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Many aspiring entrepreneurs believe that the key to growing a successful business lies in the ability to secure funding from investors. For some businesses this may be true, but many successful businesses have been built from the ground up with no outside investment or support, also known as bootstrapping. It takes a lot of dedication, a strong work ethic, sweat fairness, and immense drive to make a business a success.
Today most entrepreneurs are booting their businesses. A recent report found that of the 202 million working-age adults in the United States, 27 percent either run a business they own and manage or start one. Of these, 33.1 million are in the entrepreneurial phase (founding or running a company for less than three and a half years). Now consider that only 0.5 percent of these 33.1 million entrepreneurs are using venture capital for seed capital.
Growing a business with a self-sustaining approach requires a strong vision for the business supported by a focus on several key areas. This includes developing a sustainable business model, prioritizing customer acquisition and retention, integrating transparency into the company's DNA, and strategically expanding the company's presence and offering.
Related: The 7 Elements of a Strong Business Model
1. Acquire and retain customers
Rather than looking for funding to drive growth, Bootstrap companies dedicate their time and attention to customer acquisition and retention. Without outside investment, it is critical for bootstrap companies to quickly build a customer base in order to generate positive cash flow.
Attracting new customers and increasing the loyalty of existing customers can be done by listening to what they need, listening to their feedback on the company's product or service, and using that input to develop offers that are of greatest value Offer.
A prime example of this is GitHub, a web-based hosting service for software development projects. The company, which functions as a social network, portfolio and co-working space, started as a weekend project that was fully funded by its three founders. When the project began, programmers requested additional functionality to project their data, and the founders knew it was time to turn the project into a full-time job. The team started releasing new products tailored to customer needs and the business shot to death. It currently serves 50 million developers worldwide.
Related: Are You Sitting On A Gold Mine For Customer Loyalty?
2. Development of a sustainable business model
Finding a problem and then developing a solution is the foundation for the successful growth of a bootstrap business. The development of a business model to solve core problems represents a gap in the market and offers customers real added value. This allows companies to quickly start selling services or products to establish and maintain cash flow.
Building a bootstrap business allows flexibility that a company supported by outside investors may not have, namely growing slowly and quietly to develop paying customers who offset the cost of doing business rather than facing the expectation of Beginning to demonstrate high growth to build investor confidence.
Different markets have different challenges, of course, but there is a widespread desire among bootstrap companies to satisfy a market need and resolve its weaknesses.
3. Practice transparency
Customers are the only metric that matters for a bootstrap company. In order to acquire and retain customers, a company must make transparency part of its DNA. In a digital world where consumers have easy access to company information and reviews, customers expect and require transparency from companies. Business customers want openness and honesty throughout their shopping journey. A 2019 Marketo and Adobe report on creating epic customer experiences found that 78 percent of business buyer respondents cited brand transparency as the top buying driver.
Corporate transparency changes business growth. Companies that practice transparency build strong, positive relationships that increase long-term customer loyalty, which in turn generates ROI in the form of profits and long-term sustainability.
Related topics: How transparency became a top priority for businesses and why you should care
4. Growth through acquisition
Bootstrap companies can also prepare to grow through effective and strategic acquisitions. One of these growth strategies is horizontal acquisition, in which a competing company is bought in order to increase market share and / or scalability and accelerate company growth. When a company acquires a competing company, it can leverage existing elements such as key executives, proprietary technologies, and customer databases.
Build for the long term
The willingness and patience to grow on a smaller scale allows you to initially build a corporate culture without external pressure while retaining 100% ownership of your company and your future vision. With the bootstrapping approach, founders decide to run and grow the company.
While growing a bootstrap company involves many moving parts, an emphasis can be placed on prioritizing customer acquisition and retention, developing a sustainable business model, integrating transparency into the company's DNA, and strategically expanding the company's presence and offerings Promote business growth and long-term sustainability.