Invoice Bazaar Blog

What are the advantages and disadvantages of bootstrapping your business?

By Invoice Bazaar | September 5, 2021

As an entrepreneur, if you manage to start a business venture and build it with the little personal savings that you have or without any money at all and without depending on any venture capital funds or angel investment or outside cash or support, it is known as bootstrapping. In other words, it alludes to a situation where you get your startup going using your own money or the money you earn from clients. There are many advantages and disadvantages of bootstrapping your business, and some of them are discussed below.

The most significant advantage is that you have absolute ownership and retain total control of your business enterprise. Furthermore, you can make all the decisions yourself as you are the ultimate boss and not answerable to anyone. You can focus all your time, energy, and attention on growing your business as you don’t have to waste time or resources pitching for funds or investments. You can also experiment with your ideas, products, services, and brand, and keep tweaking them and improving or upgrading them as there is no pressure or interference of any kind from any quarter. You also have all the freedom to decide the business model, the product design, and the direction of your company without having to take the approval of anyone.

The main disadvantage of bootstrapping is that the entire responsibility and all the risks associated with running and growing your business rests on your shoulders. So, if your business venture fails, you face a substantial financial and personal risk, and you can lose everything and become bankrupt. If you have extremely limited funds and resources to fall back on, that can inhibit your firm’s pace of growth, the scope for expansion, the potential for diversification, and foray into new markets. Your business venture may also take a relatively long time to achieve market visibility, acquire respect from vendors and customers, and register profits. Last but not least, the bootstrapping route may sometimes prove to be a very tough and stressful exercise for the concerned entrepreneur.