So you have an idea in mind for a business and a vision for financial success. The next question to ask is how are you going to fund your business?
Sure, you can share equity or take out loans, but you keep most of your earnings if you use bootstrap financing. Bootstrapping is when you start a business with little or no outside financial help.
Instead of relying on venture capital firms and investors, you're using the money from your customers. Like the saying pull yourself up by your bootstraps, you become financially self-reliant.
Why bootstrap, exactly?
Aside from saving you money, you also learn new skills as you take on different roles. You connect to your customers, and you have an opportunity to form new partnerships.
And those are just a few of the many benefits. Keep reading to find out why you should become self-reliant and learn to bootstrap.
1. You Learn the Value of Money
It's easy to spend an investor's money, but you watch your spending habits more when you bootstrap capital. Since it's your hard-earned cash, you learn to spend wisely and only when necessary.
For example, there are certain things for your business that you have to buy: equipment, business cards, office supplies, and other essentials to name a few. But you generate significant savings when you bootstrap.
Buy used technology, look for sales on office supplies, and buy wholesale. Learning how to budget helps you learn how to manage your money effectively and achieve bootstrap success.
2. It's Sustainable
When you decide to bootstrap your finances, you call the shots and take the risks you want.
Your investors are your customers. If you can create a product that your customers love, they'll keep buying it. Securing your first customer is one of the best bootstrapping tips to follow to achieve success.
Deciding to bootstrap your finances is sustainable, and even when you need to grow your business, you can use the skills you've learned bootstrapping going forward.
Being frugal and putting in the extra work is hard, but financing advice and careful planning will help you through it.
3. You Create Brand Awareness
When you bootstrap your finances, you have to put a lot of effort into connecting with partners, potential customers, and clients.
You're continually pitching ideas and forming connections while at the same time getting the word out there about your brand. You also get to connect with customers and get honest feedback about your products.
4. No Shared Equity
When you handle your finances yourself, you own your company. You don't have to share equity to get funding.
There are times when an investor is necessary, but bootstrap if it's possible. It puts all the control and risk management in your hands.
You also learn about every aspect of your company by taking on different roles to get the work done. You started your business; you should learn everything possible about it.
Get Started with Bootstrap Financing for Your Business
Are there alternatives to bootstrap financing? Of course, but you don't have the same control over your money, and you may have to relinquish some ownership.
Bootstrap financing is hard work, but it's worth it if you have the drive and passion. By bootstrapping you save money. When you do spend, you have a plan to keep your finances on track.
Have a product with traction? At Score3 Angels, we want to help minority and female entrepreneurs get the financial support they need. Apply now and tell us about your product.