We talk a lot about venture capital around here, but the truth is that most companies will never take VC money. Data from the Small Business Administration suggests that 99 percent of new businesses started each year will not get venture capital at startup.
But it’s not an easy undertaking. Here are some words of wisdom I rounded up on bootstrapping a startup, from those who have done it themselves.
It’s not right for everyone
Having a well-defined product or service, a small founding team, limited capital needs and a short sales cycle may be indications that bootstrapping is a good option, according to this piece by Les McKeown, a serial entrepreneur-turned-author.
Bootstrapping is a state of mind
By nature, entrepreneurs are disrupting the universe, says Seth Goden in “The Bootstrapper’s Bible.” Part of that mindset should be that your current business ought to be funding the next innovative thing you do. That thinking will help create a powerful product that “makes a ruckus,” he explains in this video.
Line up as much credit as possible, even if you don’t think you’ll need it all
This lecture is a bit longer but worth a look, starting at 19:00. Charles Plant, the founder and chairman of Material Minds, outlines a few big steps like finding a mentor, picking the right business, and bringing in early revenue. His first word of advice, though, is lining up credit ahead of time as a cushion, even if you don’t use it all. Get as many lines of credit as you can, and up the available limit on credit cards as high as you can, he says.
Find a good accountant
Software entrepreneur Suzanne Huber shares her experiences with business partners, clients and service providers in this post from TechVibes.
10 Bootstrapping Lessons for Entrepreneurs http://t.co/Uu6IkaMYKC
— Techvibes (@techvibes) July 17, 2013
Find a few initial customers to help pay the bills
Early revenue will help bring in specialists that you couldn’t normally afford, says Jeff Solomon, who founded Leads360 (now Velocify).
Focus on one thing and do it really well
Entrepreneurs like to “go for the next shiny object,” says Hussein Fazal, who bootstrapped the company AdParlor from his parent’s basement. “Focus on what you’re doing and doing it really well.”
Use your product as if you were the customer
In a recent LinkedIn column, Jon Oringer suggests that entrepreneurs go as long as possible without outside capital. Some of the ways he stayed cash-efficient while building Shutterstock Images was by learning to code, using as much open source software as possible and using the product as if he were the customer.
And, always remember…
Doing a startup, especially bootstrapping, builds character.
— Vijay Anand (@vijayanands) July 9, 2013