Charting Your Own Course: Key Mile Markers for Considering Funding or Bootstrapping
The classic startup story begins with founders, an idea, and venture capitalists just crazy enough to take a chance on an idea. But is that the only way to build a business? In this post, I’ll outline some things to ask yourself as you’re thinking about how you might execute on your business.
Start by asking yourself these questions:
Can I live without income for a while?
If you’re young with very few obligations or any age but willing to risk it all for your idea, the answer may be yes. For the rest of us who have financial obligations and mid-career lives we really want to maintain, it’s more complicated. If you do need income but you’re interested in building something, you can
- Save up a nest egg to fund yourself while you try to build
- Take advantage of severance or early retirement opportunities your company might offer
- Have a spouse or family member fund your build time (i.e. your food and shelter)
- Live off that trust fund or giant investment portfolio you have (yea, I don’t have that either)
Give yourself a few options and make a rough plan of what the steps might be for each of them. This at least helps you understand what it would take to step away from the W-2 life.
Why would I want to build a business?
Are you looking for meaning or serving a mission you believe in? Is it day to day control of your time? Do you want to be untethered from a physical location? Do you think there’s more upside in business building than in climbing the corporate ladder? Do you just want to call yourself CEO? Do you think you might live a more flexible life? Do you want to work with your close friends or family members daily?
No judgment on the answers themselves. This is an exercise in what the drivers are for you in wanting to build something yourself. Identifying these will help you determine some guiding principles as you think about additional important decisions in steps to follow, such as bringing in a cofounder or looking to raise money from investors.
What are my strengths?
This is where you get to be really honest with yourself. Spend a few walks or bike rides visualizing the steps in how you might build a business. Think about the steps and the skills. Write them down, and ponder how they fit with your own existing skill set.
I like to make a pro / con list as a way to identify gaps or places to grow. You can worry about how to “solve” these gaps later with additional human talent (cofounder, team) or skill building yourself. Here’s a partial pro / con list for myself as of earlier this year.
As you can see from the list, this is just a self assessment of where you see your own strengths and weaknesses. I did identify a few things that I wanted to work on given the list, which have really helped as I started to think more tangibly about building. I decided to work on:
- Not a developer → get fluent with AI tools fast (how? more posts to come!)
- I don’t exist on social media → started this blog, posting on LinkedIn regularly (good practice existing on the internet!)
- No idea how to build a website → learn! I did a huge amount of Webflow University and am forever grateful to the “star” (instructor), McGuire Brannon for helping me become capable with Youtube videos
Ultimately, deciding whether to seek funding or bootstrap your business is very personal and dependent on your own situation. By asking yourself hard questions about your financial needs, motivations, and skill gaps, you can chart a better path forward. This isn’t about choosing the “right” option for every startup but choosing the one that works for you. Take time to assess your risk tolerance, your reasons for building a business, and where you have strengths (or need to grow).
Building a business is a journey—whether you bring in investors or go it alone, it’s about way finding. Whichever path you take, the most important thing is that it aligns with your vision and values.
So, what’s your next step? Sketch out your options (remember those first 3 steps) and start sketching a plan that matches your needs. With a more clear view of the guard rails, you’ll be better prepared for the bigger decisions ahead. More posts about those coming up!