Counting the Cost of Startup Bootstrapping

Forget about unicorns and billion-dollar ideas for a moment.

Consider bootstrapping.

You may have heard about its benefits. Cultivating creative freedom and flexibility. Becoming a magnet for talent that bets on your vision. And although the road may be hard, growing and evolving fast lest the startup dies.  

On the flip side, there are also the fears and the challenges. Figuring out what to do while bleeding money out. Falling behind the competition especially those backed by venture capital. And making and taking the responsibility for decisions that may or may not ruin your bottomline.

At the end of the day, bootstrapping can cost you... a lot if you are not careful. So before you make your move, make sure to calculate the risk.

How much capital do I need?

This is back to basics. Before you can even ask this question, you got to have a business model in place. You got to have an answer if you would be asked how are you going to make money from your idea. It is important to check your foundation or if it exists in the first place.

According to Craig Bloem , founder and CEO of, you can know if it is possible to bootstrap your venture if the business model does not require extensive capital and research. But you may think, "what if it turns out my business model is capital intensive?" That thought will be explored in the next point.

If not venture capital, what choices do I have?

Founders like you remain the main financing source for startups in the United States. But put another way, this question seeks to know what bootstrapping means can you take on if your personal funds do not suffice.

Raising capital through funding is already out of the picture, perhaps for now. In fact, less than one percent of owners go to venture capitalists for help.

According to a Gallup-Wells Fargo survey cited in this article updated last year, the second most common source of startup financing is a loan or a line of credit from a financial institution. This goes against the notion that banks do not often lend to startups as well as small business owners. Crowdsourcing also accounts for a few percentage.

How do I determine my budget?

Be realistic. Start with a budget that can help you deliver the promised value to your target clients without compromising the cash flow. This tactic can force you to be diligent and resourceful. Sometimes, it can also make you discover your hidden gifts.

Stay flexible as you track your operating expenses. Adjust your budget accordingly. If you are working on a tight budget, you can do marketing on your own. If you can afford to hire an employee, by all means, do so.

Your budget can be set at the beginning, and it is crucial that you stick to it as you bootstrap your startup.

How do I pursue investments?

You may have a huge appetite for risk -- that's why you are an entrepreneur. However, if you are bootstrapping, you may realize that you cannot always get what you want right when you want it. Such situations will call for your inner resolve to take on paths less traveled.

Now, when talking about investing in aspects like people and equipment, prioritizing is key. It is here that an understanding of the industry you entered becomes important.

For instance, in tech and fitness, brandishing some form of certification will boost your chances of getting clients. But the two industries differ in attracting top talent. Tech firms can offer sponsored certification in order to get an individual sign up with them. Meanwhile, fitness centers require their applicants to show trainer certifications from accredited agencies before they hire them. So people-wise, the level of investment also depends on how things work in your field or industry.

In terms of equipment, tech firms can save up by implementing a Bring Your Own Device (BYOD) scheme in the workplace. Others work remotely to remove that cost altogether. On the other hand, fitness centers will have to invest heavily in equipment. Surely, they won't expect trainers to bring their own treadmill to work.

Final words

Bootstrapping can sound difficult and scary. But if you apply diligence in dealing with your seed money, you can grow your startup into that billion-dollar business that venture capitalists would love to fund. But for now, enjoy the ride.