“Bootstrapping is a way to do something about the problems you have without letting someone else give you permission to do them.” — TOM PRESTON-WERNER; CO-FOUNDER, GITHUB.
Everyone in the business industry currently has more options on how they can fund their business; savings, business loans, or even having an investor. There might also be many ways to support your business; but the option is divided into two primary funding resources – bootstrapping or investors. Nowadays, most of the Startup talks about getting investment as if without it, they'd die. It almost looks like that getting an investment from investor play the most crucial role so that a business can strive. But, is it work that way? Is getting an investor important in building your business? Or can you build your business from the ground up without investments?. In this article, we’ll help you to define what is exactly the strength and weaknesses and strength of both having an investor and bootstrapping.
Willing To Compromise And Choose Your Path
Choosing between building your business with or without investment is like choosing which are the best: creating your own business or work for someone else. There's no hard line between the two. Instead, you need to understand what each entails, what are you willing to compromise and choose your path.
Bootstrapping and investment is an old-growth concept that also has made a revitalized appearance in today’s marketplace. Bootstrapping and having an investor in your business success is akin to the all-too-familiar race between the tortoise and the hare. In the business industry, the hare is the recipient of external capital, and the tortoise is where you bootstrap your business.
Having an Investor
Nothing comes for free. Every investment made for your business will have a fine print on it. There are many questions and additional variables that need to think of if you decide to let any investments in your business. The problem, such as how many shares of your business will they have? What can they do and can’t do in your business, the boundaries that they have? What will be your new boundaries in your business? What, how, and when you should report to them?
Traveloka is an Indonesian based company with a simple aim in early 2012; to make flight booking easier for people. At their early stage, Traveloka already received an investment from East Venture, and keep on getting investments from since. There are at least 4 investors that invest in Traveloka. Currently, in 2019, Traveloka has become one of the few business/startups in Indonesia with a unicorn title; they have a valuation for > US$ 1 Billion. Lets see what are the benefits of having an investor:
Having a Mentor
Having an experience is nothing like doing your business according to the textbook. Experience is teaching you to have the mentality and right decision-making skills when faced with business problems. Investment can help you to avoid having unnecessary issues so that you can focus your mind, energy, and time to more critical business matters.
Connections, Connections, Connections
Your Investor can also introduce you to another business that they know which you can proceed to partner/collaborate with. Having a business partner that can enhance your business will always be a charm. There’s no such thing as an “always going to work” business. There’s a momentum in every business where you will need new ideas or partner to collaborate with to grow and improve your business performance.
Investor's objective is to get a high return of their investments, and that means there will be a deadline for you to meet. You can not do your business as you will. As part of that, they can also influence you to adjust your business goal to support your investor's goal.
Using Bootstrapping Method
Bootstrapping will give you more freedom compared to have an investor in your business. Bootstrapping allows you to direct your business to any direction that you want; you can decide for yourself where your business vision without any external intervention. Bootstrapping means that you can also have the freedom to do things your way at your own pace; the only person that can have a target your business is yourself. Having all the reward for yourself means that you can receive all the rewards for your regards, but it also means that you will have to bear all the risk alone.
Who doesn’t know GoPro; a 2002 action camera manufacturer founded by Nick Woodman. Nick initially bootstrapped its business from his own money by selling bead and shell belts out a VW can. He has done many types of work – emailing to truck driving- so that he could design his action camera. At the end of 2004, GoPro had $150,000 in revenue and increases to $350,000 is 2005.
With everything being balanced, bootstrapping will also force you to work extra hard on other things aside from all the freedom that it gives you. Getting your business connections from the ground up is a problem that you need to handle alone if you want to have a sustainable business. A business partner or other resources is also essential for your business, without having the investor in your business, you should find the right partner and other resources that will take some more time. Limited resources is a struggle for every new business/startups, without any additional capital from an investor, ensuring healthy cash flow is a must.
Having an investment from investor looks like a quick and fast way to have a good business, from RPS perspective, bootstrapping as long as you can is the best option. The process of grinding your own business from the ground up is priceless, along the way you will still need advice from a far more experienced person, but again, doing the process will help you understand your business in a more profound level. You can always get an investor should you need one in the future, but you can not switch from investment to bootstrap.
Rock Paper Scissors is the missing link between business and technical world. We translates business language into technical, and technical limitation into business constraints. We guide organization and individuals alike to create their own digital product and navigates all the complexity of product creation process. Find out more.