These 3 fears can hurt any entrepreneur, but you may be in for extra risk if you think of yourself as a bootstrapper instead of entrepreneur.
Just be honest: Do you really label yourself based on how you fund your business? Why would that be?
I used to do that. I even wrote under a name Happy Bootstrapper. I should have called myself a Fearful Entrepreneur instead. I was hurting both myself and my business.
I carried the fears of leadership, risk and losing control. They translated into dangerous beliefs like:
Action is the best way to kill fear - but first step is to recognise the fear and see how it’s blocking your way forward.
Fear of Leadership - lead or become slave to your business
When I imagined my future business several years ago, I had this totally unrealistic picture in my mind.
I’d have no boss and no employees. I would run my own little business and keep what I earned. It’d be a software-as-a-service so machines would do most of the work and I’d only have to work a day or two in a week.
I wanted all the good parts of the entrepreneurship, without the ‘bad’ parts like risk, payroll and managing people. I also wanted to be my own boss… but I didn’t want to be a boss really, I just wanted keep doing what I did best.
That’s a dream. This is the reality:
When your business grows, so does the amount of work. There will always be more support. There will be need for architectural changes and improvements. The impact of possible server downtime will grow each day. Your app needs to renew and have new features. Before you’ll notice, you’ll be a slave to your business.
What’s the point of having a successful business if that’s all you have in your life?
To process this fear, accept that you need to learn leadership and just do it. Think of your business as a system and yourself as an employee in your business system. Don’t try to do everything yourself. Be prepared to hire help and build a team. You can get started by reading E-Myth Revisited by Michael Gerber.
Fear of Risk - you can manage risk, but you can’t avoid it
The biggest lie you can tell yourself is this: “I control everything, so I have less risk”. In reality, you are always making bargains between time, money and risk. There is no absolute control.
The most successful entrepreneurs embrace financial risk, but manage it well. They look for asymmetric risk-reward ratios.
When Richard Branson started Virgin Airlines in 1984, he planned for failure. He bought the first five planes with a special deal: Should the business fail, he could return the planes and get his money back. He prevented the situation of ending up with five planes and a debt to go with them. Yet, the possible upside of succeeding in the business was enormous.
Here’s a thought to take with you:
The risk you think you have may differ from the risk you actually have. Bootstrapping may limit the risk you feel firsthand, but it often increases the total risk.
Just imagine these two failure scenarios:
A. You create a working prototype for your app in a month. You launch it and get funding. You’ll use the funding to put together a good team and get a pay-check for everyone. You continue to grow your business and invest part of your wages in stock market or bonds. After 2 years you’re no longer able to get funding and your business isn’t profitable. Your business goes bankrupt, but you aren’t personally responsible of paying back every cent of your funding.
B. You create a working prototype for your app in a month. You launch it and decide to bootstrap. As you can’t spend all your time in marketing and you probably aren’t very good at it, your business grows slowly. You can’t pay yourself so you use your retirement savings to live. It does make money, but not enough to hire a support person. In the second year you still can’t get a proper pay check and you’re working way too much. The business is not growing. You’re thinking of quitting - or maybe someone would buy this business?
Now, think about the investments made. Who’s better off after the failure? Who had better opportunity for an upside?
The funded startup runs out of money. The bootstrapped startup runs out of time. And time is the more valuable of the two assets.
The best bootstrappers understand that they’re essentially playing the same game as the funded startups and need to ramp up their business and team as soon as possible. How they fund the business isn’t a philosophy - they just pick the funding option that works best for them.
Fear of losing control stops you from dreaming big
If I’d be a person to have regrets, I’d regret of not dreaming big enough when I started. It was just a sheer luck that prevented my business from running into a dead end.
When you are compelled to have full control in your business, you will plan based on what resources you have. You trust your own talent too much and may give yourself a position in your business that’s irreplaceable. Security becomes more important than great opportunities. Security becomes more important than your freedom.
Successful entrepreneurs don’t do that. Instead, they dream of what could be - no matter what their current resources are. Then they go through the hassle of actually getting the resources.
You are taking a big risks with your business, no matter how you fund it. It’s not worth doing if your goal isn’t big enough.
I’ve experienced all this firsthand. It’s a vicious cycle that can be hard to break out from. I almost gave up in last November when I desperately needed help but my business wasn’t earning enough to hire anyone. Worse, my business was working as I had planned, but it just wasn’t enough. As I survived that experience it lead me to one of the biggest personal growth spurts that I’ve ever had.
Facing these fears is the only way to ensure your business has a real future.
Have you been hold back by these fears? How did you get around them?