I am a big fan of the bootstrapping business approach. I am also a big-talker, since I was forced into bootstrapping by circumstances – investors weren’t knocking down my door, and banks weren’t handing me cash. I was a bootstrapper before I even realized that this approach had a name.
At the beginning of my journey to business-dom, I took the MATI Small Business Course. This is a comprehensive course that covers the basics of running a small business, such as banking, financing, marketing, sales, and more. The teacher at that time placed a lot of emphasis on what were considered accepted business practices: writing a comprehensive business plan, getting loans or investments, buying supplies and stock, renting office space, etc. The basic idea was that a business can only succeed with a business plan that is a work of art, and lots of funding to do all those things businesses are supposed to do.
This approach didn’t work for me. I was hesitant to become indebted to banks or investors (not that investors invest in my kind of business), and I couldn’t write up a business plan since I had not pinpointed the exact service I would be providing. Profit and Loss projections – how could I project something based on nothing? It seemed like a type of fortune-telling to me. “Market Research,” our teacher announced. “Lack of funding, resources, and time for Market Research,” I thought to myself.
Bootstrapping and the Jewish People
I ended up taking the bootstrapping track out of necessity. This is a perfectly legitimate approach, and has been used for hundreds of years by businesses. Many of us know the stories of the Jewish immigrants to North America before and after WWII. These people came with nothing – not a penny to their names. Those who came after the Holocaust came with even less – whole families had been lost, homes and livelihoods destroyed. Yet these survivors came, scraped together some capital, and began their businesses. Many went into real estate. They started with one little structure, moved up to a few buildings, and over the years became significant players in the market.
My grandfather, Charlie Levenstein, and his family moved to Toronto before the Holocaust. Life was tough, and Jews had it even tougher due to the unabashed discrimination at that time. He got a job working for another Jewish guy who had a wholesale and retail electrical supply business. Charlie started off as a truck driver doing deliveries. He worked his way up to manager, and then succeeding in putting together enough money to buy one of his boss’ stores and trucks. Slowly his business grew, and eventually he needed bigger premises and moved from Queen Street to Martin Ross Avenue in the Downsview area. My grandfather’s business was very successful, and he became well-known as a generous philanthropist as well. He closed his business in 1969 when he retired, and his sons decided they wanted to pursue different careers.
Dot.com Boom = VC; Dot.com Bust = Bootstrapping
During the dot.com boom, we became used to start-ups with oodles of money from angel and venture capital (VC) investors. The dot.com bust led many to reconsider the wisdom of pouring truckloads of cash into new, unproven businesses, and many began to promote the bootstrapping approach – starting small, and growing with your success. Slow growth is now seen as a sign of stability and sustainability, and not of weakness.
Investing and VC does have its place. But I think it is important to consider and educate entrepreneurs as to the benefits of the other approach of slow and gradual growth. Therefore, illuminea blog has now introduced the bootstrapping category of articles, which will include articles on the methods, tools and benefits of bootstrapping. Let us know what you think!