Bootstrapping key in tough economic times

Filed in archive Bootstrapper Resources on October 14, 2008

Photo courtesy of iStockphoto, Tatiana Gladskikh

Despite the market's dramatic rebound today, some in the business community continue to be pessimistic about the immediate future.

But, as I mentioned in a recent post at the Bootstrapper's Gtoup on Yahoo!, Mark "Rizzin" Hopkins is not one of them and in a recent post at Mashable predicted, not surprisingly to readers of this blog, that bootstrappers will be among those who cope most successfully.

Hopkins insists that bootstrapped ventures will continue to thrive in an uncertain economy because they:
• Do more with less. Since the very definition of bootstrapping is getting along without outside investment this implies a startup and growth without loans and credit though some bootstrappers certainly have used it.
• Require a sharper business mind. This is due to the economic discipline that bootstrapping requires meaning bootstrap entrepreneurship is likely to attract only the best because these are the only entrepreneurs that can survive and thrive with its rigors.
• May face more pitfalls on the road to success. And so are theoretically better able to navigate tough times since they must always deal with not having enough.
• Must be more nimble and responsive to market changes. Largely because of the previous point giving them a better edge when it comes to survival.
• Offer far greater rewards to the entrepreneur. With less dilution of earnings among shareholders, this allows founders to keep much of what they have created, a key point often also raised by bootstrapping guru Greg Gianforte. The exact opposite of a modern company strapped for credit, a bootstrapper is flush with cash flow and hopefully can keep much of it for owners' draws and re-investment