We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is Bootstrapping?

Nicole Madison
By
Updated: May 17, 2024
Views: 6,277
Share

Bootstrapping is a term used to describe the act of starting a business without the help of outside investors. In some cases, however, the term may be used to describe a business that does use outside investments, but strives to keep them to a minimum. A bootstrapper may also avoid loans from banks and lending companies in order to keep business debt under control. Often, bootstrappers use their own savings and credit cards in order to get their businesses up and running. Sometimes they seek start-up loans from family members and friends, or even fund their new businesses with paychecks from their current jobs.

Bootstrapping represents a risk to the owners of the business. Since they often put their own money up to finance their businesses, they stand to lose their investments if the business doesn't succeed. However, there is a major benefit to bootstrapping as well. Without outside investors, business owners are free to develop their businesses as they see fit, without the input or interference of others. Furthermore, they don't have to share their profits with others or deal with repaying loans and struggling to pay sometimes-high interest rates.

While some people may view bootstrapping as a recipe for disaster, or at least a difficult road to travel, many successful businesses have been founded with this approach. People who have been successful at bootstrapping often list time and effort as their most important investments in their companies. To be successful at starting and running a company with little capital and no outside investors, an entrepreneur may have to work harder, at least initially, at developing his ideas, finding customers, and meeting their needs, so they'll continue to purchase his products and services.

In some cases, the lack of start-up capital may actually help the bootstrapper move towards success. Since a bootstrapping entrepreneur may need to generate cash quickly in order to keep the business afloat, he may be more aggressive in seeking customers, rather than spending time on other details that may be important but can be tackled at a later time. He may also seek out the most efficient and inexpensive ways of handling business-related tasks, which may help him to stay out of debt. Likewise, a bootstrapping entrepreneur may seek creative ways to get the word out about his business since expensive advertising may be beyond his means. Though this creativity is born of necessity, it may catch the eye of his target market and secure more customers than traditional, and perhaps less imaginative, methods would.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Nicole Madison
By Nicole Madison
Nicole Madison's love for learning inspires her work as a WiseGeek writer, where she focuses on topics like homeschooling, parenting, health, science, and business. Her passion for knowledge is evident in the well-researched and informative articles she authors. As a mother of four, Nicole balances work with quality family time activities such as reading, camping, and beach trips.

Editors' Picks

Discussion Comments
Nicole Madison
Nicole Madison
Nicole Madison's love for learning inspires her work as a WiseGeek writer, where she focuses on topics like...
Learn more
Share
https://www.wisegeek.net/what-is-bootstrapping.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.