Earn First, Spend Later: How to Bootstrap Mindset Makes You a Better Entrepreneur

I've built several businesses, following different business models and in different markets. What I've never done throughout all this is take on any kind of debt or external funding.

I've bootstrapped all my businesses. Including ones that come with considerable startup cost, such as Thrive Themes. I recommend you do the same, no matter what business you're trying to start.

Keep reading to discover why the bootstrap mindset isn't only about saving money & how you can become your very own investor.

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The Money Example

Bootstrapping your business means funding it yourself. Of course, building and running a business costs money. There's no way around that. The difference between a funded startup and a bootstrapped business is timing. It's a question of when you spend the money.

In a funded startup, you spend the money right away, before the business is up and running. Before any profit or even revenue has been generated. You get funding from investors who hope to get a future return on their investment. You spend that money on office space, employees, hardware, software, services, advertising etc.

You're basically using piles of cash to fuel the starting of a business and you hope that at some point in the future, the business will return a profit.

This is a common startup model and it's been taken to an extreme that is stupid and destructive.

For a bootstrapped business, we change up the timing: we make money first and then spend it to further grow the business.

In my case, that meant spending some early startup expenses out of pocket and keeping them at a minimum. Specifically: domain name, hosting, email marketing service.

Beyond this, you can earn the money you need to fund further developments in your business. We laid out a specific strategy for doing this in our podcast episode about the customer first approach.

So, the basic plan is: make a simple offer, get some customers, make some money. Then, spend that money on things that will help you make a better offer and reach more customers. And so on.

The Not-Money Example

The bootstrap mindset doesn't only apply to money - and this is where even frugal entrepreneurs tend to make mistakes.

You should be deliberate about how you spend your money. And equally, you should be deliberate about how you spend your time and other non-monetary resources.

A common example of this is a rebrand. This may be something you've experienced as well: you start a website and brand when you're still new to the whole entrepreneurial thing. A year or two later, you've gained experience and knowledge and you can now see that your brand isn't great. Maybe the brand name and domain name are too long and too generic. Maybe you've pivoted your business. You can clearly see that if you were to start from scratch again, you'd do things differently.

Now, a rebrand is something that can be done for very little money. You need to spend a few dollars on a new domain name. Everything else can be done for free.

So, you should do it, right? The new brand is going to be better, after all!

Wrong.

Rebranding comes at a high, non-monetary cost. There's the time investment needed to get the technical stuff sorted out, to move your site from one domain to another. There's all the time needed to choose the basic setup and design of your new site. Time needed to create a new "about" page. Time to create some content explaining the rebrand. Time spent going through old content, updating or removing outdated references. And so on.

It's something that could cost you weeks of your time, if not more.

If your business is up, running and profitable and you think it's strategically the best use of your resources to do the rebranding right now, then sure, go for it. But if you're still working on the basics of getting customers and generating revenue, a rebrand is like spending cash you don't have.

The Magic Question

How do you put the bootstrap mindset into practice? By making a habit of asking the magic question:

"Is there a faster, simpler way to do this?"

This question helps you avoid the problem of implementing a good solution instead of the best solution. To go back the the rebranding example: no doubt a rebrand can have some benefit, but we can't pursue everything that has some benefit.

We have to be more careful with our resources. We have to think not just about "is this good?" but also "is there something better I could be doing with this time/money?"

The magic question can help you focus on this.

To make strategic business decisions, don't just think about “is this good?”, also think about “is there something BETTER I could be doing with this time/money?”

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First, identify the problem you want to solve or the outcome you want to achieve. Then, look at the idea or solution you have and ask the magic question: "is there a faster, simpler way to do this?"

In our rebranding example:

  • Problem: the brand name is too long and difficult to remember.
  • Solution: rebrand the entire business & website, to give people a catchier name to remember me by.
  • Faster, simpler way to do the same thing: create a landing page and a product/service using the catchy name.

Your product doesn't have to have the same name as your brand, after all. My brand is called ActiveGrowth and I sell a product called focus & actionMy other brand is called Thrive Themes and we sell a whole range of products under that brand, each with its own name.

This is just one example, to illustrate that the problems we perceive are sometimes not real problems and the solutions can be a lot simpler than we first think.

Your Turn

Now it's your turn: think of a current business problem or challenge you have, define the problem and desired outcome and ask the magic question.

Leave a comment below with your challenge. I'd love to see what you're working on and help you in finding a more bootstrappy solution.

