Many companies have proved that bootstrapping can pave the way to financial success.
Bootstrapping is a financing method where the company is started with personal savings that also includes borrowing or investing from family or friends and earnings from initial sales. These businesses do not rely on traditional financing methods like crowdfunding or bank loans.
People wonder if bootstrapping is the way to go for your business. Here we give you some reasons why it is a good decision.
As you bring in outside money, there is pressure to satisfy the need of others. You become answerable to your outside investors. But investing your own money ensures that you have the freedom for decision making. It also applies to smaller decisions like hiring people that match your vision for the company.
Since you have minimal resources, you will take extra time to not waste your money on things that are not a priority. It will lead to better spending habits in the long run. Many founders postpone their additional expenses until after they start earning profits with bootstrapping.
When you bootstrap, the growth can be comparatively slower. But the journey of freedom reduces stress. You have more control over your business without someone breathing down your neck. When the business model is right and you are moving towards your goal, success will be slower but more peaceful.
Founds often say they don?t have the time as they are stuck in investor meetings. But bootstrapping means you don?t need to spend time convincing someone else to give you money. You can instead use that time to work on your business and product or service.
After taking large quantities of money from investors, it is very easy to lose sight of the primary focus of the business i.e. satisfying the customer?s needs and wants. But bootstrapping makes you focus more on your goals, customer and product or service. This is important in the long run, as it helps increase retention rate and user base.
With every round of funding, you dilute a part of the equity. But if you bootstrap, you are the sole owner. Even with co-founders, you own a good number of equities leading to less dilution of the company in the early stages.
Wishing you success in your business.