These days with so much new terminology appearing, do the old words we all knew and loved actually mean the same now?

Bootstrap, or bootstrapping, is a verb that comes from the saying, “to pull oneself up by his bootstraps.” the noun for Bootstrap is ”a loop at the back of a boot, used to pull it on ”

Bootstrap Meaning In Computer

Of course in the computing world it means something entirely different, the noun is ”a technique of loading a program into a computer by means of a few initial instructions which enable the introduction of the rest of the program from an input device.”

Bootstrap at Startup of A Computer

The most fundamental form of bootstrapping is the startup process that takes place when you start up a computer. In fact, the term “boot” as in booting up a computer, comes from the word bootstrap. When you turn on or restart a computer, it automatically loads a sequence of commands that initializes the system, checks for hardware, and loads the operating system. This process does not require any user input and is therefore considered a bootstrap process.  In layman’s terminology… when you have to re start your PC as there seems to be a problem with it, re-start it and it should work out its system problems.

Bootstrapping in Business

Another verb meaning though is ”start up (an Internet-based business or other enterprise) with minimal financial resources.”  Now this where the new terminology appears as ”Bootstrapping” is now known as ”Starting up your own business with no money, or at least very little money”. It means starting a business without the help of venture capital firms or any significant investments. It means plowing back into the business the money earned from customers. While there are lots of old sayings about “pulling up by your bootstraps” — the general idea is that in the context of startups bootstrapping means to do something hard, on your own.

The way a bootstrapped company grows typically goes through stages:

Stage 1:  Seeded Money.

This stage starts with some personal savings, or perhaps “friends and family” funding to get going. Or it may start as a side business, where the founder continues to work a day job to keep afloat and money coming in to live every day. But somehow, the founder manages to scrape up enough resources to get the business off the ground.

Stage 2:  Customer-Funded Money.

The second stage is about getting money from customers. That customer funding is pumped back into the business. It is what keeps the business operating and, eventually, funds growth. Growth is often slow, because the business first has to meet its operating expenses to stay in business.

A Word about Credit.

Bootstrapping does not mean going out to get a big loan to start a business. Yes, along the way, some startups may take on loans or lines of credit. Others lean heavily on credit cards, a few may even get small grants. But those are typically short term fixes to fund specific growth activities, such as buying equipment or hiring more staff, or to even out cash flow dips. It’s not so much about using credit as the main source to start the business, but rather as a secondary source to keep it operating and grow it. The founder still has to pay the monthly payments or debt service, out of funds earned in the business.

Starting a business this way is a litmus test for entrepreneurs and a challenge for everyone involved in running the business.

When companies use this approach for their business culture, they are practicing bootstrapping. Bootstrapped businesses avoid investing except where absolutely necessary and work within their means, finding ingenious ways to get by with less.

Bootstrapping requires a very different mindset from the management mindset in a venture-funded or angel-funded company.

Focus of Bootstrapped Companies

Bootstrapped companies must focus on profits to keep on going. They have no outside investment dollars to spend — no ready pile of money they can tap into. Bootstrapped companies can’t afford to waste money. They must make money, if they are to survive. The profits they make are what fund the business.

Bootstrapping brings out the best in entrepreneurs and the best in those they work with too. They are enthusiastic, passionate and relentless. Bootstrappers don’t give up on their dreams and they never stop learning. They also end up learning a lot more about themselves along the way and end up accomplishing a lot more than they might have originally thought possible.

Bootstrappers wake up earlier, spend longer days at work, know how to keep their wits about them even under pressure, know how to eliminate unnecessary distractions and are often very productive. Bootstrappers are also natural savers, can go hungry until they become profitable and are naturally minimalistic in their outlook on life. They are also committed to the long-term.

It’s not hard to understand that is why teams that collaborate while bootstrapping, often stick together longer and the companies that Bootstrap become, are inspirations for other companies and entrepreneurs alike.

Now you have learned some new terminology for ”Bootstrap” Welcome to 2016.

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