From the course: Entrepreneurship Foundations

Bootstrapping

From the course: Entrepreneurship Foundations

Bootstrapping

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- Even after eight years, people are still amazed to hear that we have never taken outside funding. So spoiler alert, if you haven't seen my Shark Tank episode, while we did take a deal on the show, we ended up not doing the deal in real life. So when I talk about bootstrapping, that's what I'm talking about. We didn't use any outside money to start the business. No friends and family gave me money, no investors, and no crowdfunding platforms. However, just because we didn't take outside money doesn't mean we didn't take outside help. There is a big difference there. So here are two ways we took our bootstrapping to the next level. First, a charge card. And I know what you're thinking. Charge card, credit cards, same thing. If so, you're just like me. But these are not interchangeable. Just not the case. I found out about charge cards by accident at a conference. I was chatting up the girl next to me during a break, and it turns out she works for American Express and introduced me to charge cards. Charge cards allow you to have an unlimited credit line as long as you pay off the balance in full within 30 days. This was huge news for our business because we were an agency, and we knew that our clients were going to pay us, but we also knew that they weren't going to pay us upfront. After getting our charge card, our business grew exponentially in a matter of months because we were able to spend on inventory, sell the goods, and then pay off the charge card just as quickly. In addition to charge cards, a great strategy to grow your business while you're bootstrapping is to keep cash on hand. The more cash you have, the more inventory you can buy and investments that you can make. The easiest way to keep cash in the business is by not taking cash out of the business. That means once you start making money, don't start pulling out a hefty salary and basking in your entrepreneurial riches and hard work. Instead, take only what you need to pay your bills. For the first year of our business, my co-founder and I took out $1,000 a month. The entire second year, we took out $2,000 a month. Here we are working with A-listers like Justin Bieber and Taylor Swift, and I was only making $24,000 a year, way less than what I was making at my old corporate job. Friends and family were shocked to learn that I was still eating ramen noodles and skipping nights out with friends to save money. However, every dollar that we didn't take out for ourselves went back into growing the business. It was hard, but in those early years we wouldn't have gotten where we are today without doing that. While bootstrapping isn't for everyone, it could be a great solution for those who are okay with growing slowly or those who want to stay in full control and have full ownership of their company.

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