You may have heard the tern bootstrapping. But what is it all about? Well, when it comes to business, bootstrapping refers to starting your business without any money or with a very small amount. It means that you have to get started with your business without taking any help from venture capital companies or any major angel investment. If you are getting curious, here is how bootstrapping works.

How bootstrapping works?

Here are some stages that every typical bootstrapped business has to go through:

  1. Seed money – Here you have to begin with some of your personal savings. You can also get some funding from your family and friends also. You can also start it as your side business and continue with the day job you have for keeping things in place. But you have to manage scrapping up enough of resources, somehow, that your business takes off easily.

 

  1. Customer funded money – In the next phase, you re-invest money that you earn from your customers. It’s simply how you keep your business operating as well as see your funds growing eventually.

 

  1. What about credit – In bootstrapping, you don’t have to get any major loan for starting the business. But that’s a possibility when you’re up and running. The concept of bootstrapping restricts you from getting loans and credit to start the business in the first place but you can keep it as your secondary source of funds for keeping your business in operation and for letting it grow.

Why should one opt for bootstrapping?

If you want to dig a bit deeper into what benefits you can enjoy by going this route, here is why you should think seriously about bootstrapping.

You are in full control – When you bootstrap your business, you are the person who has 100% control of the company. You are the one who makes all the decisions about team, product and company’s overall mission.

Your core focus is on profitability – Profitability is the major priority for almost every business. It means even more when you have shoestring type of budget.

You get better at managing finances – Right from the beginning, you have to ensure that every single cent counts and you get to manage your finances better well before you get to the big stage. You understand all the costs involved and can make better money-related decisions that will pay you in the long run.