One of the most significant challenges in business development is always on starting off the business. You may have the most innovative and grandest ideas but may remain stuck in your notes or concept phase due to many factors. They may never see the light of day. Taking off from any idea is always a hard task whether you are a developer, marketer or a straight-up hustle entrepreneur.
The question of where to acquire the resources to finance your startup or business activities is still a nightmare for most entrepreneurs. I have personally struggled with this decision in my business startup as I considered the different options on how to finance the business. This is because; to start a business and bring it to successful result takes a sound mix of self-discipline, confidence, risk tolerance, competitiveness, and determination.
As a bootstrapper, I have, however, learned the skill of taking an idea and using my skills, talent, and professionalism to build a worthwhile business without the backing from investors and having little or no starting capital. I have long believed that venture capital was one of the keys to a successful startup. Somehow, it was a way to validate the project as well as one way to say that the idea has enough potential and that it could change the world (or almost). I’m not the only one who thinks like this. And many entrepreneurs like me have been asking themselves at one time or another if they have to bootstrap their project or raise funds.
Bootstrapping means starting a business venture with your own capital or without any support from outside sources of funds to grow your business. At the beginning of 2018, I managed to raise funds through a “venture capital” for one of my projects in South Korea. But as you can well imagine, given the title, and without going into details, it, unfortunately, did not happen as planned. I know the reasons for this failure, and they are similar to startups that fail too. I have over the last few years, learned the hard way to overcome some of these challenges.
I questioned myself a lot about how to envision my projects, and here are the top 10 reasons I decided to bootstrap my projects as I strongly believe that bootstrapping has the most potential of making me a better entrepreneur.
1. Freedom of management
Nothing gives pleasure to any entrepreneur than the freedom to manage and run his or her business. Freedom is, therefore, the primary reason I believe bootstrapping can make me a better entrepreneur. With freedom comes enhanced ability to make business decisions that are learned from the choices we have established, whether positive or negative and their possible consequences on the business. Therefore, by funding on your own, your freedom is protected. In this case, you are the creator and the captain of the business, which results from this artistic freedom. Compared to when you have external investors whose primary interest is to protect their investment and undermining your freedom, in this case, bootstrapping provides you with freedom which can no longer be taken by any outsider.
2. Thrifty
Often than not, an individual is cautious while spending their money as compared to when spending money or resources from other people. Therefore, I believe that bootstrapping can become thrifty even with large capital. As a result, I have always been modest in spending. In as much as I like taking a risk as an entrepreneur, I do so with reflection. So necessarily, with personal capital, I am led to be even more careful. It also requires more reflection on the expectations of my projects. And if I make mistakes – as all entrepreneurs do – they will almost certainly have less scale and impact. By managing my financial resources, bootstrapping would certainly make me a better manager and also be able to encourage me to manage my business intelligently.
3. Security
Security in business is one of the most fundamental attributes that every entrepreneur seeks to achieve or to enjoy. As a bootstrapper, you are the largest and only shareholder in your company. As a result, you will maintain control and fairness in your business, by which with greater control comes greater and effective management of the business. Bootstrapping also aligns your motivations with the success of your project. Since you are the only shareholder, your motives, objectives, and motivations are what guide you to achieving success. Therefore, if the startup fails; it would create a bad situation in that you will suffer alone. However, if the startup succeeds, then you will be able to enjoy the benefits alone! No investor will claim a part of the company or interfere with the important decisions you must make at the very beginning of a startup.
4. Building better products
The ability to produce quality or better goods provides an entrepreneur with a competitive advantage. Bootstrapping, therefore, enables an entrepreneur to build or produce better products: It goes back to the previous point, having a smaller capital forces us to innovate and offer something better for less. On top of that, we live in a great time where it has never been easier to create a business. Then, having limited resources helps us focus on developing a better product that would compete effectively with other products in the market. You are inclined to utilize the best technological solutions to build and grow your idea. Sub-standard products are relatively less competitive in any market.
5. Better decision
Bootstrapping provides an opportunity for every entrepreneur to make a better decision concerning their business. One of the barriers to effective decision making has always been interference or delay in decision making because of many business shareholders who have different interests in the business. There is no time to wade in bureaucracy regarding business meetings and strategic decisions. By relying on your resources for business development, you are always in a pole position to make a better decision concerning the business or products.
6. Better profitability
Better profitability or better profit margins are significant reasons as to why bootstrapping can make you a better entrepreneur. The rationale for this argument is that bootstrapping enables you to apply lean management concepts that are aimed at reducing wastefulness in business or wastefulness in resource use. Companies that run with low overheads, which are an aspect of bootstrapping, enjoy a much larger profit margin; a better entrepreneur is, therefore, one who is capable of maximizing the business benefits by minimizing wastefulness of resources. Bootstrapping enables you to keep your budget as lean as possible to extend your company’s lifetime.
7. Better productivity
Achieving better productivity is always the ultimate goal for every entrepreneur as it brings about business growth as well as sustainability. Bootstrapping, therefore, provides you with an opportunity to enhance efficiency in productivity by planning for the efficient use of the limited resources to achieve the business objectives. With better productivity comes a higher return of business gains, which is the focus of any good entrepreneur. The primary challenge is always on how to efficiently use small capital resources or rather in starting small to achieve a bigger dream. However, starting small enables you to avoid market risks associated with starting largely with equity capital. Bootstrapping allows you to run the company shortly, and hence there is less time to run the company off the ground.
8. Less influence
External business influence from other stakeholders makes it challenging to achieve efficiency as an entrepreneur. However, bootstrapping ensures that you, as an entrepreneur, experience less or no influence since you are the primary shareholder in the business. Perhaps if there are any influences, then these must be the market forces which are universal to all business and have some impact on the business. In this case, you are in a position to control the forces that impact on your business from within or internally. Having less influence in the business helps you become more aware and confident in business decisions as you can think and analyze every decision you have made to reduce any risk of failure.
9. Better future investment
Better future investment provides business security to the entrepreneur. In this case, bootstrapping provides you with high business stakes or risks but with higher rewards. As the founder of the business, you are the only shareholder who enables you to retain business control and equity. It also provides to align the company incentives with the success of the company and hence providing more growth prospects in the future. A better future investment must be able to help the business gain higher returns as compared to the initial capital investment. Bootstrapping, therefore, allows you to use your capital to grow your business by reinvesting the capital or the profits gained and hence enabling you to have better prospects in terms of returns.
10. Talent growth
Talent Growth is one of the critical aspects of bootstrapping, which enables one to become a better entrepreneur. I have always believed that entrepreneurship is the ability to use the talent and skills to develop a business or an idea. Therefore, bootstrapping provides you with an opportunity to grow your talent by identifying and effectively using your skills to develop your business. As you do so, you can learn more and also grow your capacity to run business and enabling you to achieve talent growth. Truth is the most innovative idea that has grown to be big and transformational ideas simply because of commitment for individuals to grow their business through bootstrapping. Once their ideas grow, they can expand or allow for other outside stakeholders.
CONCLUSION
In conclusion, I believe that bootstrapping has immense capacity to make an individual a better entrepreneur as it provides them with opportunities to build qualities of a good entrepreneur. In this case, it gives you a chance to be a risk-taker as well as a good business controller, planner, and manager. It provides an opportunity to make better and smarter business decisions, achieve better or higher profit margins, foster business progress as well as enjoy less influence from external business forces such as outside investors. It enhances your business production efficiency while, on the other hand, enhances your creativity by providing creative freedom as you don’t need to be accountable to an outside voice that could be seeking to protect its investment.