Tips and Tricks for Bootstrapping Your ISV Business

For the business whose long term strategy is bootstrapping, doing it effectively is literally the difference between success or failure. They’re operating without a net. But even for businesses whose plan is to raise investment capital, bootstrapping increases the value of the company and creates operational rigor that will serve them well over time.

Eric Wu (@ewu) is an entrepreneur, a die-hard product guy, and the co-founder of Bracket Labs. He’s also a fan of whiskey, punk rock, street food and Japanese denim.  Eric can be reached in the Salesforce Partner Community at @[Eric Wu].

Whether it’s a long-term strategy or just a matter of necessity, the ability to effectively bootstrap your startup business will produce big benefits. Bootstrapping, or the creation of a business without outside capital, requires a focus on revenue and expense management that is extreme when compared to the typical early stage venture-backed business.  The bootstrapped business is “pulling itself up by its bootstraps” in that its operations are funded entirely by founder contributions and revenue generated by those operations.

For the business whose long term strategy is bootstrapping, doing it effectively is literally the difference between success or failure. They’re operating without a net. But even for businesses whose plan is to raise investment capital, bootstrapping increases the value of the company and creates operational rigor that will serve them well over time. After all, what investor wouldn’t be excited by a portfolio company that knows how to get revenue quickly and shave expenses to the bone?

As the founder of a bootstrapped business, this is a topic that I love to discuss. There are as many approaches to bootstrapping as there are bootstrapped businesses, and there’s always some great new trick to learn. Here are my top three tips for getting it right:

1) Talk to customers before you build your product

Probably your biggest expense will be in building your app. Even if you’re the only one writing code, it’s a significant investment of time to get it built. So with that investment on the line, make sure that you’re building the right thing. Get out of the office, meet with prospective customers, and validate that what you’re planning on building is something they’ll actually pay for. If you do this right, you’ll not only ensure product-market fit, you’ll have a list of customers who are ready to buy.

2) Be wary of fixed expenses

A fixed expense is any cost that doesn’t fluctuate with the operations of your business. In other words, you pay it no matter how your business is performing. You should try to avoid as many fixed expenses as you can for as long as you can. A prime candidate for avoidance is rent on office space. Rather than signing a lease, consider co-working spaces or a service like PivotDesk which will allow you to rent just the space you need on a monthly basis instead of signing a lease.

3) Find advisors

Bootstrapped startups don’t typically have the same accountability mechanisms as venture-backed businesses. But just because you don’t have a board of directors doesn’t mean you should overlook this key element of running your business. There’s real value in having smart outsiders evaluate your business, challenge your assumptions, and track your progress. Find and cultivate a network of advisors and mentors that you can trust to offer their honest opinions and insight.

Want more? There was an entire session at Dreamforce ‘14 devoted to this topic. My co-founder Blakely Graham and I joined the founders of Arrowpointe, Conga, and S.P. Keasey to discuss how each company thought about bootstrapping and share our favorite tips. You can listen (unfortunately no video) to the full session here.

Published
April 16, 2014
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Tips and Tricks for Bootstrapping Your ISV Business