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The Good, the Bad, and the Ugly of Startup Bootstrapping

posted on 19th November 2018
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In the past few years, the world of entrepreneurs has drastically changed. However, there is a perception roaming in the startup landscape i.e. one need to raise the fun to launch the company successfully. By this notion, young entrepreneurs are standing in the live or die situation as some popular startup stores start with drastic investor pitch. 

On the other hand, many young entrepreneurs who have game changing ideas and talent enter the field with a low bank account. This apparently cannot support entire operating cost for developing the business product or starting the firm from scratch. Actually, new entrepreneurs are confronted with two options when it comes to investing namely fundraising or bootstrapping. 

Fundraising is one of the best paths, which promises plethora range of comforts such as connections, money, and guidance while bootstrapping means you have to support yourself without any network and financial support of others. In most cases, many entrepreneurs opt for the first path as it renders immediate benefits. However, it has some dark side that left out of the narrative often. 

Not all startups have the chance of getting investors, sometimes it takes startup bootstrapping by funding it out of their own pocket. Actually, it is the honorable way to initialize a company but it is extremely hard than what it might seem. For the first time entrepreneurs, getting the fund without showing some traction as well as plan for the potential success is quite a trouble. 

Understand the real meaning of bootstrapping your startup

Basically, bootstrapping your startup means to self-fund your company with the help of internal revenue and existing resources to drive your business rather than raising external funds. With the widest scale of venture capitalists and investors, it is slightly tougher to resist the opportunity to develop a stable business without accepting any external funds. 

To be frank, most of the today’s startups have forgotten the significance and benefits of starting out business on the shoestring budget. If you are thinking about starting the business with the minimal budget, then keep in mind that bootstrapping your business is not a bed of roses at all.

Therefore, before winding up, you should weight the options as well as pros and cons of the bootstrapped startup. This will help you take a picture perfect decision, which is beneficial for your business growth in all ways. Continue reading to know the positives and negatives of bootstrapping. 

Good things about bootstrapping startup

One of the biggest benefits of bootstrapping your startup is that you are not answerable to anyone because you only have invested for the business. This means you are answerable to yourself only. Additionally, you will have rights to direct your startup as you wish. 

Since you are the boss, you need not pay attention to the outside influencers i.e. investors. By startup bootstrapping, you can freely focus on doing on the best thing you perform without any need to worry about taking your organization in someone’s prescribed direction. Typically, bootstrapping renders you creative control of the direction of your business.

As the sole investor in your business, you are able to maintain sole responsibility. You can take care of your ownership without any worry. Since the only source of profit is an end user, you will need to prioritize them first than others. As a result, the customer goodwill and satisfaction helps your company grow

There is no pressure of returning someone’s money, which you have borrowed earlier for your company growth. Hence, you can able to concentrate more on building your product and business development rather than other unimportant issues.

Bad things about bootstrapped startup

Entrepreneurs who access their own money or assets to enhance their startup are at huge personal financial risk especially when the business fails. Bootstrapping startup means your entire business rests upon you. When you make a profit, it is highly beneficial. In case, if you do not, then you could lose everything. 

Usually, investors and venture capitalists are well connected. If you bootstrap your startup, then you will miss out the valuable network connections, which gives several chances to open up new markets to increase your business visibility. 

Your business growth may become slow without capital. Bootstrapping makes you operate the business with fewer resources. Additionally, you are in the situation to invest in the resources when money comes. 

If you have fewer connections, then it is tough to gain credibility, which results in limited growth potential. As you are a one-man show, you may face many hurdles to lead the business into further steps.

What is ugly about bootstrapping your startup?

This is the circumstance where things can get a bit out of your hands. Unless you have a high quality and trustable team it is not a good idea to bootstrap. Since you have not received any external funds, it is definitely hard to make a huge profit for sometimes. Obviously, this can de-motivate your staff and co-workers when they are not dedicated to product development like you.

It takes some days to figure out that it is tough to pay off the overheard charges, workplace bills, and others. These all may pull you under the considerable amount of debt, which you could not solve and it may make you face many problems. You will also get an idea of getting the external fund to see how things actually work out. 

Conclusion

As an entrepreneur, you can either start out or bootstrap on the minimum budget. However, you need to be wise enough in order to accept potential investments when the time is perfect. Until now, you have to create the service or product, which make you stand apart from the huge crowd and no matter what, you go for bootstrapping or not, customer must be your top priority in any case. This will make you win big in this competitive business world and you will soon be able to make your dreams come true.


image source: https://businesskart.in/

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Spandana V

Love Food & Kids | Full time content marketing lead at RankUpp Labs | Creating engaging, informative and interesting content for Indian consumers especially on the e-commerce industry.



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