23 Jan 2017, 10:22 — 5 min read
In a test match, if a team loses 3-4 wickets in the first session, what will be the strategy of captain? Save wickets, get settled; pass the time, play ball by ball and not indulge in risky shots. Right?
That’s what bootstrapping on the field means. The aim is to maintain a low cash burn rate (save wickets) to increase the chances of your business surviving and hence succeeding. But of course, you need to first believe that business is a test match and not a 20:20.
By definition Minimalism means “a style or technique (as in music, literature, or design) that is characterised by extreme sparseness and simplicity.”
When companies use the approach of minimalism, they avoid investing except where absolutely necessary and find ingenious ways to get by with less. In the process, entrepreneurs and companies do learn a great deal. Hence, bootstrapping should be a choice and not a desperate need. It should be ingrained within the company culture.
1. Resourcefulness: The reality is that there is never enough capital - even for the well-funded start-up. Like any other skill that is practiced and perfected, resourcefulness is an entrepreneur's most valuable asset. A start-up team with too much capital may fail to develop the discipline necessary to achieve long-term growth. When things get tough, as they inevitably will, that bootstrap foundation will allow you to weather the storm.
2. Fine Print: There are a lot of insights you will only get when you gets into micromanagement. You are learning invaluable lessons at the beginning of your venture while bootstrapping. As a business owner, you can hire out virtually all functions of your enterprise, but true understanding of the drivers in your business come only from building it up with your own two hands. Bootstrapping puts you into the school of micromanagement out of necessity.
3. Focus: If you do not bootstrap, you will have to invest efforts in raising funds. Not surprisingly, many entrepreneurs spend more time on their pitching than working on their products. Bootstrap and avoid that trap. The more you focus on developing a great product and customers, the higher your chances of success. Lack of money can bring the best out of you.
4. Time Bomb: Many times, your success will depend on how much time you will spend on the ground. Playing the game with your head lowered will increase your lifespan in tough times. If you choose the right space and bootstrap, you'll fly under the radar a lot longer. You can diffuse the time bomb, if you have time.
5. Rockstar Hires: Bootstrap startups do face the problem of hiring rockstar employees. Honestly, If somebody is not joining you, because you do not offer them cushy sofas, dinner parties or beer allowance, that’s a blessing. Committed employees will join you because of better reasons like building something world class. That’s why teams that collaborate while bootstrapping stick together longer. The real rockstar is someone who stays with you in trying times.
6. Trade-off: Bootstrapped companies are forced to make trade offs between speed and efficiency. If you want to remain on top, efficiency will take you further. Indian e-commerce companies are classic case in point, most of them chased speed over efficiency and we have closures of well funded companies like Askme, Fashionara, Timtara, Yebhi, Tushky, Mebelkart. The list is pretty long. Don’t worry about the rabbits in the game; the smart tortoise still wins the race.
Bootstrapping brings out the best in entrepreneurs and the best in those they work with too. It makes you learn a lot more along the way and you end up accomplishing a lot more than you might have originally thought possible.
So if you've got an entrepreneurial itch that needs scratching, don't let money get in the way of your dreams. Through intelligent bootstrapping, you can survive and prepare yourself for bigger battles.
But you may be wondering, "How do I start a company with little or no capital?" Answer: that's a story for another day. Right now, let’s go back to the game!
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