You have a great product idea, and the local startup development collaborative gave you the green light on your business model submission. You have know-what down pat. But founding requires resources you don’t have, and the likelihood of securing equity funding that meets all your needs is slim. Enter bootstrapping.
Bootstrapping involves imaginative access to resources within your founding network—that network should be in constant development from the seed of a business idea, past implementation, and into growth. However, you may have only focused on your product and operations, and your enterprise is poised to launch into startup as that awkward 12-year-old entering middle school. Your lack of social capital will force your bootstrapping capabilities to suffer.
Avoid social deficiency in bootstrapping
For founders finding themselves with limited personal resources or an inability to harness resources for startup use, knowing who can meet resource needs is a must. Need space to run your business? Utilize your social capital. Assess who in your family, friend, acquaintance, and neighbor network has an empty garage or backyard shed to provide cheap or lease-free. Need equipment? Strengthen your network. What used equipment outlet is available to you? Or, who has equipment for which you can barter use? For example, Colin Chapman, the founder of Lotus Cars, needed specialized equipment to test his innovative lightweight prototype created in 1952, but the project required costly space-consuming equipment. So, Chapman leveraged his relationship with an acquaintance at a local airfield for unsanctioned use of the airfield’s wind tunnel. Chapman developed his prototype into winning Formula I models by accessing another enterprise’s testing equipment that designers built for a different industry.
If founding an enterprise around a team, realize that each team member brings with him/her a unique set of social capital, providing for a multiplicity effect. The sum of the network is the startup team’s social capital. Realize the value in that expansive network and gather the team to brainstorm over each resource need.
Dig into know-how
Theresa Johnson of the Beaver Street Enterprise Center in Jacksonville, Florida, promotes know-how over know-what and know-who. The development center focuses on program offerings for women entrepreneurs, and Ms. Johnson contends that utilizing know-how is vital and can mean the difference between startup success and failure. Founders may have solid know-what education and a deep know-who network, but the devaluation of know-how will hinder movement from the startup phase into growth mode. The bootstrapper can acquire know-how by developing skills useful for that commodity. Skill acquisition comes through utilizing available learning and practice.
Learn new skills
Develop perspective-taking skills
Begin to view every social connection as an in-road to a resource. You could leverage social capital by treating your sum of contacts as open invitations for exploring opportunities. Don’t be dismissive before you fully explore a relationship, and don’t immediately discount individuals and other enterprises in your social capital network—look for ways to form strategic alliances with suppliers and customers. For example, like Colin Chapman, you might need product testing. Establishing a relationship with a local university laboratory might be the solution to your need. Of course, you can’t access the laboratory yourself, but a student working on a doctoral thesis might be your connection. Permit creativity to govern your perspective, and allow collaboration to be your guide.
Develop negotiation skills
Part of negotiating is assessing the other party’s advantages and limitations. The same assessment of your enterprise can lead to a successful negotiation when you pursue a win-win outcome. For example, picture an urban restaurant supplier needing agricultural growing space. The resource might lie with a customer who has an empty rooftop or adjacent vacant lot—the producer acquires a place to grow the produce. The restauranteur gains access to fresh ingredients grown on the premises. Or, a farmer might provide a larger growing space on unused land in exchange for produce by-products that can feed his animals. Utilize a barter proposition strategy when it fits in a negotiation. Let creativity rule the day.
Develop the skill of resilience
Realize that joining an existing industry presents a level of resource assistance to entrepreneurs that innovators cannot know. Still, this advantage does not mean entrepreneurs will travel an easy road. Your first, second, or seventh attempt to harness know-who might not be successful. Don’t give up! Resilience is a skill because it requires a change of mindset and a learned response to “No.” Bounce from each rejection to the next possibility. The next door you knock on may open. Internalize an attitude of “if I never try, I never will.”
Social deficiency might be your obstacle to successfully bootstrapping your startup. First, resolve that deficit by building up your social network. Then, learn how to leverage your network to acquire startup resources. Last, develop skills that arrange the pieces of resource acquisition that form the picture of the value of your social capital. You’ve already solved at least one problem by founding your business enterprise. Elongate that experience into solving your resource needs through your network.
- Smith, David. (2009). Financial Bootstrapping and Social Capital: How Technology-based Start-ups Fund Innovation. International Journal of Entrepreneurship and Innovation Management; Milton Keyes, 10(2). PP. 1-10.
- Ye, Qian. (2017, November 2). Bootstrapping and New-born Startups Performance: The Role of Founding Team Human Capital. Global Journal of Entrepreneurship (GJE), 1(2). PP. 53-71.
Mark Elkins has had a varied career in banking, lending, and higher education. For the past eleven years, Mark has served as the Financial Aid Director at Trinity Baptist College in Jacksonville, Florida. Mark is currently pursuing an MBA degree, with an additional finance component, at Regent University in Virginia Beach, Virginia.