The Case for Bootstrapping Your Business

These days, it’s very fashionable to have a business “funded” by an investor or venture capital firm.  While this kind of funding is most prevalent in the tech sector, it’s still tempting for ambitious new store owners to bring on investors or get a business loan to “accelerate” their progress.

But that’s almost always a bad idea. Here’s why bootstrapping your business is usually the better alternative.

What Is Bootstrapping?

There are a lot of different definitions floating around, but here’s one I created that I like best:

“Bootstrapping is starting and growing a business using your existing resources.”

Notice what bootstrapping doesn’t mean.  It doesn’t mean you’re excluded from investing any of your own cash.  It also doesn’t mean that you must remain a one-person company for eternity, or that you have to settle for meager revenues and profits.

It simply means growing your business using your existing resources instead of going out and raising a bunch of money from other people.  It means growing organically.


Why Bootstrap?

If your #1 goal is to build something enormous and world-changing as quickly as possible, bootstrapping may not be a good choice.  But if your primary goal is to build a profitable business that you will ultimately control, bootstrapping is almost always your best option.  Here’s why:

Cash Alone Rarely Solves Problems

Cash is pretty nice to have around, and there are many situations in which a fat bank account can come in handy.

But in just as many cases, business owners tend to see cash as a solution to their problems.  Instead of thinking through business growth issues and dealing with them, they’ll simply throw a lot of cash at the problem (by hiring contractors, consultants, etc.) and expect the underlying issues to be taken care of.

This rarely works and is a mistake I’ve made myself.  Instead, most successful companies grow due to the direct, in-the-trenches sweat equity of a highly invested personal founder who is personally grappling with problems.  Paying to outsource the early work involved with getting a business off the ground is almost always a bad idea.

Forces You to Prioritize

When we have a lot of something, we tend to be much less discriminating about how we use it.  When you’re sitting on a big pile of money, it’s pretty easy to spend needlessly on things like logos, flashy web design and nonessential “feel good” business items.

Working with limited resources (both times and money) forces you to ruthlessly prioritize on the bare essentials to move your company forward.  More often than not, you’ll eliminate 90% of the waste and fluff that wasn’t that important anyway.

Allows You to Maintain Control

Money always comes with strings attached.  At a minimum, you’ll be bringing on a third party who will be scrutinizing and trying to influence your decisions.  At worst, you’ll be giving up control of the company you’re pouring your heart and soul into.

That doesn’t sound like much fun.  Isn’t calling the shots one of the reasons you started your own business in the first place?

Makes You Focus on Profitability

With $100,000 in the bank (especially if it’s someone else’s $100K), it’s easy to mask the reality of an unprofitable venture for far too long and avoid making difficult (but necessary) decisions.  That’s much less likely to happen if you’re running a lean operation and/or the money in the bank was solely generated from your own blood and sweat.

Keeps You Out of Debt

Skip out on that big bank loan.  Few successful companies have been started with a founder saying, “We just secured our $100,000 line of credit!  Let’s start ordering things.”

And potentially even more dangerous is the prospect of borrowing money from family.  As Dave Ramsey says, Thanksgiving dinner always tastes different when you owe somebody at the table money.


The 5-Step Bootstrapping Process

Once you’re onboard with the bootstrapping concept, here’s a five-step process you can follow to give you the best chance of success:

Step 1:  Prove Your Concept

With limited funds, it’s more crucial than ever to prove your business concept before investing your valuable resources.  If you’re reselling an existing product, this step is a bit easier given the existing demand.  But make sure you’re very clear on how you’ll be adding value — and don’t say via low pricing! Will you be offering a unique branded experience or adding informational value?

If you’re creating a new product, make sure you’re able to validate that people want — and are willing to pay for — your product before you invest heavily in mass manufacturing.  Get your prototypes in front of as many people as possible, take pre-orders or even launch a Kickstarter campaign.  Nothing is worse than manufacturing 5,000 new items that nobody wants.

Step 2:  Do/Learn as Much as Possible

Wait a minute … How am I going to build a real business if I’m doing everything?  And are you really suggesting I do everything?  As in, learn to code and even do my own accounting out of the gates?

