From a definition point of view, bootstrapping is starting a business without or with limited cash. Bootstrapping usually refers to a self-starting process that is supposed to proceed without external input
For me, a bootstrapper is not a particular demographic or even a certain financial situation. Instead, it is a state of mind.
Bootstrappers run billion rands companies, nonprofit organisations, and start-ups in their garages, or from the boot of their cars.
A bootstrapper is determined to build a business that pays for itself every day. In many ways, it is easiest to define a bootstrapper by what she is not: a money-raising bureaucrat who specialises in using other peopleʼs money to take big risks in growing a business. Not that there is anything wrong with that.
I think bootstrappers are entrepreneurs who don’t wait to raise enough capital before they start their businesses. I don’t think McDonalds started with huge capital investments and 200 stores, they started with one store, probably using the owner’s personal funds.
Nike started from the boot Phil Knight’s car.
Bootstrappers build prototypes with their own cash and then test the market, fix here, adjust there, step by step, drip by drip build a market, until funders are willing to invest in the startup and make it big.
Most of the companies you deal with every day, read about in the media, or learn about in school are companies with hundreds or thousands of employees. They have an ongoing cash flow and a proven business model.
Because this is the way you have always seen business done, it is easy to imagine that the only way to run a business is with secretaries and annual reports and lawyers and fancy offices.
Of course, this is not true, but it is worth taking a look at the important distinctions between what they do and what you do.
Just as playing table tennis is very different from playing Wimbledon tennis, bootstrapping your own business is a world apart from running SAB Miller. You need to understand the differences, and you need to understand how you can use your size to your advantage.
Traditional companies succeed for a number of reasons, but there are five key leverage points that many of them capitalize on. They are distribution, access to money, brand equity, talented teams and customer relationships.
Do you have a chance to succeed? No.
Not if you try to compete head to head in these five areas. Not if you try to be just like a big company, but smaller. If you try to steal the giantʼs lunch, the giant is likely to eat you for lunch.
Inventing a new computer game and trying to sell it in retail outlets would be crazy, Electronic Arts (EA) will cream you. Introducing a new line of sneakers to compete head to head with Nike at the core of its market would be suicidal.
You have to go where the other guys canʼt. Take advantage of what you have so that you can beat the competition with what they donʼt.
Many bootstrappers miss this lesson. They believe that great ideas and lots of energy will always triumph, so they waste money and years fighting the bad guys on their own turf.
David didn’t defeat Goliath with brute strength, he attacked Goliath’s weaknesses. He used Goliath’s weaknesses against him, more like bringing a cannon to a stick fight, Goliath stood no chance.
Bootstrapping is a state of mind that exploits loopholes in big companies’s business models, having little money and energy as a startup is useful but not enough.
Strap your boots and start that business.