***Bootstrap Your Way to Startup Success

Bootstrapping is the process of conserving financial resources to the extreme during a business’s startup phase. It means pulling yourself up by your bootstraps by doing most of the work yourself.

Because you want to go into any new business enterprise with your eyes wide open, let’s take a look at some of the pluses and minuses of bootstrapping:

Upside: You can get started, even when you lack the money to hire others to handle the tough work.

Downside: You run the risk of making the wrong decisions and wasting time on tasks that could actually have been done more cheaply by specialists.

Upside: You don’t need to take on extra debt or cripple cash flow during your critical startup phase.

Downside: Designing your own marketing literature and applying other “homegrown” solutions can limit your growth just when you need it the most.

Upside: Once you get through the startup period, you own more of your company - and it might be worth more because you preserved more of your financial recourses. That can pay off if you later decide to sell the enterprise.

Downside: Competitors with deeper pockets can spend money on advertising, salespeople, product development and other assets to gain a critical advantage in the marketplace.

So should you bootstrap, or not? I wish I could pull a rabbit out of my hat here on the Trump Blog and offer you a reliable, one-size-fits-all answer to that question. Every start-up needs to think long and hard about how to allocate its resources, including the abilities and time of its owners. The right kind of knowledge and guidance can make all the difference between enterprises that flourish and enterprises that fail.

Michael E. Gordon, PhD, author of Trump University Entrepreneurship 101, has founded five companies. He teaches entrepreneurship at universities around the world. He is an Adjunct Professor at Babson College, the Harvard University Extension School and at the International School of Management in Paris.