As getting VCs are becoming more and more difficult (46% drop this year in India), it has become more and more important for every startup to bootstrap. There are various advantages to bootstrap. In the past we had seen raising money for the startup was easy but building a profitable business was difficult and many startups closed down because of this reason as their funding would dry up. Currently, Snapdeal is dealing with a similar situation. And, Flipkart may also go down the same path if they don’t become profitable.
- You control your own destiny – A friend of mine started his corporate gifting company with a credit card debt of Rs 10000 ten years ago. At this moment today, it has turned out to be a very successful business. He is still not in a hurry to get funded while he plans an IPO in the next five years. When I started my garment export business way back in 1985 we started from 20ft x 20ft hall in Naraina village which comprised of my small office, a cutting room, sample tailors, and fabric store. We used to go to GPO (25kms away) to send the telexes and make overseas calls. When we had no export orders, we used to pick up work from other exporters to keep the cash flowing. Bootstrapping helps you manage your resources to the fullest. It helps you realize your talents which you don’t know you had. Finally, when we went public in 1995 we only gave out 30% equity and retained full control of our company. I became an entrepreneur because I wanted to write my own story. Sometimes early funding makes you lose your focus and funders always press you to work towards their early exit. Above all, you will control your own destiny.
- It helps you find the right partners – We live in a world of instant gratification. But in the entrepreneurial community, we need to remember to hold out, to take the time to build the business into something actually worth VC funding. Only then you will be able to use the investment to scale quickly and not to figure out what you are trying to do. At that point, you can raise money from funders who function as true partners. Once you have bootstrapped and become profitable money will chase you and you can find right partners
- It brings out the Best in you – As humans, we prefer to put in only as much effort as we need to, but whether we recognize it or not, we all have extra gears. Sometimes it’s not until things get really tough that we find the gears that allow us to shift into overdrive — that is what bootstrapping does for you. Admittedly, it is hard, but it forces you to get creative with your strategy and come up with solutions you would never have thought of.
- It makes you strong – Bootstrappers wake up earlier, spend longer days at work, and know how to keep their wits about them even under pressure. They know how to eliminate unnecessary distractions and are often very productive. Bootstrappers are also natural savers, they can go hungry until they become profitable and are naturally minimalistic in their outlook on life. They are committed to the long-term.
- It helps you to attract talent – A bootstrapped startup can’t afford the experienced lot and are forced to hire freshers. It works to the advantage of the startup as it may get people who believe in your idea ready to come along. Also, I personally believe in training freshers and retaining them for a long time. My number two, right-hand man, has been with me for the last 30 years. He joined me when he was only 20 years old. I can go away for a year and he can manage everything in my absence.
Teams that collaborate while bootstrapping stick together longer and become inspirations for others. Bootstrapping requires skill. Founders who bootstrap must amass a wide variety of skills, defy tradition, network like crazy, and innovate on a regular basis and find answers to problems daily.
Bootstrapping has become easy to these days. You don’t need an office you can operate from co-working space. Even the bigger companies are opting for co-working spaces instead of setting up their own office. You don’t need infrastructure!! Earlier, you required a room full of servers; cloud storage has solved that problem. If you cannot afford a full-time team, you can hire freelancers instead.