5 Tips to Bootstrapping a Company for Entrepreneurs
Here are tips to bootstrapping a company for entrepreneurs to help get you started on creating your startup. Read on to learn more.
Though rewarding, there’s definitely no doubting that bootstrapping a company for beginner entrepreneurs is one of the most difficult career paths a person can set out on. It’s a unique situation, an intensely difficult journey fraught with distinctive challenges and the perils of failure, requiring a tough, resilient mindset.
If you’re a new entrepreneur with the plan to self-fund (or even if you’re still just thinking about starting a company), then this article is for you. In it, we’ll explore exactly what goes into a successful foundation of a bootstrapped business.
1) Develop a Business in a Familiar Industry
One of the keys to successfully bootstrapping a company for entrepreneurs is going into business in an industry you’re already familiar with.
The problem with starting out in an entirely foreign industry is that it will cost you resources (especially time, your most valuable resource) to learn and understand the industry. Remember: if you want to be successful in a particular domain, you can’t just have a cursory knowledge of it. You need to know the ins and outs of the industry, and learning that it’s a process that requires time and patience.
In some verticals, getting to know the playing field could even mean that you would have to drop significant amounts of cash (on one of the principal technologies in the industry, for instance). Considering that this cash will be coming out of your personal bank account, this means that you’ll be far in the red even before you start your business.
The wiser course of action is to simply go with an industry that you already know well. A good rule of thumb is to find your passion and apply your skills to that field in a way that will net you profit.
2) Find the Right People
Jim Rohn, a legend in the personal development niche, once said, “You are the average of the five people you spend the most time with.”
While this quote was originally meant to be taken in the context of one’s friendships, the same principle can be applied to business.
For your bootstrapped business to be successful, you have to have successful people around you. Your startup team is one of the most critical pieces to success.
This fundamental concept is never as important as when you choose a co-founder if you decide to go that route. Your co-founder(s) must share your vision and drive for success if your business is going to make it in the long term.
Another critical point for your team is the first 1-3 hires. These people will set the tone for company culture as you continue to grow, so remember to be patient and take the time to find the right fit for your vision.
Pro tip: don’t be afraid to hire remote workers. Groove, a popular help desk software with explosive growth, is driven by an entirely remote team. Learn how Alex Turnbull, the founder, manages his company here.
Your startup team is one of the most critical pieces to success. -Aaron Vick
3) Make Do
This may not be something you really want to hear, but it’s still absolutely crucial to your success as a beginner bootstrapper.
As a self-funded company, you simply cannot afford to be extravagant with your expenses.
A lot of new entrepreneurs fall into the trap of believing that the more they invest in their company, the more committed they will feel, and thus the harder they’ll work to ensure success.
What’s far more likely, however, is that you end up dropping cash on a lot of bells and whistles that aren’t essential to growth. Then before you know it, you’re so far in the red that it’s a struggle to even break even.
When bootstrapping a business, create a budget, strip it down even more, and then stick to it. Save the money for what really matters.
Remember that this will pay off in the long run. If/when you open up your company to outside funding sources, investors will be hugely attracted to the positive cash flow, as well as your frugal mentality as the leader of the company.
4) Have a Learning Mindset
We’ve already discussed going into a vertical that you’re familiar with. But even in an industry that you might think you know intimately, there will still be a lot of new things to learn when you face it from the perspective of a business owner.
Consequently, it is absolutely crucial that you have a learning mindset and a teachable attitude. Stay humble, and always be ready to learn how to do things in a new, more efficient way.
For instance: those beginner bootstrappers creating a web-based business (probably a majority of you) will have to learn at least a few website development skills. Otherwise, you’ll find yourself shelling out significant money (that you probably don’t have!) to a developer for every little change in your website.
Again, this will mean putting in a lot of hours, but bootstrapping a company for beginners anyways means a lot of hard work in any case.
5) Be Flexible
Flexibility is key to the survival of bootstrapped businesses.
As a new entrepreneur, you will make mistakes. And that’s fine. Remember: failure is just a stepping stone towards success.
But what you can’t do is decide on one course of action and resolutely stay on it no matter what the outcome. Instead, you have to be ready to adapt when something doesn’t work out.
For example, let’s say you’re running a web-based business, and you started out using a business model where customers pay per month for access to a software that you’ve developed.
Unfortunately, this isn’t working out—customers have been giving negative feedback about the annoyance of making recurring payments. Prospective customers also worry about whether the per-month access model would make them over-dependent on your software to a point where they feel that their options would become restricted.
At this point, you may have to consider a new business model. For instance, you could try a one-time fee for the purchase of the software, and then additional payments if the customer wants direct support from your development team.
Or, it could be a different model entirely that works best for your company. When bootstrapping a company for beginners, the most important thing is to be flexible and ready to adapt to the new situation.
Final Thoughts on Bootstrapping a Company for Beginners
Let’s quickly review the different strategies we discussed on how you can be successful creating a new company:
- Start out in a familiar industry.
- Surround yourself with the right people for your company vision.
- Make do with what you have, and stick to your budget.
- Put in the hours to learn the ins and outs of your niche.
- Stay adaptable.
By keeping these five principles in mind, you’ll be all the better equipped to face the unique challenge of bootstrapping a company for entrepreneurs.