In short, yes!  I recommend doing as much as possible in the early days of your venture, especially if you don’t understand the underlying concepts.  This often requires performing a task or learning a skill that you weren’t anticipating.

You’ll save money doing things yourself, of course.  But more importantly, you’ll gain a deep understanding of your business that will be incredibly valuable as you grow.

It’s nearly impossible to manage people and/or outsource tasks if you don’t fundamentally understand them.  In fact, it’s often a precursor to disaster.  You won’t be able to do this for every aspect of your business, but the more areas you can understand well in-house, the better off you’ll be in the long run.

So teach yourself the basics of CSS and HTML and then go and outsource your layout and design work.  Get a good grasp of the fundamentals of finance and get a few months of bookkeeping experience under your belt and then hire a bookkeeper to manage the books on a monthly basis.

I’m not advocating being a one-man or one-woman shop forever; that’s no way to build a business.  Currently, I have either in-house team members or contractors manage most aspects of my business, from accounting to customer service.  But I’ve done my own accounting and I understand how the books work.  I’ve answered countless emails and phone calls.  That inside knowledge of my business is crucial to helping it grow and scale, as we’ll talk about next.

Step 3:  Systemize Your Roles and Processes

Once you have a firm grasp on most aspects of your business, it’s time to start handing off tasks to others.  Delegating responsibilities is one of the most crucial steps for successful growth.  It’s also one of the areas most fraught with frustration and friction if you’re not intentional about how you do it.

The Wrong Way to Scale:  Hire someone, give them a few general areas of responsibility and hope they do a good job

The Right Way to Scale:  Document your critical business processes and hire people to execute (and improve) those processes

This concept of systemization and documentation is involved and far beyond the scope of this post!  So instead of doing a poor job of writing a brief primer here, let me point you to a few great resources on the topic:

The books Work the System by Sam Carpenter and The E-Myth Revisited by Michael Gerber are go-to resources for how to best create a process-driven company that controls chaos, enables delegation and allows you to scale.  I’d also recommend this great podcast episode by the guys over at the Tropical MBA on building processes into your business.

At eCommerceFuel and Right Channel Radios (my eCommerce business), we have dozens — if not hundreds — of documents outlining the best processes for most tasks in our business.  Everything from editing an order to bringing on a new forum member has a document outlining how it should be done.  We manage everything using Google Docs and Asana.

We’re definitely not perfect, and there are certainly some shortcomings in our documentation.  But without it, our business would be absolute chaos.

Step 4:  Start Plugging In Key Team Members

Once you have systems and documentation in place, it’s much easier to start plugging team members into roles that are clearly defined and documented.

But growing a team with a bootstrapped company is a bit challenging.  Unlike bigger companies, you probably can’t afford to have someone dedicated to HR and someone else focused solely on graphic design.  Instead, you’ll likely have to pick a key team member or two who will be required to wear a lot of hats.

Personally, I’ve found the most important thing to have early on is a trustworthy, reliable person who can act as the operating core of your business.  Someone who really understands your customers and the different aspects of your business, and can serve as the go-to person for general operations.

It’s not too difficult to outsource graphic design or programming tasks.  But it’s extremely difficult if you don’t have a person with a good high-level understanding of your business to manage customer service tasks, supplier issues, etc.  Having someone in this operations and customer service role is often the best first hire you can make.

For more thoughts on hiring, check out the recent conversation I had with Bill D’Alessandro here on the podcast.

Step 5:  Decide How Big You Want Your Business to Be

At this stage, you likely have a six-figure business that’s well-documented, highly automated and hopefully growing.  Congratulations!  Now it’s time to do some soul searching.  This step isn’t technically necessary for “bootstrapping” a business, but I think it’s an important enough step in the process to discuss.

How big of a business do you want?  Stated differently, what’s most important to you?

If the ultimate goal of owning your own business is to provide a full-time income and flexibility/time to do what you want, that’s easily accomplishable with a six-figure business, a small team and minimal stress.  But if you’ve got your eyes set on something bigger — a multi-million dollar business, for example — you’ll need to take a different approach.

