These are individuals who rely on their own resources, knowledge, and gumption to accomplish their goals rather than seeking assistance or having someone else do the heavy lifting for them. In the real world, nine out of every ten startup businesses are launched by bootstrappers.
However, this term may cause some confusion when it comes to writing a business plan. The bootstrapping entrepreneur might feel that because he or she is not seeking outside capital to fund a startup, then a business plan is not needed.
But that couldn't be further from the truth. A business plan is not simply a document that you design for venture capitalists or potential investors (though it can be used for that purpose). Instead, it's a roadmap of sorts for how an entrepreneur wants to grow his or her business, maintain cashflow, and keep costs in check.
In other words, every company (bootstrapper-created or not) needs to have a well-thought out business plan to increase the chances of its survival and ultimate success. Here are a few tips for creating a good one.
Focus in on your overall strategy. You don't have to write a white paper about how you wish to operate your business. But you should at least have several bullet points which define your basic approach to your company. This should definitely include exactly which customers you are targeting and why your company is different from every other one in the marketplace. Avoid empty phrases like "exceed customers expectations" or "pay attention to quality" – save those for your marketing materials.
Crunch the numbers. Just because you don't have to submit regular financial reports to investors doesn't mean that sales forecasts aren't an integral part of a business plan. In fact, it's more important for bootstrapping entrepreneurs because no one else is controlling costs and spending. So make some reality-based predictions on how much revenue you will take in at which points on your company's timeline. Flesh out what your expenses will be, when they will be incurred, and how long it will take for your enterprise to break even or become profitable.
Establish milestones. You don't have to identify dozens of them; just list a few of the more important milestones and write down when you expect them to occur. Some examples would be the dates on which you actually open for business, hire employees, or when you should be seeing a profit. As your startup progresses, refer back to these milestones to see if you are meeting the expectations you spelled out in your business plan.
Make a schedule to review your plan. Once you have compiled all the nuts and bolts of your business plan, circle dates on your calendar on which you will reassess your progress and how you are meeting your goals. This is to help you stay the course that you mapped out in your business plan. Periodic reviews also give you a chance to correct or adjust your plan before you make a fatal mistake.
Actually carry out the reviews. Nobody expects you to predict the future, so parts of your business plan will turn out to be incorrect. But the review process permits you to make allowances and tweak your numbers and plans so you can stay on track. Think of it as a living business plan which requires a large number of small corrections.
Entrepreneurs – bootstrapping or otherwise – should always do a lot of planning before starting up a business (hence the name: business plan). So whether it's just your money or the capital of a thousand investors, take the time to build a thorough business plan. You'll be glad you did in the future.