Managing Money Bootstrap Your Wallet — and Your Life

by Julie Anne Russell March 18, 2019

In the startup world, bootstrapping is a term for financing a company the old-fashioned way — on your own and from scratch.

A scrappy entrepreneur starts with very little money, sinks in her own savings, takes on little to no debt or any major investment and pours in sweat equity (and some tears) to build a business. Money is important, but startups also rely on friends, borrowed office space and other cost-saving resources to help move the business forward. Even in the venture capital age, startups are choosing to bootstrap their endeavors in order to more securely control their company’s growth and direction.

So what can those of us who aren’t (yet) entrepreneurs learn about budgeting from bootstrapping startup founders? Plenty. Here are five lessons about living within your means, adopting a DIY attitude, and learning how to turn limitations into opportunities based on bootstrapping principles that you can apply to your own life.

Lesson 1: Re-examine what you truly need
 

When Lynn Le started the women’s boxing gear and apparel company Society Nine, she knew she needed to make every dollar count. After all, Le had financed the company with her savings, a credit card and a $15,000 grant from the city of Portland, OR, where the business is based. Le says that she had given herself a window of time — two years — to see a “sign of life” for the business. The “sign” came in the form of a grant she received from the city, which she took as a cue to quit her full-time job and focus on her startup.

Forgoing that income meant she had to find ways to save money. Le chose to live with friends, instead of having her own place, to cut down on overhead and sold most of her personal things to help fund Society Nine. The experience, she says, served as a total reset for both business and personal spending.

Having virtually no possessions, she says, and living frugally taught her that there is a large difference between what we want and what we truly need. “It has made my spending so much more deliberate,” Le says. “It really forces you not just to be appreciative of what you do have, but to ask yourself, do you need this to be successful? To survive? To thrive?” she says.

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There is a large difference between what we want and what we truly need.
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The takeaway:


Wherever you are in your life, whether starting a business in your 20s or looking towards retirement in your 60s, there is a good chance that you could live with less. After all, study after study shows that possessions (yes, you've heard it before) don't lead to enduring happiness. One study from 2014 even suggested that people derive more happiness while waiting to spend on experiences than they do awaiting the purchase of things.

For Le, even small financial decisions — such as buying a single cup coffee pour over for the office instead of a fancy espresso machine — freed up money to be invested where it most counts for her business. Look at your own expenses: Are your must-haves actually nice-to-haves? Use a bullet journal or a spending app to track your purchases for a couple months and help you determine which expenditures can be nixed.

Lesson 2: Run lean and keep a long view
 

Starting a business with her own limited funds also meant Le was — and is — focused on running a lean operation, and keeping big-ticket expenses out of the budget when they’re not essential. “I could budget for expensive social media ads, but does that mean I will?” asks Le. A marketing opportunity for Society Nine might be as simple and hands-on as taking samples of her company’s boxing gloves right to the customer. “You can be as lean as popping up a table outside a gym, putting out product and shaking some hands,” says Le.

Rob Farrow co-founded Aisle Planner, a business management and planning platform for wedding professionals, with his wife, Christina, who previously ran a successful wedding planning company. The couple bootstrapped Aisle Planner, based in Encinitas, CA, with the proceeds from selling Christina’s business, as well as their home — truly going all-in. “Lean is scary,” he says. “It’s a tough place to be, to have that really frugal and lean mentality.” What helped the Farrows was learning patience and that establishing the company would take longer than they ever expected — but that's OK. Running a business is a long game, says Farrow. “You don’t win in the first quarter."
 

The takeaway:


Set medium- and long-term financial goals and keep your focus on them. What do you want your future to look like? Your goals can be as simple as a big vacation next year or as far away as a comfortable retirement. Just the act of creating goals will make the financial choices you're making now — staying in your current home for a few more years, driving that older model truck — feel less like sacrifices, and more like an investment in your future. Living lean is about winning in the fourth quarter.

