Starting a business with no money or least money i.e. self funded startups are Bootstrapped startups or ventures which need real entrepreneurship to get profit out of less investment and lesser resources. Such startups or ventures are more customer centric since their day to day operations depends upon the money given by the customers against the certain products or services startups provide.

How Bootstrapped Startups Are More Customer Centric?

Since the ventures are started without the help of venture capital firms or angel investment, such ventures grow with the help of customer’s money. Certain part of customer money is used for the business operations and rest amount is invested back into the business to grow it further.

Often, growth of such ventures is slow because the business first has to meet its operating expenses, to improve the products or services offering, to increase resources, to beat competitions to stay in business etc. Some startups may take on loans or lines of credit, use their credit cards, take small grants for short term to fund specific growth activities but such low cost solutions are only temporarily used in an intelligent way to solve instant problems. These are only secondary source of funds to keep the startup operating and grow it taken by the founders.

When startups use such methods to operate and grow their businesses, they are practicing bootstrapping. Bootstrapped businesses invests at absolute necessary points, use their resources in full way, and derive the profit with less investment.

Pros of Bootstrapping

1. Brings out the best in entrepreneurs, you can find resources to work for equity rather than cash
2. Hones guts, passions and skills in the founders as well as Develops patience
3. Bootstrapped companies are accountable and careful
4. Build loyal customers, partnerships, and recurring streams into their business model
5. Such ventures are governed by the customers and for the customers rather than investors
6. Run the business the way you want, no external forces such as investors or VCs can push you against your will
7. Waste and needless expenditures are less thus losses are negligible or less which attracts funding in future course of actions
8. Full ownership of the company
9. In future, if funding is required, you can get investments from VCs and Angel investors easily. Investors are likely to be impressed by the fact that you’ve managed to build a company entirely on your own, This, in turn, may make them more likely to invest (and to invest more) as they recognize the true extent of your skills and dedication towards your venture
10. Focuses on profit

Cons of Bootstrapping

1. Growth of Bootstrapped companies is very slow since they have less money to implement the idea in full due to lack of resources
2. Face huge barriers for growth
3. Bootstrapped companies may become risk-averse and as a result miss growth opportunities
4. Lack of money causes less or no marketing for the product
5. Grow organically which is slow and time taking
6. Develops risk-averse mentality, preventing startups from capitalizing on big opportunities due to this may not get massive success in this competitive environment

Conclusion on Bootstrapped Startups

Keeping the above thoughts in mind, bootstrapping makes good entrepreneurs great by forcing them to be more nimble, committed, relentless, and action-focused. Although such ventures are not supported by the cushion of external investment, yet there are many entrepreneurs who made their ventures a great success through bootstrapping. Good Luck.

Image credit- Canva