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About the Author Shane Melaugh

I'm the founder of ActiveGrowth and Thrive Themes and over the last years, I've created and marketed a dozen different software, information and SaaS products. Apart from running my business, I spend most of my time reading, learning, developing skills and helping other people develop theirs. On ActiveGrowth, I want to help you become a better entrepreneur and product creator. Read more about my story here.

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  • Raul says:

    Good point. It remembered the rules of Warren Buffett. “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No. 1”.

  • jodie says:

    Thanks so much. You saved me a lot if money I didn’t have

  • Samuel says:

    Thanks Shane, I’ve been trying to do this on 3 different projects at once. I know it’s not advisable but I truly do enjoy working on radically different things and this approach… and thrive themes, if I’m being honest… make that manageable.

    • I enjoy variety as well, so I can totally understand. The way I see it, the more successful you can make your business, the more you can afford the luxury of working on multiple projects. You can pay the price for it, so to speak.

  • Ritter says:

    As I often do… I agree with you here Shane. I’ve personally gone the other route and it exerts a certain type of psychological pressure on you that’s not necessarily good or productive, it’s actually quite stressful and none of us perform our best work while in that frame of mind!

    • Good point. The further you dig yourself into a hole of indebtedness, the worse this stress factor becomes.

  • Michel says:

    I am always being reminded that “Perfection is Poverty”. Get it done no matter how ugly then titivate later when you have the luxury of time and money.

  • Benson says:

    Shane. Thanks for sharing. Everything big starts small. It is good to plant a seed and patiently grow it into a tree before attempting to go into debt to grow a FOREST. It is better to make a mistake growing the first tree and correct the mistake when growing the second tree so you can grow the third tree without mistakes etc.

  • Karen says:

    I feel— once again! — like you’ve been looking over my shoulder! ;-) This was just what I needed WHEN I needed to hear it! :D

    I’ve been spending far too much time on creating several pages on my website (the one I took your productivity course to finish…but it’s *still* not done! :-o)

    After reading this post & watching your video today, I vowed to finish *this week* — no matter what! ;-)

    I’ve also seriously considered watching this video at least once every week to keep me on track!

    Always great information!

    Thanks, Shane! :-)

    • Thank you for your comment, Karen. I’m happy to see that this message isn’t only useful for you, but that you’re also willing to really take action on it. :)

      • Karen says:

        Thanks for your support, Shane! :-)

        I always *intend* to take the “right” action, but without reminders, I fall back into “bad” habits (perfectionism, shiny new object syndrome, lack of “Rapid Implementation,” over-planning…) [rolling my eyes…]

        That’s why it’s great to have your videos there reminding me what I’m supposed to be doing! :D

        I need to figure out a way to put them on “auto-play” whenever I start going down the wrong rabbit hole! ;-)

  • Irena Stopar says:

    Hi Shane, and thank you for another great advice.

    I’m guilty of the sin of too many projects and websites. It’s exhausting, and it doesn’t bring the results. What I’ve been thinking in the past year or so is exactly what you say. How to get rid of the half of my websites and projects and repurpose the content to those with most visitors? I’m not there yet, but your video encouraged me to make another step to make it happen this year.

  • Andrea says:

    Spot on, Shane. Speaking as an anthropologist here, you can also leverage the time and talent of your close family members and friends if your society leans towards the sharing economy, like in the Mediterranean countries. This is what I did with my first e-book. I found all the skills I needed within my extended family :-)

  • I like the very specific examples you use to convey the idea. Will that hit a nerve with newbies?

    It seems so many people regardless of the amount of good advice they’re exposed to insist on learning the hard way. Sad to say, I’ve been part of that club in the past. Glad I’m on the other side now. But it is tough watching others ignore good advice and stepping off the cliff. Glad you’re doing what you can Shane to put out sound guidance. “Better” really is the enemy of “Good Enough”.

    • That’s an interesting point! Indeed, it seems that we sometimes have to learn the hard way, to realize that we should have taken all the good advice we’d gotten all along.

      Even so, I think a model like the one I lay out in this video can be useful once someone has made the mistake and is looking for some specific guidance. I hope so, anyway.

  • Eric says:

    I’m trying to avoid getting into debt with my project. I appreciate some of your advice.

  • Mohamadino says:

    That’s so true!
    Funding only teach us spending rather than earning :)

  • Bibhash Roy says:

    Totally makes sense! It’s worth following your business advice!

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