To raise capital or to bootstrap? That is the question for the entrepreneurs in the position to finance their own companies. There are pros and cons for both; the obvious (pro: maintaining complete control of your company, con: high chances of running out of money) and the not-so-obvious (pro: the business model has to work from the start, con: struggling with imperative but boring aspects like accounting). And, of course, neither choice guarantees success.
Christina Stembel of FarmGirl Flowers knows what it means to bootstrap. With an eye on disrupting the market monopolized by big names like ProFlowers and FTD, the Indiana native wondered if she could launch a business with no backers. Soon enough, she was running a floral delivery company aimed at a millennial audience out of her San Francisco apartment. Stembel went from close to $50,000 in the bank down to just over $400 before she turned that sweet spot corner where profits push you into the black. Just in time, too; Stembel’s landlord told her she could no longer run the business out of the apartment, and she had to purchase space at the San Francisco Flower Market. That was a bit bite out of her budget, so the timing of the business pick-up was excellent.
Stembel says that hiring her first employee was the scariest part of the whole process: “Now it’s not just ‘maybe I can’t eat much this week.’ Somebody else now is also relying on you for their livelihood.” Her company was succeeding, though, and it wasn’t long before the brand began getting recognized and business boomed. When she began, she promised herself at least two years to make the idea work. It worked. Revenue is now in the tens of millions, and FarmGirl Flowers has more than 100 employees. Stembel took that big bootstrapping risk and it definitely paid off. Today she’s shipping hundreds of bouquets every day and has well-deserved pride in what she has built.
Deborah Sweeney of My Corporation wrote in Startup Nation about her three biggest tips for bootstrapping: Grow in small increments, don’t be too eager to bring on investors, and look at bootstrapping from a positive perspective. These are really a great foundation for building a business you can both fund and manage in a timeline most aligned with success. The sense of accomplishment achieved by maintaining a business on your own, even before you pass into the profitable phase, is hard to beat.
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