In the book No Man’s Land: Where Growing Companies Fail, Doug Tatum discusses how most founder-led companies stall out at the high six- and low seven-figure mark.  He argues that growing a company past that revenue point, an area he calls “No Man’s Land,” requires a different strategy than what was originally used to scale the company.

Instead of using a small team to leverage the skills of the founder, getting to that next stage requires building out a full-fledged team of area specialists to legitimate scale.  It requires taking a hard look at your business model to see if it’s viable when paying market rates for staff and leadership.  And it usually requires a few years of significant investment (and often financial stress) to grow the team ahead of the normal business curve to support that growth.

It’s a great problem to have, but one you’ll need to think seriously through.

Follow-Up Resources

A few additional resources on bootstrapping:

Rob Walling:  Rob is a software entrepreneur, but he’s a bootstrapping/self-funded evangelist, and many of his lessons are just as applicable to eCommerce and other online entrepreneurs.  I’d especially recommend his book Start Small, Stay Small and his podcast Startups for the Rest of Us.

The Bootstrapper’s Bible:  Written by marketing guru Seth Godin, this 100+ page PDF guide is a great resource for bootstrappers, and it’s free.

I’d love to hear what you think.  Are you  a VC or funded startup founder whom I’ve deeply insulted?  Have some additional thoughts or resources to add?  Let me know in the comments below.

Andrew is the founder of eCommerceFuel and has been building eCommerce businesses ever since gleefully leaving the corporate world in 2008.  Join him and 1,000 vetted 6 and 7-figure store owners inside the eCommerceFuel Community.

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  • I completely agree Andrew. Being forced to be resourceful with what we have in our endeavors to start a business–as opposed to thinking “if only I got a bucketload of money from ” is an enabling perspective. By the way, The E-Myth was an eye-opening book, and I would highly recommend it to anyone currently in business for themselves.

    • Thanks, RC! I think we’re too often fooled into thinking money will solve all of our business woes.

  • Great job Andrew, allowing you to focus on profitably really is the key here. It’s not as much for the reason to make money (that part is nice too) but when you’re focused on profitably you’re also focused on building the product that your customers really want/need.

    At the beginning many people come up with grandiose plans. The problem there is that they never know which one of these ideas the market really wants. If you have unlimited cash in the bank then you have unlimited time to build this grand vision…. Which almost always misses the mark.

    With limited runway there’s a limit to what you can build and experiment with. In order for you business to survive you must be laser focused on what the market wants. When you go to work each day, pleasing your customers is then #1 priority. When you’re bootstrapped, happy customers is where you’re money is coming from… not from happy VCs.

    When you make customers first priority keeping your current customers happy and adding future happy customer is you’re one and only job. There is no choice but to focus on your product and customer service…. not raising the next round and awaiting your huge exit. Focusing on product, service and your bottom line is the foundation of a great business.

      • Absolutely, thanks for asking!

        Also, I’d like to second your advice on Rob Walling’s book Start Small, Stay Small. It’s a short read but there’s no fluff. He gets right to the point and you finish with actionable tips. It’s the ‘less hyped’ version of The Lean Startup.

        It really is a must read –

  • I totally agree – and it really isn’t difficult.

    Yes, there is a learning curve, but those growing pains will go away, and as long as you don’t make too many expensive mistakes, you can make things work!

    I think one of the biggest reasons that startups don’t make it is that they have a huge overhead monster to feed. Rent, payroll……these things add up quickly! Stay lean – stay happy.

    • “Stay lean – stay happy” nice. Reminds me of Rob Walling’s book title, “Start Small, Stay Small”.

      I think most people just assume that getting enormous is the goal for all businesses, but it’s not what always makes founders happy. Scaling up brings with it a huge new set of responsibilities, stresses, etc. And I imagine there’s been more than one business owner who, after tripling the size of their company, found themselves pining for the more simplistic and stress-free days of (albeit) smaller lore.

