Increasingly today you can hear the question: "Bootstrapping - what is it?" And this is not surprising, because now you can often hear about the organization of the next startup with fairly modest funding. Therefore, the topic of developing a business with a limited budget is more than relevant.
Bootstrapping: what is it?
This term is used to convey several images related to entrepreneurship. These are the following concepts:
- self-tuning;
- self-loading;
- promotion;
- self-sufficiency;
- bootstrap, etc.
If we take into account the vocabulary that startups use, a term such as bootstrapping can be translated as follows: "tightening the belts." In this case, we are talking about the full financing of the creation and development of a business project exclusively at its own expense. Only insignificant financial assistance from outside can be allowed.
Obviously, the successful development of such an enterprise requires a competent development strategy, in which all possible risks will be calculated, and the funds will be directed to the most relevant segments of the business model.
Bootstrapping Pros and Cons
In this approach to the implementation of a specific project there is a tangible minus - limited funds, but we must not forget about the positive side of the issue, namely, the absence of risk of loss of investor money or credit funds.
If we talk about the benefits in more detail, then we need to highlight the following positive factors associated with this model:
1. First of all, an entrepreneur gets rich experience, risking with his own money. This means that in case of failure, he will not be forced to pay loans or other borrowed funds. If the project is successful, then the business owner will not only save capital, but also will be able to attract the resources of investors, thereby moving to a new level of activity.
2. The fact that when you start a project you can count on a limited amount, forces the entrepreneur to think creatively and find innovative ways to achieve their goals.
3. Given that you do not have to deal with other people's money and compound interest, the company has every chance of becoming a successfully scalable business that can figure on the global market.
4. Since bootstrapping is a business from scratch, without money, the owner of the company is forced to make every effort to maximize profits. This means the formation of a decent service and a competent strategy for working with clients in principle. And in today's market, good service is the key to successful company growth.
5. Bootstrapper retains the right to own all the developments, as well as ideas that were used during the development of the business.
6. It is worthwhile to understand the fact that the later investors are attracted, the greater the share of the company will be in the hands of its actual creator.
7. Also worth noting is the complete independence from the opinions of investors, who, as investors, could make certain adjustments to the company's development strategy. Since an entrepreneur who has chosen a business with his own financing has complete freedom of action, he can come up with a unique and unusual product or service.
Giving an answer to the question “bootstrapping - what is it”, it is necessary to touch on the minuses of this form of company development. One of the significant drawbacks of bootstrapping is the lack of net profit in the early stages of enterprise development. This is due to the fact that all earned funds must be immediately invested in the project.
Another drawback that deserves attention is the need to act quickly and extremely competently. It depends on the correctness of the action whether the bootstrapper can survive or not.
Given that bootstrapping is a business from scratch, without attracting investment, it is necessary to adhere to several key principles in order to rest on the laurels of financial success.
Quick income
Starting a business in bootstrapping format, it is extremely important to consider this principle. Since, as mentioned above, at the initial stage the company will require stable investments, it is necessary to offer such a product or service on the market that will allow cash flow to be generated quite quickly. Otherwise, business development may slow down significantly.
If the income is low or unstable for a long time, then the company may completely cease to exist.
A thorough study of competitors and the market
Since bootstrapping is a business from scratch that should generate revenue quickly and immediately, before launching a specific project, it is necessary to carefully analyze the market for the relevance of a particular product or service. Do not lose sight of the activities of competitors who already have experience in implementing similar projects.
In order to win a place under the sun within a specific market segment, it is necessary to focus on two areas: quality and USP. Under USP should understand a unique selling proposition. It is about positioning oneself in such a way that it will stand out among competing companies. Quality is necessary so that new customers turn into regular ones.
To study demand, you can organize various surveys and practice trial orders.
Creative marketing
Effective promotion of goods on the market is one of the key conditions for successful sales. But with a limited budget, spending large amounts on marketing campaigns will not work. Therefore, they need to be made creative, non-standard, attracting attention.
It makes sense to pay attention to the so-called viral marketing. For this, social networks are perfect, in which fresh and non-standard ideas are widely used. Do not forget about content marketing. Its distinguishing feature is not the sale of goods, but the presentation to potential customers of useful, interesting information that is indirectly related to the company's product. Similar methods must be used in an enterprise format such as bootstrapping. Own business without investments is able to develop on low-budget creative to impressive heights.
Internet resources
Any business that intends to survive in the conditions of the modern market should "light up" on the Internet. Thousands of representatives of the target audience of various companies spend many hours in the vastness of the worldwide network. Therefore, on the Internet, you must definitely post information about a new product or service.
In this case, it is not necessary to spend a lot of money on creating a site. It is enough to make an understandable and convenient resource on which a competent presentation of the product will be placed. It is unreasonable to spend significant funds on the site at the beginning of entrepreneurial activity.
Active personal involvement
Considering such a thing as bootstrapping (that this should already be clear), you need to realize the fact that the organizer of a business of this format should minimize the costs of the company. This means that he will have to perform several job duties in person. Moreover, the list of functions that the author of the project will take up should be maximum, but, of course, without overload.
Think carefully about your budget.
When every penny counts, expenses need to be considered and adjusted, as much as possible easing the burden on the budget.
It is also important to pay attention to quality accounting. Otherwise, you may face a loss of resources due to the incorrect organization of the financial side of the project.
Personal participation in PR
If possible, you need to be able to attract the attention of the media, as well as online publications to your project. To do this, you will have to personally contact the representatives of the media space, who are eager to interview the founders of various startups.
Such advertising will not put a burden on the budget and help present the world information about your own company.
Personal expenses
A startup who is embarking on bootstrapping should be prepared to limit himself to the maximum. Such a maneuver will allow you to take a minimum of money from the business by investing the lion's share of the funds in the development of the project.
In other words, you may have to forget about constant trips in your favorite car and remember what public transport is, and instead of buying coffee, be content with a hot drink in a thermos.
Do Not Reduce Margin
Do not try to break into the market at the expense of low cost - this is a fatal mistake that will only complicate the situation. It is necessary to present the product in such a way that the requested value is justified.
If the buyer realizes that the product is really worth the money, then he will be willing to pay. But in order to get the most out of it, you need to correctly identify the target audience and focus on it specifically in your presentation.
Customer feedback
Everyone loves when they are remembered and appreciated. If the company can prove to its customers that it respects them, then in return it will receive a solid percentage of loyalty. Such attention can be expressed not only in certain promotions, but in a simple birthday greetings.
In other words, you need to finely organize interaction with customers and win their sympathy.
As you can see, to be on top by choosing bootstrapping is real. The main thing is to act quickly and competently.