Bootstrapped startups are an incredibly inspiring example of entrepreneurs overcoming significant challenges to achieve success. With a limited budget and resources, these innovators have found success against all odds. In this blog post, we’ll be looking into ten lessons from bootstrapped startups. From hard-earned strategies to creative solutions, we’ll explore ten lessons from the stories of successful entrepreneurs that have used bootstrapping to get off the ground.
10 Lessons From Bootstrapped Startups
Whether you’re an aspiring entrepreneur or a seasoned veteran, these lessons are sure to provide invaluable insight into how you can achieve success in the competitive world of business. Let’s dive in!
1. Pick a Co-founder Wisely
Having two perspectives heading the company can be critical. When bootstrapping, the vast majority of the work is done internally, so cofounders need to complement each other’s skill sets. If you’re good at different things, you have a better shot at being able to do everything between the two of you, keeping expenses low.
2. Design a Business Model That Generates Cash Quickly
Not all businesses are equally ripe for bootstrapping. The most successful bootstrapped companies have a business model that generates cash as quickly as possible. Without any cash inflow, you’ll burn your reserves before gaining any real traction.
3. Watch Cash Like a Hawk
Spending out of a personal bank account is sloppy and risky–instead, fund a bank account specifically for the business. By creating a separate business account, you can track and learn what adds cash and what diminishes cash from the business. Free tools such as Mint can help track spending and calculate burn rates. Watch your cash like a hawk, daily.
4. Cut Personal Expenses
Without a salary, you won’t have money to spend–so don’t expect to live a posh life when first starting your company. Consider every purchase and only spend what’s necessary. If possible, bunk with a family member or friend to decrease rent expenses and come to terms with the idea of a less-than-lavish lifestyle.
5. Do Not Outsource Jobs You Can Do Yourself
When bootstrapping, hiring out for a job you could do yourself is an avoidable expense and a wasted organizational learning experience. For example, I delivered lunches myself for three months before hiring our first driver. This saved us $1,200, which may not sound like a lot, but it was 12% of our capital.
6. Nothing is Impossible to Learn
If you don’t know how to do something, learn it. Every co-founder once didn’t know how to write code, but they didn’t have money to hire an engineer. Some even learned how to code themselves, and programmed a website in just a few weeks. Building our code allowed us to iterate quickly because we knew the technology inside out. Don’t be afraid of learning new things; you’ll be surprised by your abilities.
7. Be Thrifty
Being fancy doesn’t always get the job done. Pick functional over posh office space. Start with the free versions of QuickBooks and Dropbox. Print free business cards. Consider refurbished computers instead of the newest MacBook Air. Use a free banking service. Saving on little things goes a long way.
8. Invest in Your Website Doman and Incorporating
Incorporating and securing your website domain are major exceptions to the “price over quality” rule. We initially used an online incorporation service, but ended up with complications that cost more in the long run. If you intend to get VC funding, it’s better to have a clean incorporation record.
Regarding your domain, don’t think you can buy it later once you have more traction. It turns out that once you get traction, the price increases exponentially. Buy the domain outright from the beginning, and start building brand equity around it from day one.
9. Be Discerning When Chasing Revenue
Remember, your goal is to get as much traction as possible to raise a big round. While you chase revenue, you will randomly encounter tricky opportunities that achieve a significant bump in growth at the expense of modifying your operational model or product offering.
Evaluate these opportunities before jumping on them: Seize them if they’re aligned with your long-term goals, and decline if they’ll become a huge distraction from achieving further growth. At an early stage, what might appear to be a revenue touchdown may distract you from building a real replicable business.
10. Do Not Take No For an Answer
When you’re so small, vendors and suppliers won’t want to work with you; it will take a personal touch to get what you need. Work to build personal connections with partners that may help your business in the long run. This may help obtain the resources your startup needs to get moving, at a price that won’t break the bank.
Don’t be afraid to share your story and appeal to people’s human side. To succeed as a bootstrapped startup, you have to persevere for the answer you need.
10 Additional Tips
We can never have enough help when it comes to starting a business, but here are ten more tips from well-known companies that bootstrapped their way to success.
- Relentlessly focus on your users — you could live and die in no time. Select a target set of users and spend time with them. Get a deep understanding of their problems (they’re the experts)
- Focus on what you can deliver soon to move to learn earlier in the process. Getting it wrong equals learning as long as you get good feedback
- Be willing to change in the face of evidence. Develop an experiment/test mindset
- For every ‘No’, seek to understand WHY!
- Ideas are overrated, Execution is the hard part. “The hustle is sold separately”
- Have skin in the game or scratch your own itch
- Keep expenses down (know how to be resourceful)
- Customers going out of their way (self-service is possible) to get their debit card to pay is great validation. Don’t be everything to everyone. Focus on what fits your business model. Starting small is the next pre-Huge.
- Build a team that can make your goals a reality
- If you are considering a web/mobile startup, it is far less costly than at any time in history to start a company. You have access to robust open-source software and cloud-based elastic data centers that would have been expensive or unavailable a decade ago.
In conclusion, the most successful bootstrapped startups demonstrate the power of hard work, creativity, and perseverance. They prove that if you have a great idea, the right team, and a commitment to the long-term success of your business, you can succeed without relying on external funding.