      Not for everyone, I think there’s a lot of merit / value is seeing how big you can grow something. But I think getting into it with the right mindset, expectations and knowing what really will make you happy is important.

      Thanks for reading, Scott!

  • Hey dude,

    This is really cool. I am bootstrapping my own project right now and loving it.

    I feel like bootstrapping is like getting on the Entrepreneurship fast track because of how hard and fast it pushes you to grow (or die!) in so many areas at the same time.

    I just finished my website yesterday and have gotten a lot of positive feedback so far.

    You were one of the guys that got me into this originally, so thanks. Without your content and feedback my project would have never happened!

    Hey, also – there is a barber in Bozeman thinking about carrying my stuff. Cool little side note.

    Thanks again!


    • Awesome to hear, Ian! Glad to offer some inspiration and excited to see how Beard Mountain goes for you. You’re making all of the stuff yourself, right? And which barber in Bozeman?

      Best of luck and thanks for reading!

      • The Barbershop and Shaving Parlor on N 7th – they just had a beard competition last week.

        I am making all of my own product, so it has been a ton of learning for me in many areas – everything from sourcing materials to packaging and everything else that makes it happen.

        It has been one of the most positive experiences of my life.

        Thanks again!

  • I agree with everything – however, personally I’d put step 5 before step 1 since shaping your long term ambitions helps set the right expectations. I’ve built businesses both ways but would always choose bootstrapping/lean startup for future ventures. I don’t particularly want to be rich, but I do want to love what I do, not worry about paying the mortgage and see a long term future.

    • Great point, Kev – I can definitely see how thinking about that upfront would be helpful to structure growth and make decisions. I may need to do some re-arranging in my next edit.

      Thanks for reading!

  • Great post Andrew. After making the mistake of spending money on some fancy site for my store the developers were over budget, and left me high and dry with an incomplete product. Then I found your course and blog and did a quick build on shopify and I’m off and running. I’m going to learn how to code so I can fix the initial magento store and transition later. The bootstrap way really helped me focus and go after the critical issues . Thanks for the insights and best wishes

    • Thanks Chi! And sorry to hear about the backtracking you had to do. Most of us (myself included) end up having to do that at some point or another.

      Best of luck with BabyZWorld!

  • Interesting and helpful content Andrew. I echo your sentiments and will be applying your suggestions for success to my new business venture. One aspect of sole proprietary I have been irritated and surprised at is how long things take to deliver and how undisciplined many third party providers are. I thought being small would allow me to be very nimble but things actually took much longer as I am a small ripple in a large pond. Still today I am launching my store which I am proud of on several levels not least of which I had to do so as a blind person. Cheers to our mutual success!

    • Congratulations on the launch, Lee! Hope things go very well for your Emporium. 😉

  • Great post! What entrep doesn’t like looking back on our fledgling start up days? There wouldn’t be as many fun stories with a big investment. I started my business with the sale of an $800 mountain bike, a broken laptop with no M key, and stolen wifi…sigh…learned a bunch of skills! And now I’m happily ready to let other professionals have at some of those skills.

    • Aweso_e Stoops! Who needs the “_” key, anyway? I’ve _anaged to get through this entire co__ent without it. Actually, reading back through it, _aybe it does co_e in handy after all…..

      Hope all is well and thanks for reading!

  • Excellent and extreeeeemly helpful post. After becoming partially disabled and ending a fruitful career working with abused kids I’m trying to re-tool and re-learn and plan for better things to come. It seems as though you have hit most nails on the proverbial head- while indirectly implying happiness that comes from being a “really useful engine” (Thomas Train ref- if you have young kids) as opposed to just becoming filthy rich. There is a lot to say for being content and maintaining integrity along the way to finding success and the joy of providing true value to your customers with what you offer . Thanks and blessings to you.

  • I agree with you to an extent. I bootstrapped my first company. We expanded only as the company could afford to expand. I appreciated profitability. After 18 years, I sold it. However, as I am about to start my next company, there is absolutely no way I am going to bootstrap the 2nd time around. This time, I’m taking angel, series A-?, growing as fast as possible, and then selling. Now that I know what I’m doing, I’m not taking 18 years to reach success. If it fails, I’d rather fail fast on somebody else’s dime and then move on to business #3. That being said, I agree wholeheartedly that company #1 should be bootstrapped.

