Bootstrapping – the thorn in the side of the start-up vocabulary. Even the very mention of the word can put chills through your idea before it even leaves your lips. The concept behind BS’ing is “to pass the hat – ROUND – of funding”, calling on family & friends to get involved financially in your “Industry 4.0 plot to change tech as we know it” or whatever it may be. The ability to BS (now now, you know the acronym I’m referring to here), from the get-go is essential, as investments from angels or VC’s may be a mirage on the horizon only seen by your hunger to succeed. It may feel like a negative force but in my opinion, BS’ing can be fundamental to the longevity of your start-up.
The days of unique ideas that gain investment overnight are few & far between – superseded by conceptionally similar, but more efficiency in delivery. This results in both angels & VC’s doing intensive due diligences on any potential investment, as inevitably the more players in the game can mean less ROI.
What always raises my level of interest on the start-up circuit is hearing the words, BS’ing has got us this far, which shows me the founders are true believers in what they are trying to achieve. This in turn gives them the ability to present their pitch with clear forecasts based on sales already achieved in their target market. Therefore, resulting in an appreciation of money as a prerequisite for maintaining a healthy burn rate.
This is evident when you speak to a start-up with no BS’ing V’s BS’ing experience. One common denominator will be the different variations in funding required. In most cases you can expect a more detailed configuration on the financials from the BS’ing start-up, as they have a precedent to work from for their calculations.
My top three benefits of bootstrapping:
Educational value: BS’ing provides a steep learning curve for you and your team, leaving you with a deep grasp of the knowledge required for roll out. From logistics to accounting, regulations to market research, basically all the dynamics associated with your start-up which all fall under this “CEO crash course” remit.
Customer relations: As you will be entering the market with a “soft launch”, full of trials and tribulations, whether it’s a product or service, you will have limited customers. Remember when your BS’ing, your customers become your basis for feedback. Tweaking your concept to adjust to your customers demands here will accelerate your B2B or B2C sales. If you can polish what it is you are bringing to the market led by customer feedback, this data to you is priceless. In a sense, your customers are also your VC’s as they are investing in your product/service, validating your concept.
Commitment: BS’ing soon filters out the commitment levels of your core team. Their involvement will mean financial sacrifice in lieu of equity. Some will stay and some will go. They are not be judged for jumping ship, as people have lives to lead and bills to pay. It will be a stressful time so it is imperative that all cornerstones are dependable.
Helpful tips for BS’ers:
- Engage local business support services in your area. There are entrepreneurs in most communities or online today who would only be too happy to offer insights. Reach out to them which in turn also improves your networking skills.
- Check out what government initiatives are within your region as many are free and will have the ability to help you accelerate or scale.
- Use your social platforms to broadcast your message, you will be surprised how many companies start like this, as not only does it give you an entry point in to the market but it also gives you an indication as to how your product or service is being perceived.
To Summarise: The BS’ing journey can be long and feel draining not just on your wallet. As renumeration for your time and hard-earned cash, know that you are obtaining certain skills that will set you on a trajectory for success. You should gain some inspiration knowing that the likes of GoPro, SPANX and many more started the bootstrapping way!