Published on February 27th, 2018 | by Jose Vasquez0
Is Bootstrapping Right for Your Startup Tech Company
Bootstrapping may seem like a good idea, but it isn’t the perfect solution it’s sometimes made out to be.
Bootstrapping is the process of starting a business entirely yourself; you might raise cash from friends and family members, or ask around for pieces of advice, but you don’t have an angel investor, venture capitalist, or other outside force providing you with funding or direction.
Bootstrapping has become more popular in the entrepreneurial community, in part because of its perceived merits and approachability for new entrepreneurs. But is it the right way to go for your company?
These are a few of the most significant benefits you’ll see:
- Without someone holding your funding hostage or seizing partial ownership of your company, you’ll have near-full autonomy. You can make your own decisions, not beholden to any other party or entity.
- Organic growth. When bootstrapping, your growth is forced to be organic. It’s usually slower, but more deliberate and manageable, which makes the growth curve easier for new entrepreneurs.
- The story. It’s hard to deny that the bootstrapping story is more impressive—and to some, more noble than other modes of startup growth.
However, there are some downsides to consider:
- Limited potential. If you’re only going to work with what you can raise yourself, and only use profits to keep the company moving, you’ll limit the overall growth you can achieve. With fewer resources to invest in your company, you won’t be able to grow nearly as quickly.
- Lack of direction or advice. Many entrepreneurs hate the idea of taking direction from someone else, but it can be valuable, especially if you’re new or in an industry you don’t fully understand. Not having that advice can be your downfall.
- Higher failure risk. The rate for failure is high no matter what approach to entrepreneurship you have. However, bootstrapping puts you on a thin line between success and failure; you’ll have far less wiggle room, and mistakes will cost you much more.
So is bootstrapping right for you? If you’re on the fence, contact me today—let’s talk, and figure out what’s best for your venture.