When other kids were playing after school, I was working at daddy’s workshop. I run the semi-automated welding robot. I cleaned up the seams with a little angle grinder - I was too little to operate the large ones. With all the sparks flying, it was exciting. I enjoyed feeling useful.
When I grew up, I started working in the office. I did the bookkeeping, accounting, invoices and payroll. I filled the tax sheets. And as I got my truck driving licence, I also did deliveries, took parts to galvanization and shopped for raw materials.
After growing up in an entrepreneur family I thought I’d never:
- Become an entrepreneur
- Get into debt
It took me years to understand that those are two separate things. Being an entrepreneur does not equal a sucky life with an excessive workload and a huge debt.
But it might. That’s what happened to my parents.
The Formula For Miserable Life:
- Start a business
- Try to grow
- Take huge investment loans (personally back up the loans)
- Fail and kill all your chances of growing your business
- Get your loans consolidated and receive a 20-year-long payment plan
- Suffer the next 20 years
It's super-hard to bounce back after a failure
My parents’ company is still small. During the last 20 years they have tried very hard to change the situation. But it’s awfully hard when you are on a debt payment plan.
Thanks to their attempts to bounce back, I got an early introduction to VC investments and government R&D grants.
One of the most miserable times in entrepreneur’s life?
Calling in a meeting to tell your VC investor that the money is gone and you want to buy back his shares of the company.
Waiting for the meeting, you fear that he might decide that it’s better to go bankrupt and liquidate the company assets. He does have enough shares to have a say. He has been taking part in the company meetings so long that you have befriended him. And now you are feeling miserable - he lost the money because you didn’t make it. Buying back the shares at least gives him something back. And darn it, with all that reserve of business losses your company doesn’t need to show taxable profit for years.
Government R&D grants?
They are great. If you fail, you don’t need to pay them back and you are free from obligations. However, they only cover a part of the investment (2013 in Finland, 35% of R&D investment costs). That leaves you with 65% of the risk.
Invaluable lessons that made me a happy bootstrapper
My parents paid a horribly big price for their mistakes. They took a huge risk and they lost, crippling both their business and their life for the next 20 years. But where there are failures, there are lessons for succeeding.
- Running a business is a skill set you have to acquire
- Until you have the skills, you will fail
- You cannot gain these skills by observing others
- Being smart & innovative is not enough
- Creating never-before-seen unique products is not enough
I’m grateful for what I’ve learned, but my childhood experiences left me business-traumatised. For years, I was suffocating in my day-job. There were so many things that I missed from entrepreneur lifestyle. But at the same time I knew that I didn’t have the full skill set needed. I’m not a great fan of predictable failure, so I kept my job.
Enter bootstrapping. Thanks to the wonderful writings by the bootstrapper community, I realised that the traditional way is not the only way to start a business. Bootstrapping offered me a safe environment to learn the business skills that I was missing. And yes, after growing up in an entrepreneur family, I was still missing skills.
Why I Love Bootstrapping?
First of all, I love the ideology behind bootstrapping. Only play with the money you can afford to lose. That is, the money you own in the first place.
Since 2010, I have failed two online businesses. Tiny businesses, one product business and one niche site. But thanks to bootstrapping, I’m debt-free and happy as a clam. In fact, my finances allowed me to quit my day-job last May. I’ve been bootstrapping full-time since.
At best, bootstrapping online businesses leverages from itself. I’m feeding the tiny profits from my previous semi-failed business to my current business.
I also like the lifestyle viewpoint. You don’t start a business to sell it, you start it to keep it.
Bootstrapping forces you to build a profitable business model from day one. You’ll deal with real paying customers from the start.
You have total control over your business, and total freedom. You can make your business to support you, instead of losing your best years to supporting your business. Whether you want it just to comfortably support you or to grow it into a large web product empire is up to you.
Knowing how to make yourself money when you need it is intoxicating.