A magazine for young entrepreneurs
Written by | February 22, 2022
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Money. Every business needs it. Where your capital comes from determines who controls your business. Bootstrapping is the process of self-financing a business whether you’re in the seed capital phase (when you’re getting your business off the ground) or the customer-funded stage (when you’re using profits to finance the continued growth of your business).
Bootstrapping is an incredibly popular method for funding a new business. According to Fundable, the majority of startups are bootstrapped. What makes funding such an entrepreneurial favorite? It lets you maintain control over your business. You don’t have to worry about finding access to or competing for outside investors. And it can keep your business agile and self-sufficient. Bootstrapping also requires discipline, creativity, and ingenuity.
In this guide, we’ll walk you through everything you need to know about bootstrapping, starting with what it is. We’ll also cover the pros, the cons, tips for how to bootstrap your business, and resources that will help you develop your business without adding to your overhead costs.
Bootstrapping is the practice of self-financing a business with its own capital. Bootstrapping can refer to an entrepreneur investing their own funds to finance a startup, or it can refer to a more established business using their own capital to fund growth (like opening a new store, hiring new employees, expanding product offerings, etc).
Starting a business from scratch can provide autonomy but invites challenges a VC-funded startup typically avoids. So, here are some advantages and disadvantages of bootstrapping your business.
Now that you understand what bootstrapping is, here’s how you can apply it to your business.
If your company is already established and generating revenue, you’re in the customer-funded growth stage. There are a few key things that you can do to help bootstrap your business:
If there’s a simple, 6-word explanation for how to bootstrap a business, it’s “increase revenue and keep costs low.” All the resources included in this section will help you do one of those things. Sales will be your primary driver for revenue, and you’ll want to keep an eye on your business finances/bookkeeping to ensure that your cash flow stays where you want it. Hiring and marketing can be 2 primary areas where costs can skyrocket– and where many entrepreneurs feel like they could use a little help and guidance– so we’ve included tools to help you there, too.
About Mary Kate Miller
Mary Kate Miller writes about small business, real estate, and finance. In addition to writing for Foundr, her work has been published by The Washington Post, Teen Vogue, Bustle, and more. She lives in Chicago.
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