    • I guess it really depends on what your goals are. If your immediate end goal is to scale and sell ASAP, funding is probably a better way to accomplish that. But I think there’s more risk, too. With this model, there’s a much higher chance you’ll sell and not see anything (or see much less) if you don’t get as much as you’d hoped for and your investors get paid off first.

      Definitely more of a swinging for the fences approach. 😉

      Good luck, I hope it goes well for you. And congratulations on the sale of your long-time business!

  • I will try this out(bootstrapping) with building my tennis consultant business, if there is any thing else you can advise i do, please let me know.

    Arigato, from kobe, japan!

  • Hi Andrew,

    Thanks for the write-up, really eye opening. From the start of my new venture, my eye has been on funds from external investors (angels and the likes). But now I know better. I am for bootstrapping all the way, and hope the future brings good tidings.


  • I’ve been bootstrapping my business from day one since my launch, it’s no easy feat working full time and starting a business, so can’t quit the day-job just yet until my business proves itself to me 🙂

    • Definitely not easy, that’s for sure. Best of luck and hope things are going well at your shave shop!

  • Andrew, Thanks for a great post. All five of your points are absolutely the truth. I believe there are two major aspects that need to be constantly growing within the owner. This is competence and confidence! Your 5 outlines the types of competencies a start-up needs and I would like to add you need to continue to evaluate these along with the way you are thinking! It tell everyone to always have some tools in their mental tool box so that when you, as a start-up business owner are in that place where you are ready to doubt yourself, or are scared, or you have just found out you don’t know something, like how to sell, you have a way to help you through so you come out on the other side stronger and more determined.


    • Good point, Lisa. As like in so many things in life (sports, dating, etc), so much of it is our mental attitude and approach.

      Thanks for reading!

  • Andrew,
    Another great post. Yeah, I was out fundraising for a awhile thinking a few bucks could significantly accelerate my business. I’d pitch anyone who would listen, then one day I was having coffee with an Angel and friend, (thankfully he was more friend than Angel) and after pitching him he said…

    “So you have proof of concept, paying customers, and returning paying customers, and you’re turning the corner on profitability, as an Angel I’d say, I’m very interested you’ve taken so much of the risk away and now all you need is some cash, tell me more”

    Then he paused for what seemed a minute, lowered his voice and looked away from my powerpoint and towards me.

    “As your friend I say you’re nuts for taking a single dime, don’t get on this funding merry-go-round, you can never get off, you’ll always be chasing your next funding event and your priorities will go crazy. Don’t sell your soul, keep why you wanted to be an entrepreneur alive, to be your own boss, call your own shots, and keep true to YOUR vision”

    I realized in that moment I was talking to a true Angel, and decided to take his advice and forego outside funding.

    Is it tough, oh my God yes, would it make a huge difference if some airdropped a bundle of cash, of course.
    But its the struggle that makes us who we are, whether we succeed or not monetarily we get up each day and stare at that spreadsheet, check our online balances, rub our temples and sigh deeply. Its how you get into this club, and when you’re paying ALL the dues, you’re a member for life.

  • Awesome article. Im putting together a business plan draft for my eCommerce business and I was wondering what tasks were best to delegate. Ive started and other types of business but never an eCommerce site selling other people products.
    I guess the hardest part will be finding a distributor. What was the hardest part for you- in the beginning?

    • Thanks, RJ. The hardest part for me in the beginning? Probably staying motivated to continue working and pressing forward despite the slow progress. It takes a while to build / scale anything, and it’s really important to have some external motivation to keep you going.

      Best of luck!

  • Hi Andrew,

    Well written and I’m totally with you here. I’d add one more thing to your definition of bootstrapping.

    Although you’ve implied it throughout your article, I thought it might be useful to say it explicitly. Bootstrapping is not only using your own existing resources to start and build your company, but also your customers’. In other words, entrepreneurs should try and offer products that customers will pay for in the early days and help finance your company. You mentioned pre-orders, which are great. Cash advances (especially if you’re selling B2B) by customers help too in the early days.

