What is financial bootstrapping and what does it mean for ownership and profits?

Bootstrapping originates from the expression “pulling yourself up by your bootstraps”. In practice, it means using your own money, money from co-founders, or money that the business generates from customers to finance growth.

Bootstrapping keeps full control with owners and founders, who also retain all profits. One of the most appealing by-products of bootstrapping is that it forces entrepreneurs to operate efficiently or organise the business model so business finance is covered by operating revenues. With successful financial bootstrapping, you can demonstrate cashflow and profitability, placing yourself in a greater position to secure the first choice of external finance on more favourable terms.

Bootstrapping 101

The Bootstrapper's Guide from Seth Godin is now a book - but here's a summary

from J.D.Meier

WHAT?  A free online book and toolkit reviewing all aspects of bootstrapping and making your business more effective and valuable as a result. Seth challenges entrepreneurs to see external finance as only a last resort for effective growth.

WHEN?  You are setting up your business or are considering raising any type of finance for growth

WHY?  Seth Godin is one of small business’s most respected advisers


>>  A video interview with Seth Godin on bootstrapping from American Express

>>  A definition and explanation of bootstrapping from Investopia

Ways to bootstrap

Check out a short overview of 8 ways to bootstrap

from Startup Grind

WHAT?  A short article that summarises key for and against arguments

WHEN?  You are considering bootstrapping as a way of funding your startup

WHY?  Seeing a clearcut pro and con list will help you determine if the process is right for you


>>  Consider pros and cons of bootstrapping from Transmit Startups

Bootstrapping benchmarks

Contextualise your understanding with this startup funding report

from The Company Warehouse

WHAT?  A PDF with thorough data, helpful infographics and explanations on how startups and small businesses are financing their businesses

WHEN?  You are considering bootstrapping but don’t know how to implement it

WHY?  Discovering best practices will help you roll out the methodology in the optimal way

Bootstrapping case studies

Read the stories of 11 boostrapping entrepreneurs

from Foundr

WHAT?  A selection of short comments from entrepreneurs across different sectors on their experience with bootstrapping and financing

WHEN?  You are considering bootstrapping but aren’t convinced it’s right for your sector

WHY?  Getting honest, real world insight from a variety of sources helps you match the idea of bootstrapping to actual models and events


>>  Look at 12 more case studies comparing fundraising and bootstrapping, from Mashable

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