On being a Bootstrapped Entrepreneur
I’ve spent over 20 years building a business from the ground up. It has been incredibly rewarding and dare I say, fun. That’s right, the ups and downs, the highs and lows have all been fun and worthwhile. You can’t build something great unless you break a few eggs.
But, for me, the biggest lesson I’ve learned, and I want to stress this lesson is a personal preference, but what I’ve learned is to invest in myself and build a business that stands on its own legs and not on outside funding. My business rests on a bootstrapping business model. If you are not sure what that means, I’m going to go over that in a minute. If you DO know what it means and you’re curious why I took this route, keep reading.
Bootstrapping – Why I Do It
The short definition of bootstrapping a business is to use self-funding or leverage sales or crowdfunding to support your business. That means no outside funds like venture capital or private/growth equity to get things up and running, or to scale.
I started JB Knowledge out of my dorm room during my time at Texas A&M on April 16th of 2001. Fast forward to today, JB Knowledge has over 200 employees in the United States, Argentina and South Africa. All of this was done as a bootstrapped enterprise.
One of the biggest positives to using a bootstrapped strategy is that you own 100% of what you created. Outside cash infusions come with strings attached and those strings not only include parting with equity, but in many cases, control, in your business. No thanks! I built it, I keep it!
And really, when you think about, someone else’s money comes with pressures to do things their way and not necessarily what is in the best interest of the business. I call people who raise money OPM addicts – Other Peoples Money. OPM drives unhealthy habits and irrational spending. I don’t want that kind of interference in my vision or direction. Bootstrapping gives me the freedom to work towards my goals.
Bootstrapping – How To Do it
Bootstrapping means finding creative ways to self-fund your start up and to be extremely resourceful as you grow. It always takes some cash and it’s very, very hard to have a cashless startup. You always have some startup expenses (many of which you can cover by following Dave Ramsey’s personal financial managemenet system), but if you manage your cash flow to deliver a product or service that generates profit, you can piggyback on the sales to build a bigger company or more things that you want to sell. This really requires that you have a willingness to deliver services that you may not be the end goal (in my case it was web site development) that deliver the profits to build what you really want to build (in our case software products for the Construction and Insurance industries).
If you are going the bootstrapping route, which I highly recommend, there are a few other things you can do that are tried and true ways to better support a bootstrap business. Outsource instead of hiring right away, forgo office space and work from home, reach out to family if you can to for seed money (and pay them all back quickly), and work with vendors for deferred credit terms if that is available to you.
Bootstrapping can be a better way of innovating, a better way of growing, and a better way of building companies and changing industries. Those are just a few of my thoughts on the subject. Let me leave you with one more that summarizes the above : a bootstrapped entrepreneur is someone who is willing to do things they don’t like, so they can build what they love.