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Bootstrapping

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    Entrihub chats to Tanaka (General) Mutakwa, Founder of #NoDaysOff. Tanaka defines bootstrapping and talks about the advantages and disadvantages of bootstrapping.

    See transcript from Tanaka (General) Mutakwa the chat below.

    Question 1: What is bootstrapping?

    Tanaka: Bootstrapping is when you go by yourself, try start your own business. Figure out how you're gonna sauce your own funds or use your own cash versus getting funded for by a VCO, an angel investor of some sort and you've got this big backing that that's gonna help your business.

    Question 2: What are the advantages of bootstrapping?

    Tanaka: Basically you have one of the key things you have full control of your business. You're not, if you've taken an equity partner or something if you don't bootstrap you've got an extra set of people that have a say in what your business does. So with bootstrapping, because it's your it's under your own control you run the business under your own terms. Things tend to happen faster in terms of decision making because you don't really have to consult anyone else except the people you're running the business with that's one of the things. The other thing is with bootstrapping you basically grow at your own pace. You're not under a ridiculous 10x growth path that has been set by investors. Your business sort of has a longer term view of things and you can you can decide whether you're doing well or not under your own terms, whereas the funded business usually if it's like VC fund that they want 10x growth. I've seen businesses that are doing well and are profitable but gets shut down, because their growth is 4X versus 10X and it's a valuable business making a contribution to society but ends up getting shut down because it's not growing as fast as possible. One other thing is with a bootstrap business because you find it in yourself, your full control. You don't have to have some exit plan that you're going for. Your business can go forever you know because you have full control of it.

    Question 3: What are the disadvantages of bootstrapping?

    Tanaka: Depending on the nature of your business some businesses just require a large capital injection. As much as you may try to bootstrap it you probably need some hectic funding from elsewhere so they lend themselves to getting funded. Some businesses are also long-term businesses in terms of that the only start becoming profitable five to ten years later. Unless you've got some hectic amount of savings in the background you will need someone's funding to like sort of see you through those seed stages where you grow a community before you start actually making business profitable. Examples are like Facebook, Twitter all these sort of social networks but like basically the business is that of Google itself that have gone and scaled before becoming profitable and then go decide to become profitable later.