Bootstrapping a business is great. It isn’t necessarily easy and it doesn’t get much love in our venture-backed world these days, but I’ve used bootstrapping multiple times (to varying levels of success) and would do it again in a heartbeat.
Running a business — any business! — is immensely challenging and, as we all know, the odds are stacked against your success.
What’s unique about bootstrapping is that your company’s success is more precarious at any given moment. The risks and stresses are heightened because you’re playing with your money.
It isn’t just your competitors that you need to be watching. All sorts of things are threatening to derail your progress and knock you out of business.
In this article, I’m going to tell you the 9 threats to your bootstrapped business, as well as show you how to navigate your way through them. My hope is that by highlighting these, both you and your company can be healthier and more successful this year.
Nothing feels better at a bootstrapped company than signing up a new customer! They are the lifeblood of your business. And when we get them, we’re biased to assume we’ll keep them for a long time. The reality is usually a little murkier, as people come and go with all sorts of frequency. As a general rule, it takes a lot fewer resources to keep a customer than to capture a new one. So be sure to pay attention to how long customers are staying with you and do what you can to keep them longer.
2. Lack of Trust
Easily one of the biggest threats to your bootstrapped company is that people don’t know you well enough to do business with you. Rather than get frustrated and distracted by this, just accept it as the price of doing business early on. You can overcome a lack of trust by using social proof like testimonials and referrals, as well as by offering free trial periods. A little bit of traction goes a long way in demonstrating trustworthiness, so do whatever you can to establish your credibility as early as possible.
3. Poor Priorities
In small and growing companies, there is always more that needs done than you have time to do. Everything from emails and website changes to sales calls and contracting will demand your attention. And it is easy to be distracted by the things that are easiest. You have to develop a system for prioritizing the most important tasks. Otherwise you risk going down less-important rabbit holes while the really important stuff gets ignored. Be relentless about focusing on your priorities and learning to put nice-but-not-necessary tasks on the back burner.
4. Unmanaged Emotions
The only constant in a bootstrapped business is its unpredictability. If you can’t manage your emotions through highs and lows, then you’re putting your business at serious risk. The journey of a bootstrapped company is always fraught with emotion. Find ways to identify what’s weighing on you (journaling, meditation, therapy, etc.), and then practice managing your emotions in healthier and more productive ways.
5. Poor Sales Skills
Every business needs to make money, which means you need to figure out how to do sales. For bootstrapped entrepreneurs, this often leads to a desperate and embarrassing scramble hawking their product or service everywhere they go. Others face an almost opposite threat: waiting too long to capture sales (usually for fear of being seen as sleazy salesperson). If you’re running a bootstrapped company, try a variety of sales approaches and pay attention to what’s working best.
6. Poor Health
One of the first things to go in a founder’s life is the quality of their health routines. Long hours working often means poor food decisions, higher stress levels, and less exercise. While we often feel like we can work through such conditions, the evidence is clear that these all lead to making worse decisions. Be aware of how your business is impacting your health and schedule time for exercise and mental breaks the same way as you would a meeting. Counterintuitively, taking more breaks during the day can often lead to working less hours because you’re able to be more productive in less time.
Nothing is going to be perfect but one thing that hurts your business’s credibility is getting too busy to catch simple mistakes. Typos, embarrassing design decisions, and many more overlooked mistakes can cost you serious business without you even realizing it. Be sure to set aside time for carefully reviewing important materials or, maybe even better, find someone trustworthy and less busy to subcontract.
8. Not Listening
You have a huge advantage over larger competitors by being closer to your customers. This allows you to create opportunities to gain customer feedback and incorporate them into your business. Make sure you’re balancing being in “sales mode” with time spent listening to your customers. While sales is important in the short-term, it’s your customer insights that will allow you build a truly successful company.
9. Cash Flow
No list of threats to bootstrapped companies would be complete without mentioning cash flow. With less wiggle room financially, poor cash flow for even a short amount of time at a bootstrapped business can be disastrous. It’s not the sexiest part about running a company, but you need to be relentless about managing your cash flow because not only does it allow you to sleep at night, it also allows you to make business decisions from a place of strength rather than desperation. And that’s how great businesses are built!
By no means, is bootstrapping a company easy. But it is definitely one of the most rewarding ways I’ve found to build a meaningful life.
Highlighting the challenges facing bootstrapped businesses isn’t meant to deter you from doing it. It’s to help you succeed!
Because in each of these threats to your company, you’ll find an opportunity to develop in ways that will help you throughout your life. From being a better listener to improving your finance skills, the challenges of bootstrapping create a nonstop series of opportunities to grow as a person.
And being aware of them is the best way to begin navigating them more effectively. Good luck!