Disadvantages of Bootstrapping
Like everything, bootstrapping is associated with cons as well:
1. Stagnant Growth: The Business growth can be difficult in a case when the demand exceeds the company’s ability to offer or produce services or products as the company will be able to gather limited resources by bootstrapping.
2. Higher Burden: When a business bootstraps, the entrepreneur has to take on almost all the financial risks instead of sharing them with investors or other stakeholders, who would share the risk and responsibility if they would have invested in supporting the company’s growth.
3. Less Credibility: Without connecting from established investors, it can be significantly harder to find the connections which are required to build the brand, prototypes, and more. Entrepreneur has to develop his own customer base and find collaborators on his own without funding, guidance, or introductions from someone who knows the startup landscape very well.
4. Limited Capital and Lack of Investment: Under bootstrapping, entrepreneur might not be able to gather large investment and resources for the business, this could lead to problem of lesser funds for expansion or diversification.
5. Insufficient Capital for growth: Bootstrapping is helpful for arranging funds only in early phase of the business, in initial phase the business might limit there resources but once they create a significant market share, business can’t depend upon bootstrapping as fund requirement will be much more to retain and grow the market share.
Contact Us