In the early stages, newly emerged businesses and projects are called start-ups. They differ from conventional innovation projects and have to prove to be realistic and profitable, as well as they require the further search of the business model(s), which will be implemented. People that run their start-up projects often do not think about promoting their ideas; they focus their time on developing the product/service itself and on searching the investors, what is also important. However, ignorance of promotion may be the main cause of many unprofitable enterprises. It is important to engage in marketing or bootstrapping to ensure success of the start-up.
Generally, new entrepreneurs follow a different approach on how their business has to be operated. This approach requires much hard work to be done; hence, due to their laziness numerous leaders ultimately experience failure in making their start-up work. Nonetheless, if the corporation continues to exist, numerous challenges and difficulties are expected to appear, making the way to victory much harder. There are numerous ways to achieve success in the world of business; however, one of the most outstanding approaches is called start-up. This term has become extremely popular in the business literature. Moreover, this approach has frequently brought fruitful results to the people who have decided to be fully engaged in growing their business. This paper will focus on how to perform the bootstrapping of the newly born start-up business.
Bootstrapping: A Definition
In general, the term bootstrapping can be understood as a particular set of directions, activities and strategies which are aimed at the successful promotion of the start-up project (Gentry, Dalziel & Jamison 2013). The essential principle (which is going to be discussed in the next sections of the paper) is to gain the target audience using the principle of achieving the success in small portions.
The Stages and Approaches to Bootstrapping
Target audience is what an entrepreneur is expected to think about from the moment when start-up ideas emergence (Gentry, Dalziel & Jamison 2013). First, it is significant to define the end user of a new product or service. When the team is just starting to promote their company on the market, it is easy to overdo it and try to ‘grasp the immensity.’ However, it is important to focus on the target audience, which is very likely to contribute to the consolidation and development of the company at the market. Instead of trying to attract numerous potential buyers, it is paramount to focus on a specific segment (Caliendo, Iza & Weißenberger 2013). This will help achieve short-term goals. Start-up, focused on one sector, has a better chance to win its target audience.
The first stage in bootstrapping is not directly connected with the business but it rather carries a psychological function. It is very significant to know oneself, possess a true internal motivation, have the amount of money ready to invest, and be willing to follow the proper steps of bootstrapping to be successful in the start-up process (Gentry, Dalziel & Jamison 2013). Hence, motivational compound is the basis of both start-up business and bootstrapping.
The second stage of the bootstrapping process of a start-up business is assessing the available finances. The process of running each type of business carries its costs. Hence, it is indispensable to establish it, considering all possible expenses, which are required by the bootstrapping (Caliendo, Iza & Weißenberger 2013). If it is premeditated to make a new company a place providing a full-time job, it is prudent to wait for an opportunity to collect at least a certain amount of finance. This strategy will provide an opportunity to gain profits and use them in a proper way to sustain living expenses of employees and continue developing the business.
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The third stage in bootstrapping is choosing an approach to bootstrap the business and its services or products (Caliendo, Iza & Weißenberger 2013). It might be similar to product advertisement that a person always wanted to manufacture, or a service an entrepreneur feels people always need. It might even be something people do not know they need yet, because it has not been invented yet. At this stage, it is significant to define the team, which is going to perform the bootstrapping activities and functions.
In theory and practice, start-up project bootstrapping activities can also include the following steps (Caliendo, Iza & Weißenberger 2013). The initial stage of bootstrapping is called ‘pre-seed’, or the preceding stage. It means that at this stage, a creative idea is established, and there is a profound understanding of appropriate proposals, without a clear understanding of technological methods of implementation of the proposed project.
The next stage in bootstrapping the start-up project is called the ‘seed stage.’ Herein, the process involves the stage of market research or electoral field, planning of start-up project activities, the formation of the technical project, the search for investors, and preparation of the project to be launched. It is significant to complete this stage properly, because it is responsible for the further bootstrapping of the business and its products / services (Gentry, Dalziel & Jamison 2013). The next stage in bootstrapping the business is identified as ‘prototype’, or the modeling phase, wherein the formation of a working prototype takes place, and testing of the upcoming start-up bootstrapping campaign happens, including the creation of a working prototype or a product demo-promotion, clearly showing the signs of functioning (Gentry, Dalziel & Jamison 2013). This stage of the bootstrapping aims to gain the initial number of the potential clients and consumers.
There are short-term objectives of the bootstrapping process that have to be achieved by the promotion of the start-up project, its product or service. First, every bootstrapping campaign is called to ‘probe’ the market, identify the key players and competitors, as well as determine the list of goods and services that are the most competitively offers in the market. This list helps focus primarily on short-term strategy (Caliendo, Iza & Weißenberger 2013). Short-term strategy implies a use of tools of external and internal user optimization.
