What is Bootstrapping?

Bootstrapping (Definition)

Bootstrapping is a way for an entrepreneur to start a business with little money. An individual is said to be bootstrapping when they try to start a business from scratch without getting any money from investors or having very little money from outside sources. It's a way to get money for small businesses without giving up equity or borrowing a lot of money from banks. For example, when someone starts a business with $100,000 of their own money, this is called "bootstrapping".

There are three stages of bootstrapping for new business owners. First, starting the business with money they have saved or borrowed from friends and family. Second, using money only from customer and clients to keep the business running and growing. Third, the credit stage – where the business owner focuses on getting money to hire staff or upgrade equipment. For this, they may take out loans and are no longer bootstrapping.