Bootstrapping Essentials: How Can You Bootstrap Your First Business?

Money is quite hard to come by nowadays. With the pandemic still lurking around, it seems impossible for us to pay our expenses and start our business simultaneously. However, nothing should come in the way of your American dream of starting a business. Learn about the process of bootstrapping and how you can use it to start your first business. But first, let’s talk about bootstrapping.

What is Bootstrapping?

The process of bootstrapping is all about starting a business from scratch. You’re technically a bootstrapped business if you start it with zero assets and no investors. So instead of going through the process of finding angel investors or venture capital firms to help you out, you go out there, register your business, and start it all by yourself.

There are a couple of reasons why people bootstrap their first businesses. The first reason is that they want the equity all to themselves. Since you’re practically starting this business with zero capital, most of the money required to run the business will come out straight from your pocket. This means the business is 100% yours.

The second reason is that they want full control over the business with plans of expanding in the future. Bootstrapping a business gives you the control you need to grow your business. Everyone will follow your orders, and no shareholders are telling you otherwise.

However, despite having these reasons, there are also disadvantages to bootstrapping a business. Of course, the very first reason is that it’s very risky. The second reason is that investors might not invest in your business in the future because of the risk involved. Then, of course, there are many more reasons out there, but these are the top disadvantages of a bootstrapped business.

So now you know all the things about bootstrapping, how can you exactly do it?

Gather and Liquidate Personal Assets You Don’t Need

Cash-in-hand is an important asset, and you’re going to need every cash you can get if you want to start your business.

The average American owns about $91,000 worth of assets when they’ve reached their mid-thirties. That’s more than enough cash to start your business and fuel its growth for at least a year. You don’t necessarily have to liquidate all the assets you have. You only have to liquidate those you don’t need right now.

Keep Your Day Job

Don’t be passionate about starting a business at the start. Instead, be passionate first about your day job. The process of starting a bootstrapped business requires time and hard work. If you’re earning an average of $40,000 a year, don’t let go of that. Instead, do your day job while building your business whenever you can. Many billionaires reached where they are right now by having multiple jobs growing up, so don’t let go of your day job just yet.

Focus on Quality and Retention

Quality is what’s going to put you on the map. Sure, you might have only a few clients in the first few years of your business, but those are going to be clients who will fall in love with your business. So concentrate on keeping them, and eventually, you’ll get more in the future.

Consider Alternative Funding

Credit Cards

Your credit card is going to be your best friend for a bootstrapped business. You can use it for all sorts of expenses, such as travel expenses, production, and even expansion. This personal loaning machine is going to get you to places, but don’t overuse it. Eventually, you want to have a business credit card to separate personal expenses from business expenses.

Mortgage

Another alternative that will help finance your business is a mortgage. Not many people know that their businesses can take out mortgages and use them to purchase residential property. However, this is only possible if that residential property is used for commercial purposes. This is great if you want to become a landlord and build your real estate empire.

Technically, getting a business mortgage doesn’t require you to pay a lot of money. So it’s a good way for you to enter the real estate market right now, without significant funds being placed into your business.

Should you bootstrap your business? The answer to that question will always be up to you. But if you want to own a business that’s fully yours, then there is no other option but bootstrapping. Then, you have full control over the growth of your business. Sure, it’s a lot of hard work because there are no other investors around, but it’s worth it in the end when you’re earning the millions, and you can keep it all to yourself.