Bootstrapping in business. To be or not to be.

Bootstrapping is one of the strongest forms of entrepreneurship, meaning start and proceed a business without external capitals. They will survive through very little money and no outside investments to build their business.

That makes the very difference between bootstrapped start-ups and fund-raised companies. Bootstrapped businesses expect to have slow and quiet growth, focusing on business models to offset the costs. On the other hand, companies involved with external funding or help will be expected to have a higher growth rate so that they could strategically meet the investor’s ROI. 

    Many of the successful companies had their beginnings as a bootstrapped company. Including,  

    • Dell Computers 
    • Facebook Inc. 
    • Apple Inc.
    • Coca Cola Co. 

          In this article, I will write about bootstrapping in business, financing methods, stages and pros and cons of bootstrapping.

          Bootstrapping Financing methods 
          • Owner Financing: The use of personal income and savings. 
          • Personal Debt: Credit card debt, personal loans 
          • Sweat Equity: A party’s contribution to the company in the form of effort. 
          • Minimize Operating Costs: Keep costs as low as possible. 
          • Inventory Minimization: Requires a fast turnaround of inventory. 
          • Subsidy Finance: Government cash payments or tax reductions. 
          • Selling: Cash to run the business comes from sales. 


                      Bootstrapping process 
                      1. Early Stage 
                        The entrepreneur utilizes personal savings or borrowed or investment money from friends and family. Also, the founder might be running or working for other projects.
                      2. Customer and (or) Sales-Funded Stage  
                        In this stage, money from customers is used to keep the business operating and, eventually, funds growth. Once expenses are met, growth will speed up. 

                      3. Credit Stage 
                        In the credit stage, the entrepreneur must focus on the funding of specific activities, such as improving equipment, hiring staff, etc. At this stage, the company takes out loans or may even find venture capital, for expansion. 


                            Companies Eligible for Bootstrapping 
                            • Early-stage companies
                              They do not 
                              need a large amount of capital which will allow for flexibility for the business and time to grow. 

                            • Serial entrepreneur companies
                              The founder has capital from the exit of previous companies they can use to invest could reap the benefits of bootstrapping


                            Advantages of Bootstrapping 
                            • Full control 
                              Founders will hold total control over the finances which allows them to maintain control over the organization’s cash flow. Equity is retained by the owner and can be redistributed at their discretion. This can ensure that the business is moving in the direction desired, according to the founders’ vision and cultural values, without any external influence, and when successful, keeping the profits for themselves. 
                              • Low barriers of entry 
                                Start with the founder’s own money means that super-efficiency is necessary. Solving problems without external funding means that bootstrappers have to become resourceful and develop a versatile skill set. 
                                • Focus on the business itself 
                                  Raising external finance can be a very stressful and time-consuming task. By bootstrapping their company, founders can concentrate on the core aspects of the business such as sales and product. Additionally, due to the limited cash supply, it’s normal to have alternative options such as factoring, asset re-financing, and trade finance with bootstrapping. 


                                  Disadvantages of Bootstrapping 
                                  • Personal liability – High risk of failure  
                                    All financial risks pertaining to the business in question all fall on the owner’s shoulders. The owner is forced to put either their own or their family/friend’s investments in jeopardy in the event of the business failing. 
                                    The founder needs to become adept at handling stressful situations that might crop up if you finance your company using debt to another person, such as family members and friends. Understanding what is expected and communicating this clearly to others can help you cope with the stress of the situation. 

                                  • Limited cash flow 
                                    Without the aid of occasional external sources of funding, entrepreneurs can find themselves unable to promote employees or even expand their businesses. A lack of money could possibly lead to a reduction in the quality of the service or product.
                                    One reason some bootstrapped companies are unsuccessful is due to the lack of revenue: Profit may not be sufficient to meet all costs. 

                                    Starting a business most often requires very long hours of work just to keep your business going, plus, usually, there is no stipend to go with this effort. All problems are yours, as hiring staff is not usually an option.

                                  Bright side 

                                  Building your own financial foundations is a huge attraction to future investors. Investors are much more confident when it comes to funding businesses that are already backed and have shown promise. Flaws can be corrected with growth, such as product and service. Therefore, perfection at the launch of the business is not a necessity. 

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                                  Scaling up!

                                  Thanks to Ali Hauser, INGAGE CEO for Latin America, for this amazing business trip to London! After the ones in Zurich, it’s now the leading companies in London’s famous “City” that welcome our company’s products with a strong interest. Fantastic acceleration! We will need more talents to join us soon… 

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                                  Entrepreneurship course

                                  Avila Space’s Entrepreneurship course!

                                  Avila Spaces and INGAGE partnered up to create this course specially designed for people in insurance companies and other industries to boost their entrepreneurial spirit.

                                  The course aims to directly reply to simple and/or complex questions that Entrepreneurs live on a daily basis independently of success or failure. The entrepreneurial spirit and the constant decisions around financial and economical risk or the possibility of investing in new ventures were some of the essential drivers for building this course.

                                  This course is designed to help students to evaluate the business skills and commitment necessary to successfully operate an entrepreneurial venture and review the challenges and rewards of entrepreneurship.

                                  Check out this video:




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                                  Many of the startups we have seen around the world in the past years digitize most of their processes in order to be lean and effective.

                                  As a young company, INGAGE has made the choice from the very first days to make full use of digitization (virtual teams, video conferencing, digital processes, paperless) while keeping the human factor in the center of our team.

                                  You can read more about this on our blog.


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                                  Conducting workshops, virtually

                                  Do you lead workshops, train people in companies?

                                  Most large companies nowadays use online cooperation tools. Video conferences are now part of our daily lives. They also have LMSs (e-Learning Management Systems) to train their employees online.

                                  However, many individual trainers and smaller companies still lead workshops in physical meetings rooms, thus being unable to train people across regions. There are many tools for online collaboration, for video conferencing, but the trick is to combine them effectively in order to train people online in an engaging way. You can use Skype or Skype for Business, to talk, see each other and share your screen. You can also use Webex or Zoom, which enables participants to hand over the control of their own computer to a distant participant. The technology is there.

                                  The challenge though comes when there are several people in the meeting room and participants scattered around the world via video conferences. One trick we found useful (for our own team) is to have everybody participate via their own computer with their own webcam. Even the people who are together in a same meeting room in a same location! Thus, there is no effect of a group vs. individuals. Everybody is on the same foot. Everybody can see clearly the other participants, as individuals.



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                                  HR Innovation

                                  In this “Innovation Slam”, we introduce our online and blended learning platform, applied to language learning.


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                                  ” Why did we fail? “

                                  This is the question our Agile coach asked me a few days ago.
                                  I looked at her with what might have been a big question mark on my face. “How can you say we are failing, or even worse, that we failed?! Specially now that we are actually getting one client request after the next !!! ” I answered bewildered. (I should have noticed her malicious smile…, but too late)
                                  She answered: “I’m not saying that you have failed. Nor am I actually saying that you are failing. I am saying that you should think about it.”
                                  “What do you mean?” I answered.
                                  “Project yourself in 6 months. Ask the whole team to do this. Then, ask the team why it has failed. Ask it to find all the reasons why you collapsed, disappeared. This will help you identify the key challenges you face now.”
                                  “Did you get my attention?” she added.
                                  “Oh yes, as always…” I answered.
                                  To my Dear-Agile-Coach: Thanks for this wonderful – though simple – tip. 😉
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