Some of the common myths surrounding a SaaS startup are that angel investors are the only way to raise money; and that people have ample funds to start a business. They are called myths because they are not valid. Normally, entrepreneurs do not have cash just lying around to invest and start a business. Most companies start with very little money, which makes up for great success stories. Hence, it is extremely viable to bootstrap your business.
What Does Bootstrapping a Business Mean?
Bootstrapping a business means starting a company with capital that is owned by you or borrowed from friends or family. Self-funded businesses rely only on personal assets rather than bank loans or crowdfunding. For example, a person starting a business with $10,000 of their own savings is called bootstrapping their business. It is considered a good idea because you own 100% of the shares of the company rather than being a co-founder.
Why you should Bootstrap your Business?
After conducting an extensive research, we have compiled 7 reasons why bootstrapping your business is a great idea and they have been mentioned below.
- Focus on making money rather than spending it
Since it is your own money on the line, making money naturally becomes a priority and so do the customers. You have to please your market with the products and features you offer rather than alluring them with lucrative schemes that take up your money. This will benefit your entire organization in the long run. - Customer Delight
Customers are always the priority for a SaaS business because the entire sales depend on the customers’ opinions. You delight them, your business skyrockets, you get investors and everything is set in place. - Innovation
Innovation is the base of a SaaS business because it means you are bringing something new to the market. Something that has not been seen before but the customers will immediately realize their need for this product because of its utility. - Self Confidence
With time as your product excels and the cash starts flowing in, it boosts the self-confidence to keep going and innovating. It inspires you to perfect your product according to the desires of the customers and their needs. As the company makes money, it feels realistic to work towards your goal. - Freedom
By bootstrapping your business, you do not have any investors or people from the bank judging your actions and pushing you all the time. There certainly is stress because of the amount of money involved but it is not the stress of debt. This gives you the freedom to focus on your company rather than worrying all the time about the revenue. Bootstrapping gives you the time and space to focus on the growth of the company. - Attractive to Investors Later
Since the initial investment is all yours, your sole focus is to grow and outsource your product. This makes your product valuable and builds a proper customer base in a given period of time. Hence, by the time it is time to call up investors, you are already profitable and your company is more attractive. Seeking investments in the later stage generally proves to be a safe choice. - Undiluted Equity
There is no co-ownership or partners. You are the sole owner of the business with a 100% equity. In the later stages, if you feel like giving up some shares of the company, it will go for a really high price which will again bring you huge profit.
