Bootstrapping isn’t for Wussies: How to Obtain Profitability & Scalability

by / ⠀Funding Startup Advice / January 13, 2011


When an entrepreneur starts their business, chances are, especially if they are bootstrapping, there is a continual focus on getting started and grinding through the first year or two. This is when most small businesses fold – more than 50% in year one and 95% within five years.

The first goal with any business, as it should be, is to bootstrap the company into profitability. Most of the profit in those initial years must be reinvested right back into operations to keep the company running, nurturing its ever-growing market share and ensuring the company grows from infancy into a substantial and viable product/service.

A savvy entrepreneur puts every single fiber of themselves into their start-up. But even in the face of such dedication, chances are the company will reach a plateau – the point at which there are only two choices – stay small, or lever the business up and grow. It may seem impossible when first embarking on the bootstrapping adventure, but that point actually comes a lot sooner than one would think. Below is a quick guide on how to transcend from a bootstrapped operation to profitability and the ultimate goal – scalability, without ripping your hair out in the process.

Set Realistic Short, Medium and Long-Term Goals

Too many entrepreneurs shy away from bootstrapping. They obsess over the big, expensive long-term goal stuck in their head. As a byproduct, many entrepreneurs unfortunately miss the short and medium-term opportunities right in front of their faces.

Want to own a boutique, a restaurant, or some other type of asset intensive upstart business? Great. But also realize, due to the immediate and high fixed asset costs necessary, it is unlikely (especially bootstrapping), those businesses can be scaled appropriately right away. So in the near term, a savvy entrepreneur would be well served to start off by designing and manufacturing clothing to sell at a local flea market. This begins their entrance into the market and serves as a significantly cheaper gateway toward establishing building brand credibility and relevance in the marketplace.

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Start Small

The key to bootstrapping, as most successful entrepreneurs will advise, is to find a way to start working on that big dream right now. This means scaling down and finding a near term idea which can be launched with little or no capital and provides the flexibility needed for saving up a war chest of funds.

While it is useful to start working on that big dream early on and honing out a niche to bootstrap toward, it is not essential. Simply start doing something that turns a profit and save a portion of those profits to utilize toward bankrolling your big dream. There is something out there everyone can do to make money – just make the effort to look hard enough. Find that something, and get started! What are you waiting for?

Start With Services

It is a known fact among entrepreneur communities around the world that there is an exponential decrease in barrier to entry (resulting from low startup costs) for service-oriented businesses. The reason is simple: service businesses require less overhead (storage space, equipment, etc). For example, if your entrepreneurial dream is to one day open a pet store, get started by walking dogs – there’s no outlay, you will be selling your time and establishing/building brand credibility in the marketplace.

Leverage Entrepreneur Resources

When most first-time entrepreneurs think about starting a business the only resource they pay attention to is obtaining funding – a very myopic focus. Rest assured there are plenty of other resources to leverage. For instance, throughout the country there are agencies that help entrepreneurs develop business plans, lend office space and lease equipment at very low rates.

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Each cost saving option provides a bootstrapping entrepreneur that means to hold on to as much of their most precious resource as possible – cash. Right now, especially in this economy, cash is king.

Mingle With Peers

Bootstrapping can be a lonely business. I know because I have spent those countless hours trying to figure out how to make everything happen on a shoestring budget. The good news is that you are not alone.

Find out when entrepreneur meet-ups and networking sessions are happening in your area. These types of events place like-minded individuals together – those just like you – folks who are crazy enough to bootstrap their business dream into reality.

Entrepreneur meet-ups not only offer a chance to mingle with like-minded folks who understand the trials, tribulations and successes you are going through, but they can also offer valuable business leads. If just one person whom you meet knows someone that may be interested in your business, then it was a worthwhile investment in terms of time and effort.

Plan for Growth

Last but not least, once on the path from small-time bootstrapping entrepreneur to rockstar scalable business owner – make sure to plan for growth. For instance, it is easy to start a successful business baking muffins in your own kitchen. But there’s going to come a time when demand will outstrip the businesses ability to supply.  At that point you are going to be forced to invest additional resources (primarily cash) into the business.

Make sure a plan is in place that budgets for this investment in infrastructure. Doing so is the only way the business will scale, because at a finite point, it is imperative for the long-term viability of the business to invest in growth through increases in production, employees and/or larger office space.

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Do not wait until the last minute, plan now and plan often while still in the early stages of bootstrapping, so that when the times comes, you are ready, willing and able to implement and execute immediately. After all, as they say ‘those who fail to plan, plan to fail.’

Original post from Gary Whitehill.

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.


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