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Why Bootstrapping Is Painful And Crucial
Beyond the innovation and ‘being your own boss’ tag, I believe what truly makes entrepreneurs attractive is their ability to build with limited resources
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At a time when funding has become synonymous with the term ‘start-up’, bootstrapping has lost its charm. And why not? It’s slow, painful and not glamorous. But ask veteran businessmen and they will still swear by the saying:
You are ‘in business’ only if you are cash flow positive
I started my entrepreneurial journey in 2015 at a time when if you hadn’t raised a round of funding, your existence was questioned. I won't lie, the 24-year-old me was definitely smitten by the funding bug, and there I was attending everything from speed-dating sessions with investors to start-up marathons. 5 conferences down the line, I realised I was chasing funding rather than customers. 2 years in bootstrapping mode hasn’t been an easy ride but it has taught me some of the best business lessons.
Beyond the innovation and ‘being your own boss’ tag, I believe what truly makes entrepreneurs attractive is their ability to build with limited resources. Despite its lows, bootstrapping is crucial in shaping the DNA of an entrepreneur and will leave you with essential life skills that go beyond your startup.
There is nothing more motivating than a fixed runway
Starting up requires tremendous motivation and beyond the quotes of Jobs and Jack Ma, there is nothing more motivating than knowing that you have limited time to get off the ground before the cash in the bag runs out. This very thought will challenge you daily you to build fast and fail faster.
You make smaller mistakes
Entrepreneurship is filled with making mistakes but going bootstrapped ensures you are forced to take baby steps. As a result, your mistakes are smaller in scale and impact. It took us 3 weeks to build our first version of the app and 12 weeks of customer data was strong enough to show us that our model wasn’t scalable. ‘Pivoting’ is an integral part of the startup experience and virtually every business has implemented this in some form. If you look at pivot as a second chance to succeed, bootstrapping plays a crucial part in driving this.
When you can’t throw money, you learn to solve problems creatively
Sometimes it’s not until things get tough, do we find our hidden talents - this is what bootstrapping does for you. We built our CRM on excel rather than paying $200 annually for a software. In order to bring down customer acquisition, we went door-knocking to inform customers about our service. This turned out to be a blessing in disguise as we started understanding our customers better - their needs, pain and the solutions they were expecting. This helped us build a product focused around them.
The art of being frugal
I saved this for the last because this has been my best learning in the bootstrapped journey. Frugality is often confused with being cheap - squeezing every cent and bargaining till rock bottom. But in fact, frugality is more about smart spending, and no one demonstrates this better than the bootstrapping heroes of India - street vendors. I have seen my vegetable bhaiya grow from selling just lemons on a cart to buying a tempo to today using a digital wallet to collect payments. It’s taken him over 4 years to do so but in the process he has grown and built a sustainable business.
We live in a world of instant gratification and that’s the reason funding seems like a tempting painkiller to grow fast. However, when it comes to startups, it’s important to realise that validating an idea might be quick but building a business always takes time. So raise funds with the intent of scaling your business rather than throwing money at your problems. If you are unable to solve problems permanently, funding will come back to haunt you like an addictive painkiller.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.