Bootstrapping Entrepreneurs
April 22, 2011 | Business, Entrepreneurship, Inspiration
(Excerpt taken from chapter 4 of “Seize the American Dream” available now)
There is no doubt that first-time entrepreneurs tend to think the only way they can get their businesses off the ground is to find someone to provide the cash up-front. They then prematurely seek outside capital funding prematurely with unrealistic expectations. Inevitably, it is the rejection and the outlandish requests by investors that devastate the morale of entrepreneurs at this stage in their business development. The important rules here are that entrepreneurs really need to develop the product or service first from their own personal resources. When they do attain equity capital, the trade-offs are realistic levels of ownership, not the entire company.
So how does an entrepreneur fund this very early stage of business development? It costs money to get that first customer, doesn’t it? There are many large companies today whose founders bootstrapped their businesses to get them off the ground. There is nothing wrong with the rags-to-riches, garage shop recounts of success. In fact, our society romanticizes this kind of Cinderella story. In truth, bootstrapping a company from the ground up is only romantic after it’s over. To get a true feeling of what bootstrapping really is, consider this fable:
A gentle giant and his wife were walking along in the forest when something terrible happened. In the blink of an eye, both the giant and his wife dropped into a ten-foot hole with no way of climbing out. What was worse, the giant’s wife was knocked out cold from the fall. The giant knew he had to do something quick to save his wife and himself before he lost his strength. But what? He looked around, and there was neither a foothold to scale nor a single root to climb. The giant thought for a moment, then carefully placed his unconscious wife across his shoulders. He took a deep breath and summoned a mental picture of effort. He bent over; grabbed his bootstraps and with a mighty tug, lifted himself and his spouse out of the hole.
This story is about a feat that seems impossible. But so are the stories of the many entrepreneurs who started with simple ideas and bootstrapped their way to multibillion-dollar companies. If being a successful entrepreneur was easy, everyone would be doing it. Entrepreneurs are required to do what this giant did, and that is to make something out of nothing.
If your true desire is to be an entrepreneur with a significant ownership position, then it is imperative that you find ways to finance the first few steps of the business yourself. You probably have more resources than you realize.
Once you’ve pulled your bootstraps for the last time, you’ll be happy to know there are other funding sources that will provide the capital you need to get your business off the ground. That’s not to say you’ll never have to bootstrap again. You may, but there are alternatives. None of them are easy. It takes work, sacrifice and perseverance to harvest the benefits.
Comments (1)
Do you blame other countries for hating the US? We can’t even work together to improve our own place and imagine what we do to other places. Our congress does nil to make the right decisions, it’s all about business. It’s embarrasing that our Government works against us instead of for us.