Why Bootstrapping Is The Best Option ?

Let’s come to the toughest question which has tormented every startup founder at some point of time, whether to raise fund for the business or remain bootstrapped.

What is Bootstrapping?

Bootstrapping is when a startup founder starts the venture with a limited amount of capital, acquired from his savings, friends, family or relatives. It essentially funds the business either using the owners personal finances or by the funds generated from the business itself. Though the turnaround time for profits are slow, bootstrapping is a steady way to begin compiling revenue. It also provides the entrepreneur the peace to pick up pace at their own desired time, focus more on customer relationship management and access full decision making authority.

Why Boot Strapping?

Most of the startups are bootstrapped; in fact almost 90% of the Startups are funded using credits, personal savings. While there are numerous reasons behind a venture starting bootstrap, the foremost obvious reason is: You cannot raise funds with just an idea. There are hardly few Venture Capital Firms who take the risk to invest on just ideas. In order to receive funding, a startup should always show some tangible, proven progress to the investor. No matter if it’s slow, but the progress should be steady. Having said the primary reason behind bootstrapping, here are other reasons why the Startup founders choose to be bootstrapped, and why bootstrapping is beneficial.

1. Bootstrapping give the founders the freedom to exercise full control over the Vision, growth, product, strategy and team of the company. The founders can take their own sweet time to frame a structure, design the product and allocate the markets of their own desire.
2. It keeps the entrepreneurs determined, which helps them to constantly increase their efficiency and knowledge domain. A scrappy startup would definitely result in a strong team.
3. Helps in Undercapitalizing, which is great for the initial time period as the team would be trying and building the desired product under limited resources. Undercapitalizing ensures cost efficiency and optimum utilization of resources. Money management becomes easy and commitments are serious under this.
4. Bootstrapping your way to the top sets you apart from the Crowd. Though this has its own challenges, a steadily progressing Bootstrapped venture would always attract the VC’s and Angel Investors.
5. Growing Profits is another major thing that comes with Bootstrapping. Since the end user is your only source of profit, this means you will prioritize them ahead of anyone else which wills, in turn, drive customer satisfaction and goodwill, helping your business grow.
6. Your startup will come out stronger, creative and more focused. Like it is said, “What doesn’t kill you makes you stronger”, well in this case it would be the startup. Bootstrapping is the toughest challenge in a startups life span, and if its crosses that phase successfully then every other challenge seems to be doable.