no matter what When your startup is successful, you always need to pay bills and ensure a healthy future cash flow. Abundance makes you think that funds will always flow into your bank account, because that is your reality so far, but the harsh reality is that sources of capital can dry up overnight without warning.
To deal with uncertainty and maintain emotional balance, it’s good to temper your happiness and confidence with realistic proportions. One way to do this is to boottrap.
Bootstrapping is a double-edged sword: you don’t have to rely on investors or stakeholders, so you don’t give away too much of your company in exchange for money, but the downside is that you don’t have enough money to invest in growth.
There is also a hybrid model that gets less attention and mentions.
An investment partner of mine in the life sciences genomics space just got $150,000 in angel funding. She later sold her business for a hundred million dollars. She was able to pull off this unusually successful exit because after the first angel round, sales of her specialized DNA sequencing and genomic services funded the business. With the success of her technology, she was able to quickly expand her business in the US.
If you decide that bootstrapping is the best option for your situation, you first need to know whether you will be paying yourself or needing a small amount from angels.
Don’t be tempted to jump on a plane at a moment’s notice to meet clients in fancy locations or remote locations for meetings.
These five key business strategies and principles will set you up for success:
- Choose team members wisely
- Develop your business model and go-to-market strategy to earn cash quickly
- Practice frugal thinking: always look at costs and negotiate costs
- Be prepared to take on multiple roles, including those you feel are inferior.
- Take out only the most important ones, such as legal and accounting
Choose your team wisely
Your first employees are among the most important stakeholders in your business. It’s important to choose people who are invested in your business’s mission and success. Not everyone should want to work for a bootstrapped business. Look for people who want to be part of the business rather than someone who has another job. The right employees indicate that they want to be part of a sustainable business model.
As a key financial incentive, you should offer equity over time. Each individual can be more invested in the success of your business as your team gets this boost from being with the company.
Choose employees who wear many hats and look for talents from different backgrounds to bring different perspectives. I built and ran a startup in food safety diagnostics that I sold to a multi-billion dollar S&P 500 company. We had people of all ages, genders, ethnicities, educations and geographies. This diversity was critical to our success, as we did business in 100 countries. It requires a deeper understanding of each country’s market place and cultural dynamics.