Here’s the attempt of a definition:
“Bootstrapping is a funding strategy for a start-up that ideally requires no outside capital and leads to growth of the business by avoiding spending and reinvesting revenue.”
Simply put: spend only money on your business that your business has brought in as well. Like Baron Münchhausen, you pull yourself out of the swamp on your own head.
If money has to be put into your business all the time, you run the risk that you are only promoting a hobby but have not developed a solid business idea. Benefits of this start-up financing is the extremely low financial risk and, in the case of business success, the feeling of having done it without the wallet of your parents.
However, the disadvantages should not be concealed. Anyone who has an idea that only works if the entire market is penetrated in no time, 1000 employees hired and high-tech production facilities are procured, for which bootstrapping is certainly not the right concept.
So, now to the individual steps:
Go live! – The first customer counts
All theory is grey. A business plan is a good odea. But “Everybody has a plan until they get punched in the face” (Mike Tyson)
The first customer willing to spend his or her money on your service / product is what makes the difference: is it worth keeping your idea or do you need to reconsider your concept?
Many founders write a gigantic business plan that would win any competition and have never sold a single item on eBay. WTF?
You have to get away from the desk and out to the customer and his problems. Your idea must provide customer value and win no prizes! Homework to the next part: Sell one product / one hour of your service. But beware: friends and family members do not count. The danger of pity is far too great.
Found as a side job
Since the chances are low that you can bring your product immediately to the customer, you should not immediately give up your current job.
Bootstrapping does not mean stomping a factory out of the ground on a green field and hunching 120 hours a week from now on, but testing business ideas for practicability and profitability.
Saturday used to be a regular working day and since your business idea should be fun too, you can also check out on weekends.
Next article 15 Steps for successful Bootstrapping – Part 2