Bootstrapping: what it is and what are its recommendations and principles

Bootstrapping: what it is and what are its recommendations and principles

 If we look in the trunk of memories, we can rescue the post on Tips to find financing for your company, in which we made a general review of the most common alternatives to finance a business. However, in this post we go further and put on the table another way to finance those businesses that are beginning their journey or are in embryonic stages, we speak of the Anglo-Saxon term known as bootstrapping.

We present it to you!

What is bootstrapping?

Bootstrapping is a kind of self-financing in order to start a business with your own resources. The objective pursued by this type of financing is to manage the cash flow, and internally generate the necessary funds to create the business and maintain it.

Bootstrapping refers to the process of using only existing resources to start and make grow a business

This type of financing offers the entrepreneur two advantages that are clearly differentiated from the rest of the alternatives, because with bootstrapping, total control over the business is available and the future of the company is not mortgaged, since it does not depend on anyone else and is not subject to loans or external investments.

Recommendations to launch bootstrapping:

All financing methods involve risks, so you should always make this type of decisions clearly and safely. So, we propose the following recommendations if you are thinking of betting on this alternative for your business, there they go!

  • Make sure your business idea is viable.
  • Focus on convincing potential clients that your business suits them, offering them products and/or services that suit their needs.
  • With this type of financing, as an entrepreneur you will have to renounce the benefits generated at the beginning to continue consolidating the business and reinvesting in new shares.

‘The art of bootstrapping’

To conclude, we want to mention the article ‘The art of bootstrapping’ by Guy Kawasaki, one of the most influential experts in the world of innovation, startups and management, in which he refers to the 11 basic principles that every entrepreneur or novice entrepreneur must take into account:

  1. Not only focus on profitability, but also on cash.
  2. Plan from bottom to top.
  3. Deliver and then test.
  4. Forget all about the “experienced” team
  5. Start as a service company.
  6. Focus on the function, not on the form.
  7. Choose your battles well.
  8. Always go with limited staffing
  9. Go directly to the client.
  10. Position yourself against your rivals
  11. Take the “red pill”, not the blue one (in the movie Matrix, the red pill is the one that takes you to know the whole truth).

Whether you bet for bootstrapping, crowdlending, crowdfunding or more conventional financing, we encourage you to get to know our business centers in Madrid and/or Barcelona and start up your business from adaptable, flexible and totally inspiring spaces that boost teamwork and promote productivity. Get to know them!

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