The main objective of the medium-term bootstrapping strategy is to search for the optimization of the mid-range requests. This problem is solved by using toolkits of the internal and external search engine optimization. The main objective is to find a long-term strategy for optimization of high requests (Gentry, Dalziel & Jamison 2013). The analysis of the current market situation must be supported by short-term performance results when performing the bootstrapping activities. If the theoretical calculations disagree with the practical means, then it is necessary to change the strategy, since the short-term goals should support the bootstrapping and make it more successful. After the changes are made, the process has to repeat until the results will fit the company, i.e. products due to the measures taken are sold at the market. Once the successful strategy is identified it must be considered as long-term and medium-term strategy.
However, the majority of scholars firmly believe that the best way of start-up bootstrapping is a positive impression of the product or a service that a client is likely to experience (Caliendo, Iza & Weißenberger 2013). Certainly, to make a person taste a new product, it is significant to perform a well-planned demo-promotion. After gaining a small target audience, it becomes possible to achieve better and better results. The positive feedback from the clients who have tried the new product or the new service is the best result of the secondary bootstrapping.
It is necessary not to forget that not every project can be promoted. For example, concerning the website start-up, it is very difficult to increase number of visitors of web sites with highly specialized topics (Jones, Macpherson & Jayawarna 2013). It may be that only a small number of users is interested in the network with the subject (Hechavarría, Matthews & Reynolds 2016). In such case, the resource search engine optimization is likely to be ineffective, and in order to achieve the desired result, it is necessary to seek some other means of the bootstrapping.
In respect of websites start-ups, the inbound links play a key role. The founders of such types of the start-ups have to try to do everything possible for the project to learn as much information as possible about the users. Since the budget of the ‘newcomers’ in the start-up business is limited, the company has to use all available tools, such as free classifieds, affiliate programs, link exchanges, forums, paid and free article directories, thematic communities, etc. However, here it is necessary to adhere to the ‘golden mean,’ because the reference weight should be increased gradually and uniformly, tending towards greater naturalness. For example, if earlier it was enough to place a bare anchor somewhere in the footer of the site, nowadays there are numerous great value links, surrounded by text, even if they are small (Hechavarría, Matthews & Reynolds 2016). Moreover, the referring quality is also taken into account. Ideally, this will be a ‘living’ area, which is regularly visited by users of similar or related topics.
Herein, in order to build-up a natural reference of the start-up website to bootstrap it to the mass, the company has to undergo the following scenarios. First, it should be aimed at developing good content for the site, which can cause a desire of a visitor to share it among the other users and their friends (Hechavarría, Matthews & Reynolds 2016). Second, groups and communities’ formation in most popular social networks is of great significance. It is possible to spread the sets of materials to get the audience acquainted with the new product or a service. Third, the attraction of the ‘opinion leaders’ can be achieved through bloggers, the most active participants in the community, etc. Hence, this type of start-up is likely to survive due to the proper bootstrapping technologies. To ensure that these approaches are able to bring positive results, it is necessary to concern the example of one of the most famous tart-up in the world.
An Example of a Well-Known Start-Up
One of the most outstanding examples of the successful start-up bootstrapping is the foundation of the social network, Facebook by Mark Zuckerberg. Being 23 years old a student of Harvard University and learning the psychology, he created Facebook (Hechavarría, Matthews & Reynolds 2016). Moreover, he was an enthusiastic computer programmer, and had already evolved a certain set of social-networking websites for his fellow students. These sites comprised Coursematch, which permitted its users to observe the people who are currently taking their degree. The second web site created by the student was Facemash, whereon the users obtained an opportunity to rate other people’s prettiness (Hechavarría, Matthews & Reynolds 2016). Hence, Facebook had many numerous similar websites by Zuckerberg.
When in February 2004, Zuckerberg had run a new network, which then was called Facebook, he decided to borrow the name from the newspaper, which had been distributed to freshmen at the college he studied (Hechavarría, Matthews & Reynolds 2016). The network over the time had expanded to other universities (Hechavarría, Matthews & Reynolds 2016). The secret of the Zuckerberg’s successful bootstrapping consisted in the fact that he initially aimed at the limited audience. His target audience, as it has been mentioned, was represented by the students of the same college in which he was studying (Hechavarría, Matthews & Reynolds 2016). After a successful promotional campaign, which was mainly done by the users of the website, the fame came to both the social network and its creator.
Thus, after regarding the essential stages of start-up bootstrapping, it is possible to understand that the work of a specialist is very important in information support at each stage of life of a start-up. When starting a new project, it is vital to choose the right target audience, adjust the product/service, and translate promise through the defined channels of communication. At the same time, at the very beginning it is important either to hire a specialist to contact the agency or to manage personally the process. The example depicted in the paper is one of the brightest instances, which show how the start-up has to be organized and bootstrapped. After covering the example of the most famous start-up, it became obvious that if a person applies the necessary knowledge, skills and methods to its business, it will certainly bring success to the new owner.