Bootstrapping Business Back In The Day And Today

bootstrapping business back in the day today modern bootstrap company

The owners of any beginning small business know the meaning of bootstrapping; keep every penny, hold on to each dollar, and in general, save until the revenue is consistently flowing in. In this way you don’t have to worry about debt as you try and get your business off the ground; you can focus on revenue increasing tasks.  The following are some things you may want to consider when creating your business plan. Almost all of us know that starting a small business can be fun, exciting and thrilling, however it can also be downright scary. The owners of any beginning small business know the meaning of bootstrapping; keep every penny, hold on to each dollar, and in general, save until the revenue is consistently flowing in. 

In this way you don’t have to worry about debt as you try and get your business off the ground; you can focus on revenue increasing tasks. The following are some things you may want to consider when creating your business plan. First of all, don't start big. It's ironic that the lean startup's best businesses did not spend a fortune in franchise fees, hire a huge staff, or even start with venture capital funds. They began small; a small business owner understanding a need, filling that need, and slowly adding products, services and people. Web businesses are obviously an ideal small business, but there are plenty of others that you can also do from home. Going hand in hand with keeping it small is starting out with your own money. 

Don’t even think about getting money from others before you manage sale number one. If you are confident in your product or service, you need to take a chance on yourself with your own money. In fact, this can naturally force you to pay attention to your spending, and help you make better informed decisions. Another interesting tidbit is to not quit your day job. Start out part-time in your new business and ensure that you know the market and the opportunity. As your small business proves fruitful and shows promise then you can take the leap to a full-time job. This provides a money cushion for you with proper frugal finance, thereby lowering your stress level. Start on your own, and outsource later. While outsourcing labor may prove a much easier time for you as a small business owner, it will also add additional costs that you may not yet have the money to pay for. Benefit outsourcing through professional employer organizations, however, is another matter. 

While you are only a one person business, being able to bask in the shade of the umbrella of benefits can really have an impact on the personal aspects of your life, such as insurance. Talk to other small business owners. You don't have all the ideas, you don't know everything, but someone else has been through it before - speak with additional small business owners in your area, listen and learn. Ask about their experiences with different services and companies. Obviously these tips are not just for the new small bootstrap business startup. We believe that these are recommendations to be used by all businesses, being efficient is always a good thing. Small businesses that are survivors don't stay small businesses for long. 

History Of Bootstrapping Business 

Often, service-oriented businesses can bootstrap themselves to success. Bootstrapping is a policy of reinvesting all the money a company earns into the growth of that company. The owner may not draw a salary for awhile. It's a process that can take 3 or 4 years. At the end of that time, the owner has a debt-free business and recovers his recovers their unpaid time from the profits the business now earns. Over the years, I've developed about a dozen businesses using a bootstapping strategy. 

Here's an example of how to bootstrap a business. My wife is a veterinarian. In 1980, she was asked to vaccinate several dogs at the owner's home. She spent $25 and bought the vaccines. She did the housecall. She took the money she made and invested it into more supplies. She did more housecalls. In 1985, she had enough housecall clients to buy a building and convert it into a veterinary hospital. The practice continued to grow. Today, she co-owns one of the largest veterinary hospitals in the San Francisco Bay Area. From 1980-1983, she didn't draw a salary. I think anyone who intends to build a multinational corporation needs to bootstrap a business to success. It teaches them the importance of wisely reinvesting profits into the growth of a company. Without this lesson, public company officers believe they have a right to live off the risk capital of their investors. 

Too many public companies lose money because management insists upon excessive salaries. You won't get rich by paying yourself an excessive salary. Your excessive salary often leads to the bankruptcy of the company. You'll get rich by making your company a success. Once it succeeds, you can sell your stock in a merger at Market Capitalization. If you use my bootstrapping strategy, you'll walk away in 5-7 years with $80 million. There are sacrifices in building any company. If you expect your investors to make those sacrifices, your company will fail. If you won't work 12 hour days for several years for a middle-class income, don't take your company public. In fact, don't start a company. 

Get a job in middle management with a major firm in your industry. Remember that success comes from sacrifice. It comes from making the right decisions. It comes from keeping risks low while you keep rewards high and practicing disciplined fiscal fitness. The rewards must go to your company, not to your personal bank account. If you don't follow these bootstrapping rules, you won't create a successful public company. The "live off the investor strategy" often creates an SEC nightmare. If the SEC acts, it will make your lawyer richer. You didn't take your company public to make lawyers wealthier.

Modern Bootstrapping Business

These days it's easier to bootstrap your business than ever before. There are countless online business opportunities and methods of marketing your business that require no money or little money. No investors needed, no equity lost. It is truly the golden age of bootstrapping businesses.

While there is still a lot of available investment capital these days, that might not be the case a year or two from now. Bootstrapping business ideas are a smart way to maintain control of your venture's destiny from day 1.