When bootstrapping is the only option

Filed in archive Bootstrapping Trends on December 9, 2007

Some entrepreneurs may bootstrap by choice, but as Doug Hackler, president and founder of Boise, Idaho-based American Semiconductor Inc., explains in an article for the Idaho Statesman for others it is the only way.

Why might it be impossible to find investment? As Hackly observes:
• Business experience, even in your field, may not be enough. When a partner and I wanted to start a community newspaper we brought years of journalistic experience to the table. But would you invest in two guys that know next to nothing about advertising/circulation/printing?
• Lack of assets cools interest. Hackley writes that while he had a plant and land lined up funding seemed promising but with an idea alone the investors weren't biting. This is because there seems to be no risk on the entrepreneur's side. I've been told by bank loan officers that without some personal risk or assets thrown in they fear entrepreneurs could simply walk away and you can kind of see their point.
• Some investors just don't get it. Your idea for an on line sandwich preparation service might be brilliant but if investors can't see it, even with a well-crafted business plan, than you won't be seeing their investment dollars either.
• Credibility begins after your first startup. This is, of course, tough on beginners, but obviously a good reason to forget about shopping for outside money until you've done at least part of it yourself.
• If you won't invest, neither might anyone else. I wish someone had told me about this years ago, but the truth of it seems intuitive today. Like the tip jar with a couple of dollars already deposited, placing money in your own venture can encourage others to do the same. Building a business starting with your own resources is, of course, what bootstrapping is all about.