7 Ways Bootstrapping Beats VC Money

Bootstrapping a startup is building a business using limited funds (i.e. no borrowed money). And while the journey for bootstrappers often entails making significant financial sacrifices, in the end, the endeavor can be more rewarding than if you had investors. Here are seven ways that bootstrapping beats VC money.

Solve Real-World Problems

Being smart with your cash is the name of the game when it comes to bootstrapping, and this brings with it the necessity to create something that will solve real world problems. Unlike startups which rely on venture capital funding for their operations, and thus, tend to spend money frivolously on ideas that may not be utilized, bootstrappers must continually weigh the benefits of each idea before drawing from their pool of funds. By being conscious of spending habits there’s a greater chance that products developed by bootstrappers will deliver real value.

Focus on Revenue

When bootstrapping a startup, you must focus on creating a business model that is cash flow positive, as the only other alternative is failure. By embracing this, you will be more driven to seek out opportunities that could increase revenue, while at the same time, avoiding those that may dwindle resources. Once revenue becomes a primary motivator, it will not be long before you’re assessing every angle to determine whether it is worth pursuing.

Stay Current on Market Conditions

The state of market conditions is a major concern when bootstrapping a startup, as it will indicate the level of demand for a service or product. However, this bodes well for those who are focused solely on creating a revenue stream. In this case, you will have a chance to research the feasibility of the concept to ensure that it is in line with the current market state before committing unnecessary resources or introducing a product that fails to generate sufficient interest from consumers.

Develop Sales Skills

If your bootstrapped business is sales focused then there is no doubt that it will help you to develop your sales chops, as the ability to keep revenues coming in is a necessity. It will only take a few missed sales opportunities to understand the importance of maintaining a high conversion rate. In addition, if you are new to sales, this will give you the opportunity to learn from your mistakes and hone your skills accordingly.

Control Growth

Bootstrapping a startup allows you to control the pace at which you want the startup to grow, without having to worry about investors breathing down your neck. This will give your business more time to focus on implementing ideas that could be rewarding in the end, yet still require some refining before being ready for the market. Whereas startups that use venture capital for funding, tend to rush through the development and production stages, just so that they have something that shows investors that progress is being made, regardless of the feasibility of the final product.

Take Time Hiring

The fact that there’s no pressure coming from investors, means that you can take your time when hiring employees, and this can go a long way in finding the right candidates for the job. When you are considering candidates it is important to seek out those who will embrace your vision and the goals of the company. Keep in mind that, if hired, these employees will be integral in helping to get the business off the ground. In addition, do not be afraid to be honest with potential hires about the direction you are trying to go and the role that they will be expected to play.

Promote Resourcefulness

Operating on a limited amount of cash will force you to be more resourceful in seeking out ways to decrease expenses. Instead of spending money on high-level marketing campaigns or advertising, you may want to use guerilla marketing or reaching out to others within your network. You will find that there is an array of ways to save money without compromising the integrity of your startup. For instance, simple changes, such as opting to share your contact information digitally, rather than spending hundreds of dollars on business cards, can go a long way in saving money that could be spent more effectively.

Bootstrapping your startup will require sustained effort and resolve, but the results can be well worth the initial sacrifices. By bootstrapping you’ll be able to focus on creating products of real value, thus solving real world problems. In addition, bootstrapping will allow you to control the growth of your business, so that it can meet the demands of the market, without creating products with limited sales potential. It will also give you the opportunity to hire at a pace that’s in line with the growth of the company, which will reduce issues caused by overstaffing. And lastly, the frugality that is required when bootstrapping will lead to a resourcefulness that could open the doors for new opportunities.