How To Bootstrap Your Startup?

|
Jul 20, 2015

For me, a bootstrapper isn’t a particular demographic or even a certain financial situation. Instead, it’s a state of mind. Bootstrappers run billion-dollar companies, nonprofit organizations, and start-ups in their basements. A bootstrapper is determined to build a business that pays for itself every day. In many ways, it’s easiest to define a bootstrapper by what she isn't: a money-raising bureaucrat who specializes in using other people’s money to take big risks in growing a business.~Seth Godin

This definition of bootstrapper is interesting. It tells you exactly what bootstrapping is. However, it’s not as simple as it sounds. Bootstrapping has several advantages and disadvantages as well. It’s often a painstaking approach to take and hard to scale a business. But it will give you more control in your baby and will push you to be creative with expenses.

Bootstrap

[su_dropcap style="flat" size="5"]W[/su_dropcap]Ways to bootstrapping

There are several ways of bootstrapping. You can do it as a side project, or you can start with a small capital, or you can start it with a state of ramen profitability. A clear explanation of these three types is given below.

Side project

I spent the first 8 months after university working 3 days a week as a web developer and spending most of my other 4 days working on my first real startup. This worked well to a certain extent - the startup was built and launched within 2-3 months, and it got a certain amount of traction throughout that period. ~Joel, Founder & CEO, Buffer

You can start it as side project beside your day job and keep working on it until it becomes something that can give you enough cash to leave job and work full time. Most recent of this example is Tina and Ryan Essmaker’s move with The Great Discontent from a side project to full time project. Tina and Ryan have been working on The Great Discontent for almost two years beside their day job and other design engagement. This year they started working on it as a full time project.

Many entrepreneurs of today did this kind of bootstrapping successfully. Tattly, the temporary tattoo making company based in NYC is another example of side project started by Tina popularly known as Swiss Miss.

Taking a startup as a side project is a very challenging task. You need to have that level of attention, dedication, and energy to make it every single day.

Invest you own money

For many founders after working few days as side project taking it as full project is the common nature. You work on your project on the side while doing a day job or contract job then after accumulating a small fund you get into it full time to give it a push. However, this can be done in several ways and at several levels. But if your startup is unlikely to generate any cash flow then this is a risky bet. Jole puts it very well: Having tried working in waves, I would not recommend it as a long term strategy.

Ramen profitability

Paul Graham of Y Combinator coined the term first and explained it as follows:

At YC we use the phrase “ramen profitable” to describe the situation where you’re making just enough to pay your living expenses. Once you cross into ramen profitable, everything changes. You may still need investment to make it big, but you don’t need it this month.~Paul Graham

This is a huge leap. If you can reach at this stage it’s almost possible to do anything. A Ramen profitable startup is capable to keep it afloat and can pay your dues as well. Best part of this situation is that you can stop worrying about tomorrow and put everything in work.

But achieving ramen profitability is not that easy. You need to make a product that can generate early revenue. While working on your startup try harder to hit the ramen profitability stage. This can change everything.

[su_dropcap style="flat" size="5"]P[/su_dropcap]Principles of bootstrapping

You can take the challenge and do the hard work it requires. You can even work on a side project or on the waves. But before all of it you have to understand whether your hard work is going to produce any result or not. Few principles of bootstrapping I think you need to understand before embarking on your journey.

  1. Understanding business model start before starting a business. You business must be profitable, adjustable, scalable, protectable to get it rolling
  2. Great ideas do not matter. Make sure your startup can make money. Don’t start with an idea that can change the world.
  3. Stop doing lots of things. Keep it as lean as possible and keep your eyes and heart on hitting ramen profitability stage

[su_dropcap style="flat" size="5"]M[/su_dropcap]My take away

If I was just starting out now with the knowledge I now have, I would completely focus on reaching ramen profitability, and I would work on the side on a “tool” with paid plans rather than a “social” idea. This is the approach I took with Buffer and it worked surprisingly well.~Joel, Founder & CEO, Buffer

This quote above tells a lot what you need to do after reading this article. I think changing world is good dream but it will remain a dream if you fail to survive. For startups survival is the key. You should do everything to make money to survive.

Bootstrapping is one of the best ways of making an idea happen. It doesn't require full time engagement; it does not require loads of money and so on. You just make sure you are working with enough focus to hit the ramen profitability. When you are there everything will change.

Notes: [1] To have a more clear understanding on bootstrapping I would strongly suggest Seth Godin's Bootstrapper's Bible

[2] According to Joel, Buffer is a result of successful bootstrapping. For more vivid understanding on this topic check his blog. Many of the ideas of this post is taken from his experience described in his blog.

[3] The Great Discontent is coming up with a great physical magazine. Check their website for details.

[4] Flickr image by Donald Clark & NoHoDamon


Register to read this article in full and more insight articles!

By registering, you will be signed-up for an account which gives you access to our premium stories published a few times a week and archives of all our premium stories. You will also receive a daily newsletter sent to your inbox. To unsubscribe, please visit the profile section in your account. We have a strong privacy policy. We will never share or sell your data to anyone.

What you get
In-depth actionable analysis

In-depth analysis on startup, business and technology scene in Bangladesh that you would not find anywhere else.
Daily and weekly newsletter
Get our daily and weekly newsletter with our most important stories directly to your inbox.
Ruhul Kader is a technology and business analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at ruhul@futurestartup.com

In-depth business & tech coverage from Dhaka

Stories exclusively available at FS

About FS

Contact Us

Shares