How to master the act of boot strapping your start up

In the world of startups, one fact that is very often glossed over is that most startups do not ever raise any money, much less Kleiner-Perkins venture capital money. Even then, only a very small percentage of companies do raise any venture capital – and the majority still fail.

For the startups who don’t raise venture capital, how do we fund our businesses from startup, through cash-flow positive, through profitability? We bootstrap it. But what does that look like?

Completely simplified, bootstrapping a business is very clear: you use only the money you have and the money you make from the business to start, build and grow the business. More specifically, here are a few of the things that you may and may not do in order to bootstrap your business.

1. Don’t quit your day job.

If you have a regular job and you want to start your own business, do not under any circumstances quit that day job until your business can sustain your financial needs. Making the jump to your startup is one of the most exhilarating events of a lifetime. If you do it too soon, you risk your financial ability to sustain the startup, and that defeats the whole purpose of the endeavor in the first place. I moonlighted on my first startup from May 1999 until March 2001. It’s hard but worth it.

2. Create other sources of income.

Bootstrapping means you’re not going to raise capital, but it certainly doesn’t mean you can’t earn capital. It’s very common to do consulting in your field of expertise while you build up your business. The only obstacle there is time. A colleague of mine used to joke that “there are 24 hours in each day, and then you can work at night.”

3. Learn how to do new stuff.

When I started my first business in 1999, I did not know how to use QuickBooks, write a blog post, share my vision, create an email newsletter, or market a new product. You don’t – and won’t – know how to do everything you need to do either, but you’ll learn. If you don’t do it, it simply won’t get done. When there are no staffers to get stuff done, it’s just you.

4. Attract co-founders.

Most, if not all, venture capital firms will never fund a solo entrepreneur. They look for great teams and bet on the jockey (team), not the horse (product). Why should you be any different? Seek out a great team of people who do what you don’t do, who share your vision, and who have the willingness and ability to moonlight on their day job until the startup can support their financial needs.

5. Start generating an audience.

On day one, start a blog and an email newsletter. Yes, you might have 3 readers of that first post and 7 subscribers, but that’s a start. We started with exactly zero email subscribers back in 1999. By the time we were acquired, we had built our opt-in email list to 150,000 subscribers. That took 12 years to accumulate, but it composed the core of our sales and marketing strategy.

6. Work for free.

When you finally decide to jump (quit your day job, that is), you may have built the business to the point that you cannot get all the work done and still maintain your 40-50 hour per week job, but the dollars are not there in the startup to pay you a salary yet. That’s ok. Most founders work for free for some time in order to fully devote themselves to the business and get it off the ground. You must have a solid financial plan at home in order to do this. Young, single entrepreneurs have a huge advantage in this area, because, with a little discipline, you can trim your life down to nothing, and devote your finances almost completely to the business. Here’s a great example of a startup founder who did just that. His Twitter bio reads, “Became homeless to getGrasswire off the ground. It worked out.” Nobody wants to go that far, but some are willing to do so.

7. Spend nothing, or close to it.

This option actually becomes quite easy, if you maintain a realistic, long-term view of your startup. It’s your money, so in order to get just a little further, you will pass on that sweet Macbook and a nice new desk. You’ll fly coach to India. You’ll drive 10 hours for a meeting if it’s cheaper than flying, and when you travel, you will hit up all your friends in the area for a free place to stay while you’re “traveling on business.”

8. Get good advice.

Seek out mentors in every area of your business: legal, accounting, software, IT, marketing, social media, sales. Whichever areas you are not an expert in are the areas you should be seeking and getting really strong advice, so you don’t make stupid mistakes that cost you time, money, stress, and emotional energy that you should be devoting to building and growing your business.

This is by no means an exhaustive explanation, and anyone who has ever bootstrapped business can add a dozen more to this list. It presents the basics of starting, building, and growing a business to profitability without taking on any outside cash, including loans.

Now that you’ve read just a sliver of the experience of bootstrapping a business, do you think you have what it takes? If so, go for it.


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