Jack Falvey's Investor Education Briefs: Bootstrapping takes a long time for growthBy JACK FALVEY
July 15. 2018 9:26PM
Pulling yourself up by your own bootstraps is the business expression that indicates that you have little or no outside help or investors. You rely on the revenue generated by sales to fund your product or service.
Sales must also fund the finding of additional customers. It is an arduous, but successful, business model which many have ridden to riches. Those who have will tell you it is one long ride.
Bootstrap businesses often can boast of 20 percent annual growth. That’s a great rate, but on an almost invisible base number, the total increase is almost equally invisible.
The biggest bargain in bootstrapping is buying time. If you can beat break-even long enough, good things can happen. If you don’t have a debt clock running and have not over-expanded, you can afford a learning curve that will give you the opportunity to figure out what you are doing and begin to do it better than most.
When putting together your investment plans, the idea of going out on your own usually crosses your mind. The thought of saving up a year’s salary and going for it has appeal. Few will do either. Those who do go out on their own don’t do it that way. They look for a customer. They look for someone who will buy something. Then they try to sell something to that someone. If they pull that off and get paid more than they paid out, they try it again, all the while working full time on their day job.
This can be done as many times as you would like until you get the business plan straight. Customers, sales, revenue and more customers are all it takes. This is why so many businesses begin in garages nights and on weekends.
It is terribly complex and terribly time consuming. If you run out of customers, money and time, you are out of business. If you have all kinds of customers, cash coming in, and are out of time, it’s time to go into business full time in daylight hours.
Sleep deprivation is a leading indicator of bootstrap success.
Jack Falvey is a frequent contributor to the Union Leader, Barron’s and The Wall Street Journal. He can be contacted at Jack@Falvey.org.