Bootstrap was term coined from the computer lingo ‘booting’ which means starting a computer or starting a chain of processes which eventually starts up the operating system. In the startup world, bootstrapping essentially means funding your own venture and not being too dependent on external sources.
Let’s face it, to have a bootstrapped startup you need grit and total faith and conviction in your product, something a lot of new startup’s find it difficult to conjure. While most startups believe that only funding guarantees success, we beg to differ. Bootstrap mentality is critical for a startup to succeed, irrespective of whether it has raised funds or not. Bootstrap mentality keeps the organization focused on being frugal, innovative and agile. Here are some suggestions on how to maintain a bootstrap mentality while running your organization:
Hiring: Hiring is the key element in any startup and every success story is as good as its team. They say that to make an effective presentation, ask the question ‘Why?’ / ‘So What’ to each slide and if you get a convincing answer, then you are doing good. Ask the same question while hiring someone and if the answer is in lieu with your vision and larger good of the company in a prudent manner, then that’s a good hire. Going on a hiring spree on receiving funding will ensure that you burn before you earn. Last but not the least, if you come across a ‘proven team’, then that’s just a rabbit out of a hat and you can believe us blindly. Proven teams are highly overrated and irrespective of who says what, they may not be right fit for a bootstrapped company. A young team which proves itself is where you should bet your money.
Spend Wisely: Put need first, want later – Most startups on receiving funding go berserk with huge spends on office infrastructure, hiring, system upgrades, software’s and all kinds of fancy things. Some even spend on creating apps and elaborate marketing campaigns. This is the sure shot way of burn out before you start making any money. So, question all expenses and never incur it unless you have found out a way to balance it with the money you make. Remember that it is better to be a successful business than to be a popular sink-ship.
Another pro-tip – Keep everything short – small up-front capital requirement, short sales cycles, short payment terms and recurring revenue cycles.
Barters and Associations: Barters from age-old days have been pivotal to successful business deals and if you could compensate a cost with barter, then nothing beats it. It is a win-win situation where there is no physical money spent and a mutually benefitting association is formed. These could actually extend your customer base if you use it wisely. Use it abundantly and wherever possible.