Monday, June 18, 2007

Why bootstrap your business? 1- The big picture, 2- some good reasons, and 3- a few negatives

There is just too much to say about the topic and I have been warned about being too verbose with lengthily postings so this is a 3 posting series. Following is the first posting:

The big picture of bootstrapping

Bootstraping, in my opinion, is not about conserving cash or paying out of your credit cards (although those may become ways to achieve it). Bootstrapping is about taking the right action at the right time. It is about making quick and timely decisions. And it is about being focused on cash flow and incremental progress.

There are a few key elements / drivers that make bootstrapping generally lead to better results:

1- When in Bootstrapping mode, the margin of error is much smaller and more importantly the entrepreneur knows it. This causes decisions to be more focused on generating results and on making money, and that is a very good thing.

2- The risk is personal and decisions are reduced to absolute “value” delivery. Being the one who would hold the bag if things don’t work and being conscious about the responsibility to our family makes the risks to be taken very personal. Naturally the game becomes much more dangerous but the danger brings with it a wonderful force of reason that makes us focus on doing the things activities and products that delivers value to the customer – the only way to make money is if we sell & collect and the only way to do that is if the customers see a compelling value in what we do – personal risk forces us to focus on the essentials, and that is a very good thing.

3- Time is a commodity in bootstrapping mode - this makes agility the norm. Being pressed by time makes us move faster, make quicker decisions and deal with our errors faster – being conscious of time, makes the entrepreneur place more focus on the process, the strategy and people – the three elements of execution - time limitation makes us more creative in finding solutions to issues and more agile in dealing with correcting our errors – and that is huge thing!

Coming up some next posting: good reasons to bootstrap.


Bootstrap business said...

Most sites would say that bootstrapping is conserving cash while being in business. That is one way of putting it - however this post makes me think again. This post have good points in relation to bootstrapping.

So, maybe, bootstrapping is being in business while conserving cash, and making timely and correct decisions in order to maintain the business.