Bootstrap Mentality: Key Ingredient for Startup Success
Here are some suggestions on how to maintain a bootstrap mentality while running your organization.
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The term Bootstrap was coined from the computer lingo "booting' which means starting a computer or starting a chain of processes which eventually starts up the operating system. In the startup world, bootstrapping essentially means funding your own venture and not being too dependent on external sources.
Let's face it, to have a bootstrapped startup you need grit and total faith and conviction in your product, something a lot of new startup's find it difficult to conjure. While most startups believe that only funding guarantees success, we beg to differ.
Bootstrap mentality is critical for a startup to succeed, irrespective of whether it has raised funds or not. Bootstrap mentality keeps the organization focused on being frugal, innovative and agile.
Here are some suggestions on how to maintain a bootstrap mentality while running your organization:
Hiring is the key element in any startup and every success story is as good as its team. They say that to make an effective presentation, ask the question "Why?'/"So What' to each slide and if you get a convincing answer, then you are doing good.
Ask the same question while hiring someone and if the answer is in lieu with your vision and larger good of the company in a prudent manner, then that's a good hire. Going on a hiring spree on receiving funding will ensure that you burn before you earn.
Last but not the least, if you come across a "proven team', then that's just a rabbit out of a hat and you can believe us blindly. Proven teams are highly overrated and irrespective of who says what, they may not be right fit for a bootstrapped company. A young team which proves itself is where you should bet your money.
Put need first, want later – Most startups on receiving funding go berserk with huge spends on office infrastructure, hiring, system upgrades, software's and all kinds of fancy things. Some even spend on creating apps and elaborate marketing campaigns.
This is the sure shot way of burn out before you start making any money. So, question all expenses and never incur it unless you have found out a way to balance it with the money you make. Remember that it is better to be a successful business than to be a popular sink-ship.
Another pro-tip – Keep everything short - small up-front capital requirement, short sales cycles, short payment terms and recurring revenue cycles.
Barters and Associations
Barters from age-old days have been pivotal to successful business deals and if you could compensate a cost with barter, then nothing beats it. It is a win-win situation where there is no physical money spent and a mutually benefitting association is formed. These could actually extend your customer base if you use it wisely. Use it abundantly and wherever possible.
To be a bootstrapped company, put on your lab clothes, lab goggles, burn gloves and experiment. Don't be afraid to think out of the box, try different things, get out of the herd mentality. You would burn your fingers, but a few tests and trials and you would shine.
Similarly, to the way, we at Vista Rooms went ahead and created our mobile app on Instagram, no need to worry about downloads, or upgrades or coding. We could do it because we experimented, so keep experimenting to see what works for you.
Stretch Your Team
The optimal number of hands between a bootstrapped company and the customer is Zero. They say that God invented e-commerce to sell directly and reap greater margins, use it well. Stretch your team to don different hats be it marketing, operations or sales.
The marketing guy can always look at operations when required, or the sales team could help in marketing initiatives. The lesser the number of people between you and the customer the better. This would ensure your team size is optimal.
Product first, sales later
Most startups do the reverse of this. The focus on sales and upscaling is so high that the product never gets a chance for betterment, till the time it becomes an absolute necessity. By then a competitor would have gained ground and whatever product enhancements you do may not save you.
Focus on bettering the product and delighting the customer and rest assured your marketing budgets could reduce down. Genuine customers would always go for better products, no matter the cost. More marketing will not always bring you customers, there has to be a constant focus on understanding customer needs and action on feedback.
Funding is never guaranteed
Successful startup ventures follow this as a quote from the Bible. They would focus on being able to sustain without any funding and manage their overheads in a manner that they are able to manage with little or no funding.
They have made up their minds that they will not need funding and work towards that goal. Most bootstrapped companies would worry on expanding business or bettering their product, instead of running behind wooing investors.
Red Pill or Blue Pill
Taking a leaflet from Apple's ex-chief evangelist Guy Kawasaki's blog, the Red pill or the Blue Pill dilemma sources from Neo's quandary in the movie The Matrix, where he is given a choice to either accept reality or be in deep dream space. Bootstrappers take the red pill every day with pride and go deep into the rabbit hole to see how deep it goes.
We encourage you to have a bootstrap mentality, irrespective of whether you have raised a large amount of funding or not. Make your team focused on being frugal and innovative and take the red pill daily.