Bootstrapping your way on the business highway
March 17, 2013 in Financial Skills.
Failure has a wonderful capacity to reveal opportunities that otherwise remain hidden.
Disastrous ‘A’ Level results in 1984 forced me to take a gap year. Whilst I envied friends destined for university, part of me delighted in the chance to step off the education treadmill.
Suddenly I was making choices, dealing with consequences and relying less on others. I quickly found a job (earning a pittance) in a Cumbrian hotel and subsequently worked at a field centre, school and finally an office. And hitchhiking became a way of life. Yes it made travel between places and jobs affordable but I realise now how it chimed perfectly with my new independent lifestyle.
And if like me, you thrive on responsibility and enjoy control over your own destiny, you are probably far more likely to want to start a business one day without being financially dependant on others. In other words, you’ll probably want to ‘bootstrap’ your business.
I left university in June 1989 with a degree and a four figure overdraft. But by working every hour (as a security guard of all things) at events such as Wimbledon and Ascot I managed to get myself back in credit and even put some money aside for starting my first venture that autumn.
As a result, I was able to ‘bootstrap’ my business and I didn’t have to go ‘cap in hand’ to the banks. It certainly never crossed my mind to go down the investment/angel route probably because their services were far less prominent 20 years ago. As an aside, I am somewhat sceptical about the amount of money and effort universities in-particular put into ‘high growth’ support services – I believe this issue is more driven by available public funding rather than real business demand, which is completely the wrong way round.
By bootstrapping the first business I was also able to start as a sole trader. This meant I wasn’t subject to complex and potentially expensive partnership or Limited Company agreements and my tax situation was much more straightforward too.
As a bonus, this also meant there was no one telling me I had to write the dreaded ‘plan’. This lean approach to start-up has been researched and written about by academics, among them Colin Jones from Tasmania who has posted relevant materials on the following useful website: http://www.teaching-entrepreneurship.com/lean-startups.html
Bootstrapping like hitchhiking keeps things simple and you just have to rely on yourself. You get out what you put in but of course when things go awry there’s only you to sort them out.
This might sound scary but the highs in almost every business case I’ve ever known outstrip the lows. And importantly, as you travel along this route so your horizons for what is possible in your life expand almost exponentially.
But whilst going solo has real merit, it won’t take long before you’re having to work with other people. Whether you work with external partners or hire staff, opportunities to grow your business will present themselves and it quickly becomes impossible to do everything yourself.
Key Learning Points: Bootstrapping a business gives you complete control and means you are not answerable to any external funder/investor. This simplest of routes not only makes life easier but it also means you benefit from everything you put into your work.