Bootstrapping the Smartest Way
When I started my company 10 years ago, I knew it was going to be a long journey. It took three years for our product to generate enough revenue to sustain the company on its own. Those were the most challenging years, since I needed to a sustainable revenue stream to pay the bills and my employees. The approach I took to sustain my bootstrapped company not only paved the way to success, but it also helped me understand the market in unique ways.
The idea is pretty simple: Work for your target market. It could be consulting, part-time work or freelance work. Do whatever you need to do to generate some cash on the side so that you can keep the lights on at your startup. Just make sure it’s in the market segment you are targeting. For example, if you are developing a website for golfers, find a temp job at a golf club.
Ten years ago, I decided to build software to help small businesses create online forms. At the time, I had experience as a software engineer. That led me down the path of developing custom solutions for small business clients as a consultant. Learning about the way they ran their businesses and my client's needs allowed me to understand the importance of knowing my target market inside and out.
By working directly with small business owners, I learned to understand how the owners of small businesses think and operate. I understood their primary concerns, what kinds of products they needed and how to help small business owners succeed. When I began developing my online form builder product the deep insights I had into the needs of small business owners shaped the product and the directions I took the company.
As my consulting work matured, I became more and more selective with clients. Instead of working on random projects, I chose to focus on clients who were related to my form builder product. Essentially, I was getting paid to also do research for JotForm.
The next step was to introduce the product to my existing clients. Instead of building solutions from scratch, I started building solutions for my clients on top of our product. I implemented solutions using the product and created new solutions by adding new features. At that point, I was getting paid to develop the product even further while gaining deeper knowledge about the customers and the market. This was a great place to be.
While working with your target market for small jobs, you are also networking at the same time for your startup. You are building relationships with your clients. These are clients who may become your customers, introduce you to people and recommend your product in the future.
Are there any dangers to this approach? The biggest danger is that you lose sight of the goal and start spending too much time working on side projects, rather than improving your startup.
I have a friend who was developing a food delivery service app. Can you guess how he bootstrapped the business? Yes, you guessed it right, he was the delivery person for the first few months. Since there weren’t too many users in the beginning, it wasn’t a big deal. He gained an incredible amount of knowledge about his business and his customers by being hands-on. He listened to feedback from customers and used that information to add new features he knew were needed. He bootstrapped the smart way.
Many entrepreneurs start their business while they are employed by someone else. Although this is a good approach because it means you won’t have to worry about steady income, it is has drawbacks compared with the approach I described. As a full-time employee, you usually can’t choose to help customers the same market as your product. Even if you could, you need to be careful that your current employer won’t claim you used proprietary company assets to build your own business.
If you decide to bootstrap, do it the smart way. Spend meaningful time studying your market and finding ways to get paid by your target customers. At the same time continue to build and refine your products and company.