There is no question about the enormous rise in the popularity of private equity funding in India. Today most the equity investors are investing high amount of funds in startups. With the present scenario, we can say that today the whole market is surrounded by the people of private equity and angle funding. So, where does “Bootstrapping” stand in the market. The lack in popularity of bootstrapping concept is due to the lack of understanding about this whole concept and bootstrapping benefits altogether.
Bootstrapping a company basically means, starting a new business on a very small scale, with your own personal funds. When you start a business on credit or borrowed funds, it needs to be paid back after some time and that too with high rate of interest.
In Bootstrapping, the owner arranges all the funds and sources on his own thus avoiding the high pay back to the government or percentage on profit shares with the venture capitalists. This might seem like a risky way to start a business but it has some very unique benefits which are stated below.
Bootstrapping Benefits for a Startup Venture:
There are entrepreneurs who feel that one needs loads of funds to kick start a new start-up. Well, it’s true but only in some cases. Most of the star-ups don’t really need that much funding and can actually run by using some funds and resources used in smart way.
Bootstrapping is all about guiding business owners on using their own money or funds from relative or friends and making them partner in the company. This whole process might look difficult in the start but actually it’s the most profitable way to run a business too, if you use the funds wisely in your venture.
Here are some excellent bootstrapping benefits that you should know before starting your own venture:
- You get a chance to be your own boss. The best thing about bootstrapping is you don’t require to explain anyone about the usage of funds or taking advice from venture capitalist before acting on your ideas.
- Bootstrapping can make any person super-efficient which is very necessary to run a profitable business. When you decide for bootstrapping, you think wisely before making any business expenses and try to use own resources to run business smoothly.
- When you decide to bootstrap, you get the opportunity to learn to run business with minimum funds or resources at your disposal. You might make mistakes in the start but they will be small and can be recovered very easily while operating the business.
- Many entrepreneurs in the startup business can’t handle the pressure. With bootstrapping, you get the knowledge to lower down the expenses and handle the pressure the better way.
- If you have opted to bootstrap your company, then you can enjoy the profits without sharing it with the bank or venture capitalist which takes most of the profit because of high interest rates.
- Bootstrapping is actually a great way to start out your business, make reliable partners, loyal customers and grow company’s profit in smart way.
- You can easily develop new skills like managing the resources in better way, looking for free resources and working with minimum funds. All these things will help you run business in more efficient way.
- When you bootstrap your company, you get the whole control over the company’s equity which means your company stays safe and undiluted.
Consider the above mentioned bootstrapping benefits before approaching any investor or venture capitalist to fund your startup. Startup businesses are like your children and you must think several times before throwing the reigns of your startup to loan sharks or venture capitalist firms.
Before you choose to bootstrap your company, make sure you analyze the startup venture and the funds or resources required for the business. After learning about the bootstrapping benefits, you must have realized that bootstrapping gives the startup owners the freedom to use the funds to operate their business.
However, it also demands your time, patience and dedication towards company. So, use your funds wisely to run your start-up business and make profits for expansions.