You've been ruminating on this idea and it's consuming all your thoughts. So, you smash your piggy bank, count your Kobo and Naira hoping there are no rainy days soon. You also quit your 9-5 (or not) and use the little capital you've garnered to birth this idea. You cut down on luxuries, get your product in the market, gain few customers (or not). Congratulations! you just bootstrapped your business.
• What is Bootstrapping? Bootstrapping is when an entrepreneur self-funds his/her company from personal finances and customer revenue with no additional external funding. Some entrepreneurs bootstrap throughout the lifetime of their business and some bootstrap only during the early stages before getting external funding. Bootstrappers usually rely on personal income, savings, sweat equity, lowest possible operating costs, fast inventory turnaround, and a cash-only approach to selling.
• Why do entrepreneurs bootstrap? Bootstrapping is done for one of these two reasons; 1. There is no alternative; or 2. To retain control and independence
• Why should you consider bootstrapping? There are few funding options in Nigeria so many entrepreneurs are left with limited choices. Even when there are funding options, first-time entrepreneurs often find it difficult to raise funds without first showing some traction and a plan for profitability.
• What kind of businesses should be bootstrapped? Bootstrapping is most suitable for business models designed to generate cash from the first day. Not all businesses can be bootstrapped. The most successful bootstrapped companies have a business model that will generate cash as quickly as possible. Without any cash inflow, you’ll burn your reserves before gaining any real traction. There is no time to "aim for user growth first". No time to "figure out the revenue model later". Capital-intensive businesses such as hardware are also difficult to bootstrap except you have a lot of funds. Often, hardware companies need external funding.
Bootstrapping a business is difficult, but it’s by no means impossible. With the right amount of hard work, collaboration, and passion for your company, it’s almost easy to give up a chunk of your personal life today for the sake of your future. Ultimately, bootstrapping is making an investment in yourself that will pay off for your company in the long run.
