Bootstrapping is the act of financing business ventures with your own money, without venture capital (or any external capital at all). Impossible? Well, if GitHub and Craigslist can start a business with no outside investment – why can’t anyone?
It’s what I did with Ratehub.ca and for us bootstrapping was the best way to build a sustainable and robust business.
Not having much exposure to raising venture capital, and due to my prior experience with entrepreneurship, my co-founder and I decided to bootstrap the business. Sure, it created additional challenges along the way, but I don’t know if we would have reached where we are now without it. Here are three reasons you should consider bootstrapping your business.
No venture capital forces creativity
Creativity turns imaginative ideas into reality. It’s a process of thinking, then producing. Moreover, it’s necessary, according to an IBM case study that found creativity is the most crucial factor for success.
When I was in university, I launched small scale entrepreneurial ventures like helping students with exam prep and an entrepreneurial boot camp for kids.
They were low risk but taught me early on about the need for revenue to sustain yourself since you don’t have the cushion of venture capital. It kept me focused and grounded. Passion is important, but without income, it’s harder to keep going. These businesses were my first foray into bootstrapping and were essential to my entrepreneurial confidence which I continue to nurture to this day.
If I imagine worst-case scenarios – if everything were to go wrong and I couldn’t support myself financially, what would my reality become?
I could move back in with my parents. I could couch surf with friends until I get a job. All that to say… it wasn’t that bad.
With that mentality, I cared less about losing and could focus on growth. While my circumstances don’t match everyone’s, go through this exercise – you may find the worst-case scenario is not as bad as you fear.