Who needs Investors? BS 102
Being “Boot-Scrappy” – Why most Startups should start with Boot-strapping !!!
fm GigaCom.com 05/13 enhanced by Peter/CXO Wiz4biz
$$ Limits set useful Boundaries.
Being broke is a wonderful system for cutting through the options and setting limits. It forces you to think creatively about how to get things done. So where many established or funded companies would tend to throw money at a problem and explore all the avenues possible, a Boot-strapped company will have to find the best way, fast, cheap. This leads to a culture of problem-solving that almost every successful company has, to some extent.
Example: A Bizness App learned this while working on a mobile food ordering system. They couldn’t afford to develop both a native & mobile web version at the time, and so they made the conscious decision to develop an HTML5 version initially that would work across all mobile devices. The decision saved months of time & thousands of dollars in development costs. Doing so, not only got them to market faster & cheaper, but allowed them to get user feedback sooner & improve the product.
Urgency inspires Efficiency !!!
When you’ve got money in the bank and know the bills will be paid for months to come, it’s easy to spend late nights debating the company’s choice of colors for the logo while more important matters tend to get left for tomorrow. The boot-strapped company, on the other hand, is grinding it out to produce a product that sells. A lack of funding has a way of making prioritizing tasks easier. A core sense of urgency usually leads to the most critical tasks being handled first, while less important matters are saved for later (as they should be anyway). The result is that spending is more prudent, the product is designed in a focused manner, team members & resources are employed more wisely, and the business as a whole enjoys a great return on each dollar and hour spent.
Example: Without a huge runway at the Bizness App, they went above and beyond for their first paying clients. Even though their service was “do-it-yourself,” they bent over backwards to help new customers set up their mobile apps for them – knowing that they wouldn’t have a second chance. The extra effort paid off. Not only did this help improve the product and convert users to paying customers faster, but they gained invaluable feedback along the way.
Enforcing Discipline & Accountability
There’s no room to be loose with resources, with design, or with responsibilities in a bootstrapped company. As a result, a culture of discipline in many areas of the business tends to arise organically (otherwise, the company falls apart pretty quickly). So deadlines can’t be allowed to slide far, if at all, and every member of the team is held accountable for delivering their share. It’s the discipline of a well-run acrobatic family: Everyone has a job to do, and a “mark” to hit at a particular time and place, or everything else comes crashing down.
Maximizing Returns from time & $$ spent is often the most basic central goal in any industry. In a Boot-strapped company, it’s woven into the fabric of the enterprise. At the end of the day, all entrepreneurs who hope to build something more than just a sale-able idea should ask themselves one fundamental question: Do I really need funding? Am I willing to give up control & my share of my hard-earned efforts or should I just have a little more patience and use my “creativity” to grow my business?
Commments: What do you think are the benefits of Boot-strapping?