Lesson 3: Do it yourself
 

A critical element to running a lean business is a do-it-yourself approach. Harley Courts began Nooklyn — a Brooklyn-based real-estate website that connects renters to apartments, roommates, and neighborhoods — from a desk in a shared basement office. “Mornings started at six and didn’t stop until 10 or 11 p.m.,” says Courts. “I was accounting, I was sweeping the floors, I was handling any and every problem.” The company recently expanded to more than 30 employees, which now allows the four early partners to focus on their specialties. But the jack-of-all-trades ethos persists; Courts points out he still runs one of Nooklyn’s social media accounts.

Similarly, Farrow himself builds the booths Aisle Planner needs to promote the company at wedding industry trade shows. “For a trade show in Las Vegas, I drove a truck out there after building the booth in our garage. We took the conference table and furnishings from the office with us,” Farrow says. But the savings were immense. “We put a $30,000 booth on the floor for under $4,000,” he says.
 

The takeaway:


If entrepreneurs working 14-hour days can be their own cleaning service, carpenter, cook and personal trainer, so can you, right? A good way to determine which tasks you can do yourself to improve your bottom line is to track your expenses for a few months and discover where — and how — to save smarter.

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A critical element to running a lean business is a do-it-yourself approach.
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Lesson 4: Spend where it counts
 

Some spending, whether to grow the business or the team, is inevitable and essential. But it’s making smart spending decisions that counts, Farrow says. “Every dollar we’ve spent was a very thoroughly vetted decision,” he explains. “We spent time with the customer, investing in the proper thing for them, as opposed to just speculating.”

And yes, even so-called indulgences can be worth the spend, says Farrow, who pays for a weekly company lunch and counts the team-building time as an essential investment in the company’s health. “Bootstrapping doesn’t mean being cheap, it means being tactical and smart,” Farrow says.

For Le, essential spending includes expensive international shipping back-and-forth to her vendors overseas as they work on boxing glove prototypes. “I won’t skimp on product,” Le explains. “I won’t skimp on talent. And I won’t skimp on visual content.” If she has only five seconds to impress a potential customer online, Le explains, it will be through the website’s photography and videos. “That's our story. That’s the brand right there.”
 

The takeaway:


Some spending is worth it — once again, if you're taking a long view. If adding another bathroom to your house allows you to avoid moving to a bigger home or if traveling to a conference will allow you to network and make contacts for your small business, those might be wise expenditures. A careful cost-benefit analysis will help you determine how to spend (not splurge) smartly.

Lesson 5: Turn limitation into opportunity
 

When Courts was developing the Nooklyn brand, major marketing efforts were simply not in the budget. “Because we are spending our money and because we’re so limited on our marketing,” Courts says, “we’ve been forced to be really scrappy,” focusing on inventive, cost-effective promotion methods.

For example, instead of a million-dollar New York City subway campaign to advertise Nooklyn, the company chose to develop its own community-driven storytelling, with articles on its website focused on neighborhoods and businesses in Nooklyn’s targeted sections of Brooklyn — a smart SEO strategy that leads people who search for restaurants, bars and other establishments to discover the Nooklyn site.
 

The takeaway:


We all know what the mother of invention is, right? So impose some financial limitations to get your creative spirit going, such as trying a month-long no spend challenge where you don't buy anything beyond necessities. With those limitations in place, you might just find creative solutions to saving money that you really enjoy — having potlucks instead of dining out, going hiking instead of taking the family to the ballpark — and carry forward.

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Impose some financial limitations to get your creative spirit going.
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Take the lessons with you
 

Even as they find bigger and broader success, entrepreneurs say that the fundamentals of bootstrapping will still be relevant — just as for non-entrepreneurs, the lessons apply to running a life or lifestyle. As Le says, she fully intends to continue applying bootstrapping principles as Society Nine grows. Running a company while staying lean is a discipline, Le says. “At a certain point, when we have millions in revenue, it will shift, absolutely. But the fundamental principles remain.”

 

Julie Anne Russell finds inspiration in the stories of entrepreneurs and small business owners. She lives and writes in Brooklyn, NY.

 

 

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