Bootstrap a business

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Business Benefits

Improve your chances of success.


Verify that you already have the basic building blocks to bootstrap a business, such as initial capital expenditure (CapEx), personal expertise, and a product idea with low overhead.

There are external factors, like product-market fit, that will impact your business’ future. But successful bootstrapping requires a few initial fundamentals from you before you even get started:

  • CapEx: You must have the economic resources to reach the market and begin to generate revenue. This doesn’t have to be a lot — Spanx started with $5,000, while GoPro’s founder used personal savings and a $35,000 loan from a parent — but without CapEx, the bootstrap model simply won’t work for you.
  • A product idea with low overhead: If your business model requires developing a very expensive product, you’ll run out of CapEx very fast. This is why many successfully bootstrapped businesses, such as Mailchimp and Craigslist, sell services.
  • Expertise to build and market your product: Many things can be learned along the way, but all bootstrapped entrepreneurs need to have the basic expertise to build or develop a product and sell it.

Validate your business idea with smoke tests: define the proof you’ll need, design a simple experiment, drive traffic to your experiment, then analyze your test results to see if your idea is something the market actually wants.

CB Insights reports that 42 percent of new businesses fail because they were tackling problems that the founders found interesting, but that the market didn’t need. For example, you might decide that proof equals X people in your area showing interest in your product.

Set up an experiment that won’t need engineers or product developers. Most bootstrapped businesses use a landing page to market the idea and gauge interest. For example, a food delivery company could collect zip codes for a geographic area. When people add their zip code, the page might give them a message that the service isn’t available in their area yet, but they can leave their email address to get a notification when it is.

Drive traffic using your existing personal network, an email list, or paid campaigns like AdWords or Facebook ads. Track and analyze the metrics from your traffic, like ad clicks, bounce rates, and user conversions or leads generated.

Structure your business model around the Lean Startup approach. Use data to figure out a problem that the market needs to be solved, build a minimum viable product (MVP), measure and learn from customers, then use your learnings to improve your product.

There are many business models to choose from. When you’re bootstrapping, you need a business model that requires:

  • Minimal financing
  • Quick changes and updates
  • Rapid testing and learning
  • Optimized cash flow

The Lean Startup approach, popularized by Eric Reis in the early 2000s, has been the business model of choice for many bootstrapped businesses. Successful case studies include Dropbox and Aardvark (acquired by Google). It uses a build-measure-learn feedback loop.

Choose a cofounder or shareholders that have useful and complementary skills. Hire a bookkeeper, but hold off on hiring employees for as long as possible.

Jacks-of-all-trades are usually handy at this point. For example, if you’re bootstrapping an online business, everyone will need to have some expertise in online marketing.

Cash flow is your most important metric when you’re bootstrapping, but your efforts are better focused elsewhere. Your bookkeeper can provide a regular cash flow statement, and handle any and all other financials.

Leverage contractors and distributed workforces for as long as you can. This lets you test what works and what doesn’t work and know exactly what you need before you start hiring.

Build a basic website to market your minimum viable product. Use a free or low-cost provider, templates, and plugins to minimize expenses.

Online marketing has very little overhead costs, lets you track data that validates and improves your MVP, and allows you to quickly change and test marketing messages and features.

Wordpress.org, Squarespace, and Shopify offer free or cheap options.

Consider using contractors on third-party platforms such as Upwork, Topcoder, Verblio, and Freelancer.com for content, coding or development that you don’t have the time or expertise to tackle. This avoids the additional costs of hiring in-house staff.

Launch a marketing machine that lets you track, test, tweak, and repeat.

The most important asset in your product or service’s path to viability is a consistent and active marketing funnel that drives traffic to your website. Consider using:

  • Content marketing to collect leads.
  • Email marketing.
  • Paid ad campaigns.
  • Services like ClickFunnels or Unbounce that let you quickly build, launch, test and adjust marketing funnels and automations.

The moment you notice a specific strategy or technique working, replicate that. This is what bootstrappers refer to as a unicorn growth hack, where your top growth comes from only a small percentage of your marketing campaigns. If you notice a specific type of content, messaging or promotion generating high amounts of traffic, engagement and conversion, repeat.

Judge each expense on how it will impact your business: Is it necessary for daily operations? Will it help the business grow?

When bootstrapping, your financial runway is very short. You need to be profitable in weeks or months, and not the years that more traditional business models might have.

  • Is this specific investment in expertise, supplies, equipment or services necessary for daily operations? If yes, proceed. If no, ask additional questions.
  • Will this investment help the business grow? If yes, proceed. If no, don’t spend this money.

Review financial statements weekly and monthly. Make quick adjustments as necessary to cut down on expenses.

Financial growth should be your only priority when bootstrapping. Businesses that grow by 5-7% every week often don’t require external funding or lending.

Scale cautiously, with a focus on re-investing in user research and growth. Strike a balance between minor liquidity to minimize your personal financial risks, and reinvesting in your team and your business.

Once validation is complete and you have customer traction and positive cash flows, you may be tempted to reduce your personal risk and withdraw some of the personal CapEx you invested. Similarly, you may be tempted to rapidly grow your team.

Bootstrapping is a long-term investment. For example, the founders of Mailchimp continued to invest their personal funds into it from 2001 until 2009. And the founder of Craiglist operated the site with his own funds from 1995 to 2004, when he finally accepted a multi-million dollar investment from eBay.