☕ Top 10 Business Attributes to Consider When Bootstrapping

Bootstrapping has its own set of unique conditions to be aware of. Follow these to improve your odds of success.

Bootstrapping (starting a business without outside capital) isn’t for the faint of heart. It has its own unique set of challenges unique from other startups. While it may seem ideal to grab a chunk of cash from an investor, bootstrapping give flexibility most entrepreneurs wish they had after they accepted that first check.
When you’re considering whether an idea can be bootstrapped, use this list to analyze the business to determine if its worth giving the old college try, or moving on to the next idea.

  1. Low Inventory Cost

    Inventory requires capital, something bootstrappers are ALWAYS short on. Stick to businesses that have low or no inventory costs. This will generally lead entrepreneurs to digital businesses, but there are expectations. Industries that have preferred payment terms or allow you to order in small quantity might be good. If you can grab a large PO banks may offer factoring terms to help pay for inventory (if its finished goods).

  2. Low Capital Cost

    Similar to inventory costs, bootstrappers don’t want to be putting their cash into capital heavy businesses. Your money needs to WORK, not sit on a floor somewhere.

  3. Need to be able to make a profit on product/service from day 1

    Noticing a trend? Cash flow is king.
    Businesses or products that require outlaying effort before any profit can be received are (you guessed it) capital intense. It you can;t make money selling your good or service, STAY AWAY.

  4. Has to be something that you can sell to consumers/end user

    Consumers generally buy one or two of something. While this isn’t great for massive numbers of sales, it makes it easy to collect cash and get a pulse on WHY people are buying your product.

  5. No distributor/middle man or at least a known cost for this

    Middle men introduce costs and eat up margin. They also create unnecessary hurdles for doing business. This can skew data and lead you astray.

  6. Limited governmental hurdles or taxes

    While the government promotes small business, its policies can sometimes hit them especially hard. I’m not necessarily referring to the policy itself, but more so the paperwork associated. While in a large corporation a company can have someone dedicated to doing this work, in a startup there may only be one person who has to complete the same amount of work in a fraction of the time.

  7. No state by state regulations

    Dealing with the federal government is tough enough. Dealing with 50 state governments? Good luck.
    Businesses that need to change their processes across state lines are difficult to manage unless there are VERY mature systems you can take advantage of to handle the heavy lifting.

  8. Can market/sell online.  Don’t need to go store by store or event by event.

    We live in a digital era. Its time to recognize this. You waste time and money travelling and don’t get nearly the amount of data out. If you can;t figure out how to sell online, it might be time to quit.

  9. Can start by yourself

    Lots of people think they need a co-founder, but bootstrappers realize that’s an extra mouth to feed. The goal is profitability, and the easiest way to get there is if you can do everything yourself.

  10. Can make $50k in profit in year 2

    You need to eat lunch, right? So this is the goal…
    A year to figure things out, and then we start making money. $50k won’t make you a millionaire (yet!) but it will let you keep growing things. Keep your eyes on the prize and get going!