You’ve come up with a brilliant idea for a business and now all you need is cash. For many, the idea is the easy part. Finding resources to market and grow is the challenge especially amid massive economic changes.
How about bootstrapping as option? Self-funding from the ground up with what’s in the bank, a whole lot of hard work and a good plan. But it’s not for the faint-hearted. Like starting anything from scratch, you have to be prepared for the rollercoaster ride that is hanging on by your bootstraps.
Thousands of well-known companies started with a big idea, a willing team and a vision but they had to consider the following quandaries.
Raising capital vs bootstrapping
Sharon Melamed, managing director of Matchboard, said don’t raise capital just because it’s “sexy”. “There are many super cool, super successful businesses such as Atlassian and Campaign Monitor which bootstrapped in the early stages. If you have the money to take a risk, there’s nothing more noble than backing yourself. I’ve huge respect for other bootstrappers,” she said.
Control vs cashed up
Nikki Clarke, founder of Cadenshae, said her maternity activewear empire was completely self-funded and bootstrapped. “I started with a $20k order of bras (financed myself, it was important not to rely on investors so I could keep full control) and in less than five years, grew the business into a multi-million dollar empire,” she said. “If you can, save your pennies and go it alone.”
Consequences vs shared responsibility
Mia de Rauch, director of Flip Switch Media, bootstrapped all her business ideas. “It was my choice to start my production company, no one else’s. I wanted the business owner lifestyle and so I take the consequences with me,” she says. “There are plenty of pitfalls and challenges in running this way: I have to wait for funds to be available to take the next step or buy the next piece of equipment. So, growth is slow and hard.”
Right vs wrong
David Toohey, founder of Mind For Me is no stranger to starting a new venture. “The choice was made based on whether or not I could afford to reach this stage on my own. It’s a question to continually ask – am I at a stage where I can demonstrate the market and value, where investment is likely to increase my chance of success over continuing alone?” he says.
Five quick-fire tips to bootstrapping
- Plan, plan, plan – do not leave things to chance. This is your time to look at what if you run out of money, promoting your business, help needed and monitoring and measurement of results.
- Set up systems – Nikki from Cadenshae says, “Ensure all your systems have room for growth so it doesn’t cost you later. The last thing you want, as you grow, is to migrate systems and set up new processes.”
- Manage expectations – Sharon from Matchboard advises you may need to get comfortable with the “slow and steady” approach based on profitability.
- Don’t rush – What are you willing to sacrifice lifestyle-wise and financially to get a business off the ground. “There’s no shame in growing your business slowly,” Mia, from Flip Witch Media says.
- Weigh everything up – David from Mind For Me suggests start-ups be critical of their capabilities and experience. “Understand what problems really exist, know your competitors, get evidence of the market and solution you are offering before getting out the gate,” he says.
Hayley Birtles-Eades, founder, beinc
