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How to start your startup without a debt

Bootstrapping is a form of financing in the start-up sector in which the founders rely solely on their own, scarce capital for the foundation. Conversely, this also means that no company shares are sold (must).

We will show you in the following blog post what bootstrapping is all about and which startups have made their way upwards without a cash injection from the outside.

No risk, no fun: Bootstrapping also means risk

Bootstrapping always means risk to startups. While you share the risk with other financing models with investors, you stand alone in bootstrapping with your founding partners. That’s the price you pay for full freedom of decision and action.

If you decide to start a bootstrap, you must also be careful that your business model generates positive cash flows. While big companies like Facebook and Amazon initially focused exclusively on rapid growth, as a bootstrapper you should instead start writing green numbers from the beginning. So your priority list says: Cash flow before growth.

Focus on the essentials

When bootstrapping, it is vitally important that you use your (scarce) resources wisely. Focus on your core competencies and do not waste your time building a website for yourself, for example, rather than having it priced favorably.

Use your time for the aspect of the business model in which you are well-versed and who lies with you. It makes sense to use this method to create a minimum viable product, which is a minimally functional product that contains only the essentials of your business model.

So you can test whether your product on the market at all appeal and whether the essential feature of your business idea is needed and accepted by the customers.

Do not overanalyze!

Do not waste time with endless market analysis and research. A key aspect of bootstrapping is that you quickly bring your product or service to market, learn from mistakes, and generate revenue. You will not succeed in finding a perfect solution at all corners and edges. Done is better than perfect!

Rather, your startup – especially in the initial phase – is inferior to a constant improvement and change process. So try to build your business model as lean as possible and test your product as quickly as possible in real life.

Too long fiddling with elaborate prototypes or market analysis can cost you a lot of time that you can not afford. A good method that can help you with your bootstrap startup is Ash Maurya’s Running Lean method.

Also published on Medium.

Published inStartups

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