people all at once. Hire in anticipation of growth and surround yourself with a tight-knit team capable of wearing many hats. If your growth has allowed you to think about relocating, look beyond fancy buildings. Shop around for office locations in communities where you know your business will thrive.
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Don’t be too eager to bring on investors
Seeking investors can be more of a shock than you might think. Many entrepreneurs choose to work with venture capitalists or angel investors when they first start a business. These individuals fund companies with some much-needed capital that you do not need to pay back.
Their only requirement is that they receive a stake in your business, like shares, for instance. This may not seem like much at the start, but as your company gradually grows and becomes successful, a part of your business won’t belong to you anymore. It will belong to your investors, who will now have a say in how your business is run.
If you prefer to be in full control of your business, stick to solely bootstrapping instead of bringing on investors. However, if you know that you’re more of an idea person and less cut out to actually run a startup, you may want to fund your company with the help of a venture capitalist or angel investor.
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Look at bootstrapping from a positive perspective
When you think of the term bootstrapping, you’re probably envisioning strict budgets, wiping out a huge chunk of your savings and penny pinching expenses. Sounds great when presented like that, doesn’t it?
Here’s a radical idea: view the action as a glass half full, rather than half empty. Don’t look at the time you’ll be bootstrapping as something to be resentful about. Instead, remember why you’re doing all of this in the first place. You’re working to bring a business that you’re passionate about to life and to become the master of your own destiny. Even if it happens slowly, it will happen surely and it will be your business. It can be done. I’ve done it, and I know you can too!
