Attracting venture capital is a full-time job. If you’ve got a business idea you’re dying to launch but don’t have the capital, raising the money will take ALL of your effort, ingenuity and time.
The time you spend trying to raise VC could actually be better spent bootstrapping your idea. Bootstrapping your startup isn’t sexy, but it is highly rewarding. There is, of course, a price to pay for the freedom you enjoy as a solo entrepreneur without investors. But for many like myself, the price is totally worth it!
I built a bootstrapped proptech startup because it’s the only way I know how to build a business. Today I’m the CEO and co-founder of a successful business that is still bootstrapped and growing, five years later.
Since launching in 2014, my company Parkbench has achieved the following milestones:
- Generated over $15 million in past 5 years
- Over 1000 clients worldwide
- Average $700,000 monthly revenue
- Achieved $4 million ARR in 2018
6 Tips For Launching A Bootstrapped Startup
My startup Parkbench was an immediate success once I launched it, but it took an entire year of product development and $30,000 of my own personal earnings to make it happen. The tips I’m sharing with you are drawn directly from my personal experience.
#1) Your Startup Should Be Your Obsession
Make your startup your sole mission. Building your startup has to be the #1 priority in your life. It has to be a passion that you are willing to make sacrifices for. My wife and I lived on tuna, mac & cheese dinners for that whole first year of product development. We didn’t have furniture. We didn’t have a TV. What are you prepared to do to funnel cash-flow into your dream?
#2) Establish A Source of Reliable Cash-flow
For your initial investment, you’ll need to rely on least one revenue stream that can be funnelled into the business. Typically, this will be your day job when you first start. If you don’t have a day job, what part-time work can you find? Work within your means, steadily building your idea according to your budget.
#3) Find Creative Ways To Raise Capital For Your Startup
Consider raising capital from friends and family. Crowdfunding campaigns can also be very effective, especially if you’re business idea is nonprofit or a social enterprise that helps your community.
#4) Keep A Positive Mindset Even When You’re Broke
Get very comfortable with having no money. Once your business gets running, you’ll need a steady stream of sales to keep growing. From time to time, however, you will have a bad week, or even a bad month (ie no sales, no revenue, no cash flow).
DON’T PANIC. I’ve been there. And I’m still here. Every industry on the planet experiences ebbs and flows. Cultivate a positive mindset that you reenforce with daily rituals to remind you of why you chose to become an entrepreneur in the first place.
#5) Save At Least 3 Months of Your Startup Expenses
Always keep at least 3 months of monthly expenses and overhead covered. Resist the temptation to spend frivolously or impulsively as your startup grows. Just because you can afford the newest ergonomic chair doesn’t mean you NEED one. Instead, aim to save at least 10% of what your startup brings in to keep you going through the lean periods.
#6) Diversify Your Revenue Streams As Your Startup Grows
Last but not least, find ways to increase your revenue. Think of ways to diversify your offering as your startup grows. Are there other products or services your clients would appreciate?
Consider the entire buyer journey, before and after the sale. If you can find ways to support their needs throughout the entire process, you can expand your business into areas that are a natural fit. A bakery, for example, can cater special events, and offer local delivery. A guitarist can teach, and perform for private engagements.
Conclusion: Invest In YOU
I’ve had the experience of being able to buy whatever I desire. I’ve also spent my share of time counting pennies in the grocery line. Building my startup bootstrapped was risky, and sometimes pretty scary, but a heck of a lot of fun. Along the way, I discovered just how resourceful I can be. I also learned how innovative, how determined, and disciplined I’m capable of being.
Securing venture capital can be a challenge even for a successful global enterprise. Don’t be discouraged if your search for VC funding has led you to a dead-end. If you’re on the fence about launching your startup without investors, hopefully my advice will resonate with you.
The world is waiting for your great idea. If you believe in your startup idea, then invest in yourself first before asking others to invest in you.