I’ve always enjoyed reading stories about small, relatively unknown companies that bootstrapped their way to great success.
Learning practical lessons of problem solving, growth strategies, wits, passion and tenacity and ‘luck’ from the founders and their co-founders is awe-inspiring.
Now I don’t mean to say venture capital (VC) money is totally bad. No! I didn’t say that.
This is just my personal opinion and definitely should not be taken as financial advice. We all have our different contexts and circumstances so do your own research and proceed with what is best for you.
With that caveat out of the way, here is a list of 5 good reasons why I would choose bootstrapping over VC funding while starting my future businesses:
1) You start small: You start out with smaller amount of money. This constrains you to do the essentials to really prove your ideas, assess your target market thoroughly and if it works out well, you can scale it up efficiently.
2) You have full control: There’s limited external influence on your decisions. No one is breathing down hard on your neck to do one thing or the other. You succeed you celebrate it. You make mistakes, you learn from them and grow.
3) You move faster : You make decisions faster since it’s just you and perhaps small team so no bureaucracy or unnecessary bottlenecks to stop you. You are agile.
4) You have better profit margins: Since your operational costs are often much lower, you get to enjoy higher profit margins generally.
5) Your main focus is your customers not investors: When you have no investors chasing you or calling the shots and demanding constant meetings, you are free to deliver the best product or service possible for your customers.
Bootstrapping is indeed a great way to start and grow your business.