Greg Gianforte, CEO, RightNow Technologies, has co-authored a book on the subject: Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money. This is what he wrote in an article on Sandhill.com in March 2005:
I define “Bootstrapping” as the act of starting a business with little or no external funding. Bootstrappers don’t write lengthy business plans, chase deep-pocketed investors, or indulge in overly academic market research exercises. Instead, they focus all of their considerable energy, brainpower, determination and skills on creating a business that can actually succeed in the real world.
In fact, I can offer at least eight solid reasons why Bootstrapping will consistently deliver better results than the “fund-and-burn” model that has become entrenched in Silicon Valley and elsewhere:
1. Bootstrapping ensures that you build your business on a legitimate, real-world value proposition. When you’re Bootstrapping, you’re forced to deal with customers and to fulfill their needs from Day One.
2. Bootstrappers initiate the critical sales learning process sooner, not later. Selling is the hardest job of all. You have to learn how to be absolutely great at selling your product or service, and then teach others how to be absolutely great at selling it too.
3. Bootstrappers don’t waste money; they make it. If you have $100,000 or $1 million in funding, what do you do? Leave it in the bank? Of course not. You go out and spend itor, to use the commonly accepted term, you “burn” itIn a Bootstrapping model, on the other hand, waste simply can’t occur because there is nothing to waste.
4. Bootstrapping accelerates time-to-market and time-to-profitability. If you go the Bootstrapping route, you can start your business immediately. Immediately!
5. Bootstrappers are less likely to make big, fatal financial mistakes. Because they don’t have huge amounts of cash, Bootstrappers can’t make the kinds of huge mistakes that often destroy venture-funded companies.
6. Bootstrappers are forced into unconventional thinking. Necessity truly is the mother of invention.
7. Bootstrappers have more freedom and flexibilityBootstrappers can change direction overnight if that’s what circumstances call for. This adaptability significantly increases their likelihood of near- and long-term success.
8. Bootstrappers wind up owning much, if not all, of what they create.
From my personal experience, I could add a ninth reason to this list: Bootstrapping is good, clean fun. When you Bootstrap a company, you’re far less likely to find yourself in situations where you have to make promises you can’t keep or where the temptations that go along with large sums of unearned cash present themselves. Instead, your entire focus is on creating value. You market, sell and serve your customers every day as if the business depended on itbecause it does.
Tomorrow: In India
TECH TALK Bootstrapping Business+T