You “bootstrap” your business when you start and grow it without outside capital. The vast majority of companies started in the U.S. are bootstrapped. Why bootstrap? Most new companies can’t get generate the returns to get investors excited. Even then, many entrepreneurs still avoid bringing on investors until absolutely necessary. While an injection of capital can be a godsend, investors can distract you from building your business. Fundraising is a full-time job, and managing existing investors can be a headache. What’s more, the day you take an investment is the day you commit to selling your business. By bootstrapping, especially early on, you stay in the driver’s seat. You can’t always bootstrap at the outset, of course, but it’s worth the extra effort.
Bootstrap-friendly businesses are those that can get to revenue quickly. You have to get rid of distractions that don’t get you to revenue while bootstrapping. Revenue will keep you alive and able to grow.
If you plan to bootstrap, make sure you know how much money it’s going to cost to get to profitability. The last thing you want is to run out of money without a backup plan.
