Why Now’s The Best Time To Bootstrap A Startup

bootstrap startup We launched our current Startup (Quad Lock) at the end of 2011 when we first heard of crowdfunding through Kickstarted. For us the end of 2011 was the perfect time to launch and the good news is, now’s still just as perfect! In my opinion now’s always the perfect time, no matter when you’re reading this now’s the time.

I also truly believe that never has there been as much opportunity for Startups to bootstrap their existence and growth through access to people, access to funds, ability to transact and the ability to go global from day one.

25 years ago it would have almost been impossible to bootstrap a small Melbourne based startup like ours into a multimillion dollar business with product selling in over 100 countries. Today this is now almost common place with many small bootstrapped startup companies leveraging the internet to build self sustaining businesses while reaching a worldwide audience.

Below I’ll cover some of the reasons I think this is now possible, and the best thing is everyone that has access to the internet has access to them all. I realise most of these aren’t new ideas but I wanted to make a comparison between the past and the present.

Access To People

Social media platform growth numbers

Past – In the past access to the masses was only available to big business with big advertising budgets through either print, TV or radio. The limited amount of media and the demand from big brands for exposure resulted in an extremely high equilibrium price for airtime or print space. These advertising campaigns had an extremely high barrier of entry and often low return on investment which was notoriously hard to measure.

Present – Today access to people has never been cheaper nor more democratised, we have platforms such as Facebook, Twitter, Instagram and YouTube just to name a few. These platforms enable startups to have amazing access to people that may be potential customers the world over. The amount of potential media available is larger and more targeted than ever before.  This means the price of exposure (in many cases FREE) is much lower and the return on investment much higher.  This cheaper pricing is now paving the way for startups with good products and reasonable margins to bootstrap their existence and even their growth.

Access To Funds

Past – If funds where needed to get a Startup business off the ground the founders would have turned to either Banks or Venture Capitalists. For most Startups Banks are never really an option so VCs it is.  If you can’t convince a VC then your Startups dead in the water, it doesn’t matter how many potential customer you might have if those with the capital don’t want to play you’ll never even make your first sale or acquire your first user.

CPresent – Of course now we have the amazing phenomena of crowdfunding and the awesome platforms which make it possible like Kickstarter, Pozible and Indiegogo. Now you only have to convince the people that really matter, your customers.  Crowdfunding can give you the initial startup capital that’s needed as well as validate the product market fit. The market will decide if your business will either sink or swim, you’ll still own 100% and have greater power to influence the direction of the business.

Ability To Transact

Past – This one depends on your startups product as in the past much of what startups now make/do wasn’t needed or possible, but lets take a physical product for example. In the past to get product to the public and initiate a transaction it was either through dealing with the retailers directly, entering into a distribution agreement or actually taking out a lease on a retail space.  All these option are extremely capital intensive and are either not possible or very difficult for a bootstrapped startup to execute. This is because both distributors and retailers need margin and trading terms of 30 to sometimes even 90 days and for a startup trying to bootstrap this model doesn’t scale.  Not to mention that the terms that a startup with a new product will be able to negotiate will suck as the distributor or retailer will be taking a risk and will need to make it worth their while. Another thing is if they don’t sell anything there’s a good chance you’ll have to take the stock back and reimburse the retailer.  Among other reasons the Retailers also own the relationship with the customer which isn’t ideal.

bootstrap ecommercePresent – Now days startups can easily transact directly with an enduser located anywhere in the world. This is possible because of just how easy, cheap and effective it is to setup a highly functional ecommerce site with software as a service providers like Shopify and BigCommerce among others. Every ecommerce store needs a payment gateway and with the rise of Stripe and PayPal it’s now possible to process almost every credit card available world wide. This gives the Startup full margin and instant assess to funds as soon as a sales made (2-7 days with Stripe) enabling the business to self sustain and grow at a rapid rate. Another benefit of being able to transact directly with the enduser is that the startup business owns the relationship. This ensures an amazing user experience, customer support and open channels of communication which can help the startup better understand their customer and tailor their offering.

Ability To Go Global

Global-Network

Past – In the past only large Businesses would be able to play on a truly global scale and service customer across the globe. Smaller businesses  would have been concerned with acquiring and supplying customer from within their own country, state or even town.

Present – Now we have huge distributed networks be them virtual or physical that are super effective and cheap. From an indie developer uploading an app to iTunes that’s instantly available worldwide on millions of devices to physical third party logistics supplier (3PL) such as Shipwire or Amazon that can dispatch a physical product to almost anywhere in the would. Startups are now able to leverage these networks from day one and play on a scale much larger than ever before possible without the expense of having to build or maintain the networks.

So thank you internet, lets all go build more businesses!

Love to hear what others think, so feel free to leave a comment below.

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