    Again, very well written and much needed advice for new entrepreneurs. Thank you.

  • Another great read I must say Andrew!

    One that I’m all to familiar with. I had waisted a lot of hard earned money thinking that throwing money at a problem can solve them. Since then, I have spent much of my time and effort on finding cost effective methods to boostrap my startup. With tools like google apps and asana (which I have discovered thanks to you) you can actually do so much with so little. It’s crazy and I really wish that I can have the opportunity to short it with everyone someday.

    I currently run a retail and trading company and can’t wait to get into the ecommerce wagon! All thanks to guys like you for inspiring us.

  • Thanks for your insight, Andrew.

    This is a tough one that every company will need to decide. I can see it both ways. I come from a very conservative background that definitely points toward bootstrapping, and prior to starting my current company with my co-founders, I could have never imagined raising VC funds. So your step 5 resonates quite well. When we sat down and really thought about what we wanted and how quickly we wanted to get there, going the VC route made the most sense for us. The money was great, yes, but more so than the money was the guidance our VCs and their contacts have provided. We had our own personal funds and our friends and families wanted to kick in as well, so we could have gone the bootstrap route for quite a bit longer. The fact was that they (friends and family) couldn’t help us with anything but money, and we needed help for the intangibles that we didn’t have experience with. Our VC connections and community have helped us with everything from recruiting, to product and marketing ideas, all the way to what we should pay for rent in our local area. The advice and support have been invaluable. I don’t know exactly how it will turn out, but it’s been years and I don’t believe I would change what we’ve done.

    Hopefully that helps bring some additional perspective.

    • Great point, Jake. I’d definitely agree that potentially one of the best reasons to take money IF you decide to do so is for the network / mentorship / connections you can receive as a result. And for you guys, with scaling quickly being one of your primary goals it obviously was a good fit.

      Great having you as a new member in the forums and hope all is well at Stitch Labs!

  • Excellent post Andrew. I have been a long time follower of the guys at 37Signals, makers of Basecamp, for their stance on bootstrapping and how businesses should focus on getting off the ground by making something worth selling instead of hoping for the next truckload of money to pour in from VCs etc.

    All-too-often companies don’t even know how they are going to make a profit, let alone cover their overheads without some form of funding. The guys at Basecamp post regularly about their users who have built their companies the good old fashioned way which is very inspiring.

    And with all that said, there are of course cases when companies need VC money to get going and that’s fine but I think the main thrust is to remind people that you can get things off the ground without the money, if you really have to.

    • Thanks Seamus! Love the guys and mentality over at 37Signals as well. I’ll have to pay closer attention to their profiles on bootstrapped companies, haven’t seen many but they sound interesting.

  • Andrew – I agree completely. When we started, we were completely bootstrapped – there are a TON of tools around the internet that can help you accomplish tasks for very affordable prices – weather it is logos, marketing tools, etc – there is a service out there than be of assistance to get you off the ground. Great points made in this article, because I really feel people don’t understand how little cash you need to get a business off the ground. And then, once you make that initial investment and sales start coming in, all the sudden you have cash to invest!


    • Yeah, we live in a pretty amazing age in terms of business opportunities given how accessible bootstrapping and the internet make things. Thanks for sharing your thoughts!

  • Thanks for this awesome article. I always look forward to the new ones. Just wanted to know if you could cite any resources on writing critical documents.


  • Boot strapping is a lot of fun. Often it is best to start parttime while keeping your day job. I started with Beachbody coaching, to get my feet wet. Also, affiliate marketing has a very low barrier to entry. While doing both you can start ot earn some revenu to decided to go into (a) drop shipping (b) ecommerce with existing product from manufacturers (c) ecommerce with your own creation subcontracted in china.

  • Bootstrapping is done in two places: the entry script and the application also the bootstrapping process is responsible for allocating machines (virtual or physical) and installing the software required to provision the relevant Cloudifying.

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