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What is bootstrapping (or how to survive the first years of lean cows)

Would you dare to start your business without having extra money? This practice gives you experience and puts you in a better position to negotiate with investors.

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process. Opinions expressed by Entrepreneur contributors are their own. This article was updated on September 29, 2020

In business school they teach us to write a plan, raise capital, and execute a vision. However, this process is not entirely realistic. In the real world, startups face the fact that angel investors and venture capitals are not willing to participate in companies that have not learned to handle the " lean cows ."

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This means bootstrapping to start your operations. In simple words, this term in English means to work as best as possible with the resources at hand. Basically, don't wait until you have money to get things done. The lack of external funding can be a curse or a blessing because if you can start with what you have, in 18 months you will not have to worry about paying an investor. This is a common way to start a business in Silicon Valley .

As an entrepreneur, I believe that there are many valuable lessons from learning to manage the few resources that you have in the early years of "lean cows." For example, in my company Infusionsoft we self-invested for years and eventually we managed to raise close to US $ 127 million with investors, but those difficult years forced us to be creative and push ourselves to be better managers. That is why I believe that entrepreneurs who start their businesses even before having investors acquire invaluable experience. It can be a tricky road, but it is a critical factor for future success.

If you decide to bootstrapping , here are some bits of survival wisdom that I have acquired over the years:

1. Customers are basically your blood

When you don't have the funds of dad or outside investors you understand VERY FAST that consumers are the ones that keep you afloat (and pay the bills). You must take care of each of your clients. In my company we adhere to a service policy above anything else. If you work for me, you know that the client is your number 1 priority.

2. Master the art of selling

You must sell yes or yes when you do not have large cash reserves. Before anything else, sales are the basic indicators of business performance. The sales strategy should be integral to your business plan.

3. Control your expenses

It is essential that you have a budget when your company only survives on the sales you manage to bring in. You must control your spending, honestly analyze where you can cut money leaks, and develop a keen eye to distinguish between spending and investing. When faced with the “lean cows” of the early years, you CANNOT afford expenses that are not intended to grow your business.

4. Track your metrics

Without a safety net, it is key that you understand what are the indicators that drive your business. Do you have a website? You must master Google Analytics. Do you have a sales business? You must have an accounting expert. Understanding the granular components of your industry (leads, retention, conversions, etc.) will help you identify where you need to tighten the nuts to drive your business growth.

Tightening your belt and starting with what you have makes you strong. Force your company to prove its worth every day. It gives you clarity in the mission and vision of your business. When the time comes to look for investors, the years you spent accumulating experience will demonstrate the viability of your idea and give you a great advantage when negotiating.

Clate Mask

Written By

Recognized as a visionary leader in the small-business community, Clate Mask has been educating and inspiring entrepreneurs for more than a decade. As CEO of Infusionsoft, Mask is leading the company on its mission to create and dominate the market of sales and marketing for small businesses.