How to Make Bootstrapping Work for You
Bootstrapping may be a buzzword today but businesses all over the world have been built by bootstrapping founders all along. From the technology giant HP to a brand every woman knows, Spanx, there are so many stories. It is a brazen path with high risks but still the chosen route for many entrepreneurs. Let’s look at what makes bootstrapping work in today’s fast-paced business scape.
So, what makes entrepreneurs go the bootstrapping route? Apart from the obvious difficulties of raising funding with just an idea and of course the desire to be in full control, many entrepreneurs believe that bootstrapping makes their product more worthwhile – they invest more of themselves, they have absolute freedom to experiment with their product and business model, and they also have more negotiation power when they eventually look for funding. A successful bootstrapped business signals responsibility, commitment, and understanding of the product-market fit.
We had a chat with two entrepreneurs, Kenneth Graupner from GigGum and Zaedo Musa from SUPERB, who have made a success out of their bootstrapping story to get a first-hand account of what really makes it work.
Plan, plan & plan
Do not underestimate this phase. Planning ahead helps you stay afloat for the required time.
Zaedo advises to plan ahead for at least one year – try to factor in everything from where the money is going to come from, what expenses you will incur, what will be the milestones and so on.
Be prepared for everything to take twice the time than expected! - Kenneth Graupner
This should be the first step that you take. Your idea may seem great on paper but you need to find out if there are any buyers for it. The only way you can do that is through a proper market research. Kenneth strongly recommends taking your time and doing an extensive market research. Before you even start thinking about buying a domain, making a logo or creating a website, do a proper market research first. With proper research, you can have potential customers even before you decide what you want to call your company or write a single piece of code.
Go for it.
Make sure your startup is a good fit for bootstrapping
Some ideas require a large amount of capital to be funded. Such projects are obviously not a good fit for bootstrapping unless you are a multi-millionaire. Find a gap in the market that can be addressed by your idea and then work out the projected finances to figure out if it can be bootstrapped. Aim for business models that can generate early revenues.
Find the right co-founders
Businesses are not born with only ideas – they need skills to make the idea come true. The co-founders don’t need to just share your enthusiasm and passion, they need to complement the skills and background required for your business.
Kenneth thinks that if you have worked together with your co-founder previously and you know it will work out, it is a bonus. It is important to be aligned with your co-founders on how you work and what it takes to create a successful company.
Your team is your most important asset. It is imperative that you have a strong CTO. - Zaedo Musa
Get your hands dirty
The best way to be economical and have full control is to try and do most tasks yourself.
As per Kenneth, you should get ready to handle everything yourself - that will not only save you money but if you see all the unfamiliar tasks as a small break it will give you peace of mind instead of stressing you out. As a bonus it will get you to know your company and concept on all levels.
Zaedo, on the other hand, believes in certain amount of outsourcing as per requirement but with a high level of involvement as he feels it is very easy to have a misalignment of vision.
Outsource wisely and only if it cannot be done in-house or hire interns with the relevant skills to get some extra help.
Be clear about control and division of labour
Deciding who takes care of what early one helps alleviate confusion. Kenneth advises choosing who the CEO is right at the beginning as he believes not everyone can decide equally about everything. Zaedo also advocates keeping full control till you are sure that the team is aligned with your vision.
Collaborate with your early customers
The early adopters of your idea or product are in reality those best-mates who can tell you if you are not at the top of your game. If you are solving an existing problem in the market, the early adopters will be your best allies in getting to the right solution.
Kenneth and Zaedo both tell us it is a winning stroke to involve your initial customers and early adopters in your product development so that they get a sense of ownership. Co-creating with your customers as your design partners is the secret to building a product they will love.
Don’t ignore boring processes
Boring processes and documentation often get left behind when we are creating great products but what happens when we need to make changes to that ‘great’ product?
People often need to rework on their code to scale up when they receive funding because they were so focussed on building Minimum Viable Product (MVP) that they did not document the process. Do not make this mistake.
Zaedo stresses that it is important to be fast to build an MVP but not at the cost of not documenting the process. Document each version of the MVP development so that you are ready to scale when required.
Kenneth advises startups to scale up and then scale down in order to figure out the best way to create an MVP. Spend a lot of time discussing and sketching the MVP before writing one piece of code.
Budget smart and watch your finances like a hawk. There will be things you cannot skimp on depending on the stage of your startup but explore all options of saving money. Opt for the freemium models of software, barter skills, call in favours, do budget-friendly team building events, and everything else required to ensure that you do not exceed your planned burn rate.
You may have tight budget but let the creativity flow. Find innovative alternatives to spending tons of money. As per Kenneth, creative approaches make you stand out and makes everything more fun too and helps create a buzz.
Get some sleep! Bootstrapping and building your own company is a 24-7-job. But don't overwork yourself. A well-rested mind will be twice as effective and productive than a burned-out one. - Kenneth Graupner
Though it is stating the obvious, it is important to be persistent. There will be times when the going is going to get tough and the challenge is to keep going even then.
Find people who believe in the idea and who are willing to ‘lose’ with you. It is nice not to have to fight alone when the going gets tough. – Zaedo Musa
Bootstrapping your startup business not only enables you to gain a deep understanding of all aspects of your company and the market giving you an edge over someone with just a startup idea, it also gives you essential business skills that are going to last a lifetime.
Read more about Bootstrapping:
Bootstrapping by definition: A Newbie's Guide to Startup Lingo