5 Benefits Of Bootstrapping Your Small Business

benefits of bootstrapping

For any new business, money is at the forefront of every decision, simply because money is what will keep your business afloat. At the beginning many businesses gather a large amount of capital funding with the ultimate goal being that they move away from this and then begin to expand and build their company.

However, funding can often grow beyond what was expected and it can become the unintentional mission of the company. While many people believe that venture capital funding is crucial to the start-up of a technology business, the truth is many successful businesses managed without it and that is exactly why you should consider starting your business without any funding.

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What Are The Benefits Of Bootstrapping?

Customer Funding is More Sustainable than VC Funding

“Successful bootstrapping is all about discipline and stamina.” Kevin Hale, Co-Founder, Wufoo

For any technology business, customers are vital and your business is no different. Don’t have funding or investors? Great! All you need to do is get your customers on board and believing in your products because they are your investors! If your products fit their exact needs then they are going to keep buying from you — who needs venture capital funding! If you create a buzz around your products, your customers will do all they can to get their hands on your latest products.

Innovation and creativity are key to keeping your customers excited. They need you to move your products forward which means spending money initially but speculating in this way will only lead to accumulation. Bootstrapping allows you to make your own decisions because you do not have to ask anyone for permission and this is the ideal way to creating a business that is sustainable.

Spending Someone Else’s Money is Easier

“Stay self-funded as long as possible.” Garrett Camp, Co-Founder, StumbleUpon

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When you decide to go down the bootstrapping route your mind-set changes. This is because you are spending your own money and not someone else’s. This can only be a positive simply because it means that you make more informed and careful decisions but you can also take risks if you wish.

Working in this way becomes a habit and it filters its way down to your employees which means you can have a team around you that care about what your business does and how it works. Spending someone else’s money can lead to bad decisions and staff that simply do not care. In fact, when you are bootstrapping you need to assemble a team that are willing to work for nothing and will do everything they can for your business. Remember to start where you are, use the resources that you have and do what you can.

Lower budgets can create superior products

“Without funding, your customers are calling the shots and helping you improve your product everyday because they are the ones paying the bills.” Andrew Gazdecki, Founder and App Maker

Remember how important your customers are to you and how they are your source of funding? Well they are also your source of inspiration and that is one of the greatest benefits of bootstrapping. You might not have the millions of pounds behind you that other tech companies have but that doesn’t matter because you have your customers.

The feedback from your customers is all you require to create products that meet their needs. Time is money which means you need to work fast on any new product because once you get it right your customers will start paying and that is what you need as a customer funded business!

Start-up costs are lower than ever before

“Don’t be in a rush to get big, be in a rush to have a great product.” Eric Ries, Author, The Lean Startup

The world of business is ever-evolving and this is great for your tech start-up because now it is possible to start a business on a low budget. Great products do not need vast amounts of money just discipline, perseverance and creativity.

The world is still recovering financially which is perfect for bootstrapping because starting a business at this time means that it is easier to build partnerships and hiring staff is simpler and that means that you could have less competition for the time being. Lower start-up costs give you the opportunity to focus on creating products that your customers want and this essentially leads to more customer investment.

Be in control of your own destiny

Thomas Edison said, “I never perfected an invention that I did not think about in terms of the service it might give others … I find out what the world needs, then I proceed to invent.”

Bootstrapping gives you everything you need as a tech start-up and more importantly it gives you the control you should have. One of the negatives of choosing to use venture capital funding is that you give away a small amount of control. This can cause your business problems because investors make demands that perhaps cannot be met.

Bootstrapping removes issues surrounding control and answering to investors and this means you can make decisions on your terms. If you want to take a risk then go ahead and take a risk or if you want to create a certain product then feel free to take the reins and run with it, after all, bootstrapping allows you to be your own person.

Benefits of Bootstrapping In A Nutshell

Bootstrapping is a great way of getting your business off the ground and on its way to becoming a success. You won’t have the funding that many other businesses have but what you will have is the control and the right to make the decisions that you feel are right. Your business will receive your full attention because every choice you make will require you to use your own cash and initiative. This leads to correct decisions being made as well as more focus being shifted onto your customers because they are of huge importance to your business. In fact, they are more important than any funding because they are the ones that will help your business grow and that is why bootstrapping is an ideal way to pave your way through the business world.

Boot Photo via Shutterstock

Andrew Gazdecki Andrew Gazdecki is the founder and CEO of Bizness Apps, a do-it-yourself mobile app builder and mobile website creator for small businesses with over 500,000 customers worldwide.

4 Reactions
  1. Spending someone else’s money is easier but the responsibility is the same. It is still money after all.

    • Fair point. However, the diligence a bootstrapped company makes when spending money is usually much more thought out than if you have $5 million sitting in your back account from a VC investment.

  2. principals are the same whatever the business one is in.

  3. Are Govt. charges taken into account in start up costs ? They certainly need to be and don’t expect them to go down.