The Realities of Bootstrapping a Business
I am often asked what one of the most rewarding ways to launch a business is, and I answer ‘it has to be Bootstrapping’ – but it also happens to be the most challenging task I’ve ever worked on, so wanted to share my experience – for the benefit of future founders.
Bootstrapping offers key advantages: a) you maintain full ownership and control of the business; b) you gain increased flexibility to pivot and adapt to market changes; c) investor management requires a lot of time which, if bootstrapping your business, you can invest elsewhere; d ) you will learn to make the most of limited resources; e) it might be the most expensive MBA in your life, but through such adversity you find great reward at the end, both personally and financially!
No surprise then that Bootstrapping requires high dedication, patience, resourcefulness, and strategic decision-making from the founders. So, before you start, ask yourself do you have the right mindset and the right team to fulfil these criteria? Here is why:
Bootstrapping requires personal savings
If you think about your salary from day one, bootstrapping is not for you. Your pay cheque comes after revenue arrives or additional cash injections help, but never expect the market salary.
I paid zero to myself for the first years. Then I paid little to accommodate basic expenses, like rent, food, and healthcare. So, it's risky; you're out of your comfort zone. You have to survive, run and boost your revenue – but with next-to-no income. That brings a different level of stress which makes you hungrier to succeed by improving yourself and gaining new skills.
It requires long hours and hard work
Not only is a starting salary unusual, but you will also work many extra hours to compensate for the limited resources and move faster every day. Fortunately starting a new business is exhilarating and you should not notice the hours passing by – but others might need encouragement.
Bootstrapping requires strong vision and adaptability.
You need to have a clear and strong vision – but be prepared to be high adaptable, making changes and manoeuvres as you hone and improve your business model.
Sharpen your sales skills
Sales, sales and more sales is the key for every business, regardless of your technical strength. If you cannot sell, you cannot scale. My background is in technology, learning coding early on, and I was good at operational management as my previous role was 'operational director and management member.' Never, however, did I think I could be a salesperson. I've spent hours learning, making mistakes and improving my sales skills. Honestly, there were many moments I could not sell, but it's part of the journey, and it's okay as long as you move forward learning and improving.
Money burns quickly, and every penny is crucial
Don’t even dream of a nice market salary. Instead, drastically minimize personal spending. No nice dinners, lunches or private cars. Mostly, I've prepared my own sandwich for lunch, carried my coffee rather than ordering online or buying from a barista – and used public transport; it's cheaper and helped me read more articles and business books as I was racing with time.
Be super-sensitive about the accounting
It’s important to be on top of what you are spending, especially to notice trends that might become bad (and costly) habits. I used QuickBooks, as it allowed me to see how I spent money and where to cut unnecessary expenses
Keep your team as small as possible and be a 'doer' rather than a 'manager'. Work really, really hard
If a task requires particular expertise, hire someone or outsource with a minimum budget.
If the task is something you can do or learn quickly, then do it – do not create an extra expense line. I've done many tasks on my own rather than hiring someone. Set an example to your team by demonstrating your dedication, not just talking about it.
Requires extensive market and competition knowledge
You should understand the market and the competition back to front. Why is your service or product better than others? What are your unique selling points? Who are your competitors? Why should customers work with you? Interrogate yourself as you would a competitor and have your answers ready – uncertainty is a sign of weakness.
The 3 P rule: Patience, Presence, Persistence
Many organizations are willing to work with well-known companies comparing newly established market entrants. So, it’s vital to be patient and persistent while being present in the market, knocking down every door, attending events and conferences as much as possible. It is not enough to exist; you have to be regularly seen to exist.
Do not give up
Taking time off and resting is extremely important. I could not do that in the early stages, but when you learn how to relax your brain and keep your body healthy, we perform better. A solitary pursuit where you can exercise while thinking, like swimming or running, followed by a rest makes you sharper.
So, there you go, it’s a real rollercoaster – but it should finish on a high – so much that, like me, you’ll want to do it all over again!
About the author
Melda Akin is an award-winning entrepreneur, mentor, and computer scientist. She is the Founder & CEO of D14.AI, the true AI company solving complex business optimization challenges. Melda also recently launched Sirius Labs, an AI-driven platform helping women in tech develop entrepreneurial excellence and leadership through training and mentoring.