Advantages Of Bootstrapping Your Business

October 11, 2019
7 Views

Bootstrapping refers to the practice of building a business from scratch, largely using the owner’s personal savings and the company’s initial stream of revenue. In the vast majority of bootstrapped businesses, operations make do without outside investment, credit and bank loans. Forced to embrace a minimalist approach, bootstrapped companies need to rationalize every dollar of expense and to find clever alternative solutions to business challenges.

But bootstrapping your business although tough, provides a number of unique conditions that can be advantageous to the business.

You focus on profitability

Money talks and it speaks the loudest in bootstrapped companies. Owners of such businesses are fixated on the bottom line. They focus on money coming in and money going out. Their constant aim is minimizing costs and maximizing profits. 

As a result, bootstrapped businesses can’t afford to waste money. Neither can they afford to let revenue opportunities and customer interactions pass by without selling a product, solving a problem or managing expectations. 

Because brand reputation and customer experience impact revenue performance, bootstrapped companies can never neglect customer service. Moreover, smart entrepreneurs will do everything to keep existing customers happy because it is far more costly to acquire new ones. Being the primary tool for retaining customers, customer service plays a crucial role in keeping businesses profitable. 

You prioritize customers

A bootstrapped business is practically owned by its customers. Funding for day-to-day operations comes from customers’ willingness to invest in your product. Without customers, a business simply dies — bootstrapped or otherwise. And because customers hold the key to business survival, they deserve the top spot in your list of priorities. 

The business learns to value customer feedback and reviews. For example, when a business personalizes their communications with a customer or solicits their feedback, the business gains deeper insights about what keeps customers motivated and engaged, versus what pushed them away from using the product.

Because of this, bootstrapped startups can build products that squarely address customers’ problems, fulfil their needs, or make their lives better. Beyond product design, a genuine connection with buyers leads to better customer service performance when you need to resolve issues or manage expectations. 

You become more resourceful

As the saying goes, adversity makes you stronger. In a business context, companies need to become more resourceful as challenges become more difficult and complex. 

Not all startups survive their third year. But those that do generally find clever solutions to their problems. Owners of bootstrapped companies overcome limitations by being resourceful in almost every aspect of their business. They learn to seek free tools, adopt clever approaches and execute ingenious strategies. 

For example, many entrepreneurs who run bootstrapped companies build wide-ranging social networks and professional relationships. This enables business owners to connect with domain experts and influencers who can share skills, give referrals, promote products or help overcome specific challenges.  

Bootstrapped companies also become very proficient at finding business solutions that adopt affordable or even freemium pricing models. They optimize social media to build their brand, market products and advertise their services at reduced costs.

With insufficient funds to hire additional staff, many entrepreneurs also choose to implement solutions by themselves. This hands-on attitude builds its DIY credentials and broadens their skill set.  

The benefits of being resourceful carry over to the field of customer service. Because owners of bootstrapped businesses evolve into highly resourceful entrepreneurs, their team can engage customers with confidence and strong problem-solving skills. 

You improvise, innovate and iterate by default

Necessity is the mother of invention. For bootstrapped companies, their persistent need to keep customers satisfied promotes a culture of creativity and innovation. When the budget prevents them from acquiring an expensive solution, they’ll find or build a clever workaround that costs far less and works just as well.

Teams in bootstrapped companies also learn how to iterate their processes and products in a continuous cycle of improvement. They need to because their competitors have ample research and development (R&D) budgets. But being left far behind on product fit and customer experience will become a death sentence for the company. To compensate for limited resources, bootstrapped startups leverage their stronger relationships with their customers to gather feedback and determine market sentiment. 

Free from the control of venture capitalists and other external investors, bootstrapped businesses have the power to determine the direction and scope of their innovative efforts. This way, they can build products that customers (not investors) actually want. 

You have more control of the business 

Budget severely limits how a bootstrapped company can operate and how ambitious it wants to be. However, business owners have absolute control over how the business is run and on which direction it is heading. 

Bootstrapped companies are agile and can adapt to market changes more readily than lumbering corporate giants. They do not answer to a board of directors but to their portfolio of customers. Owners can direct any aspect of the business and participate in its processes. They have the final say when it comes to corporate culture, hiring, training, marketing and customer engagement strategies. 

Most importantly, owners of bootstrapped businesses can set the standards and best practices for their customer service apparatus. 

You become more passionate, disciplined and persistent

As an entrepreneur, you’re playing a risky game where the stakes are high, and where failure can lead to bankruptcy. This possibility drives many entrepreneurs to become more disciplined in their financial and strategic decisions. It also forces them to be more persistent when pursuing goals and prospects. 

Having full accountability for their company’s success, entrepreneurs become more passionate in following through and making things happen. They realize that customer service plays an important part in achieving success. 

Loading…

You may be interested

Eto’o snubs Messi, names greatest player he ever played with
News
News

Eto’o snubs Messi, names greatest player he ever played with

admin - October 22, 2019

Four-time African Footballer of the Year, Samuel Eto’o, has named former Barcelona teammate, Andres Iniesta, as the greatest player he…

2020 Budget: Senate queries N600m allocation to power distribution companies
News
News

2020 Budget: Senate queries N600m allocation to power distribution companies

admin - October 22, 2019

The Senate on Tuesday queried the allocation of N600 million to Distribution Companies (Discos) by the Federal Ministry of Power…

Naira Marley demands for Tinubu, Buhari’s phone numbers after trial on Tuesday
News
News

Naira Marley demands for Tinubu, Buhari’s phone numbers after trial on Tuesday

admin - October 22, 2019

Popular Nigerian musician, Azeez Fashola a.k.a Naira Marley, has reacted to his trial at Federal high court in Lagos state…

Leave a Comment

Your email address will not be published.