Another book on bootstrapping

Filed in archive Bootstrapper Tips on October 15, 2008

Photo courtesy of iStockphoto, Courtney Weittenhiller

Travel industry entrepreneur Chicke Fitzgerald is one of numerous contributors to a new "Bootstrap Business" book due out this spring.

In a post on her Distribution Solutionz blog, Chicke suggests bootstrapping may be key to innovation today because:
• Economic hard times tend to squelch innovation at big firms. Most are working far too hard at cutting costs to make their core products profitable.
• Investors tend to be a fairly risk adverse bunch anyway. And if a company is going to take care of its stock holders just how much risky speculation on unproven ventures and products should it be doing anyway, without (like Google) having an institutional way to manage that risk?
• Most investors wouldn't know an industry or world changing product if it was right in front of them. How many people (really) saw Microsoft, Google, Yahoo! coming until they were real functioning ideas
• Getting an innovative product to market isn't that costly anyway. Chicke argues much can be done by bootstrapping and that many companies need less money than a VC firm generally likes to invest anyway.
• Funding is tough without a revenue stream. This is because investors want to see a working business model not a business plan that shows a possible business model.

Ultimately, I would personally take it a step further and say that even when economic good times return it may not be a good idea for large established companies to engage in speculation on unproven ventures as perhaps they at one time did.

Bootstrappers, with their low overhead and a penchant for developing cash flow rather than chasing deep pocket investors, may be perfectly suited to this role.