Bootstrapping is one way entrepreneurs can build out the basic structure of their companies, but it comes with its own risks — namely, running out of money.
“I think it’s really important for the entrepreneur to realize that you have to live on a budget, no matter how small your budget is,” said Jacquin Davidson, CEO and president of Davidson Associates.
Davidson is a startup veteran who manages Milwaukee’s WERCBench Labs and also holds an associate professor position at Marquette University. She spoke at the Wisconsin Entrepreneurs Conference in Madison yesterday as part of a panel on startup funding. The conference is put on by the Wisconsin Technology Council.
“You have to make sure you have planned out how long that money is going to last, and you have to be able to make some income to go against that,” she said.
Self-funding is a very common strategy for startups, with investing website Investopedia claiming as much as 80 percent of new startups are funded through funders’ personal dollars.
Some panelists saw bootstrapping as a solid default strategy for startups, while others said it depends greatly on the type of business. All panelists agreed it can be useful.
Lorrie Heinemann, president and CEO of the Madison Development Corporation, said entrepreneurs should think about having a backup source of funds “whether it’s a second job for yourself, or maybe you have a significant other.” Read the full story here.