One of the most important things we want to teach at TheEntrepreneurSchool is bootstrapping.   We believe very strongly in the benefits of bootstrapping.  Some businesses require huge investments to get started, but many of the best businesses get started with very, very little money.  Bootstrappers borrow $2,000 in capital or finance start-up with their credit cards.  They cut corners whenever possible to save money, like learning to do their own web editing to save money.

Bootstrapped businesses have many benefits.  First, instead of spending time raising money, the owner spends time selling things, learning what the market thinks of the product and the proper pitch to sell it.  Also, this company learns to grow through internal profit-based financing, a much healthier route.  And in the end, the entrepreneur ends up owning much more of the company.

I have two favorite entrepreneurial stats: the average US based entrepreneur ends up owning 8-10% of their own business.  I have seen it quoted as low as 4%.   That’s it!    4%!   This happens because they sell off parts of the firm to finance growth, the “its better to own a small slice of a bigger pie” strategy.

My second favorite stat, from “The Millionaire Mind” by Stanley and Danko, you take all the self-employed, all the doctors with private practices, all the lawyers in partnerships, and all the entrepreneurs and add them up, you find that 86% of all millionaires are first generation millionaires.  They got there in one generation.  The rich are not inheritors or actors or sports stars, but individuals that made themselves rich in their lifetimes.  Powerful stuff to me.

Anyway, I digress.  I was reading BusinessWeek magazine (July 27, 2009).   They had a good article about bootstrapping.   Apparently, bootstrapping is back in style in Silicon Valley, but it has a new name, “going lightweight.”   They refer to several businesses that are being started by entrepreneurs that live in their offices to reduce monthly payments.   And, they quote a venture capitalist that praises them for going lightweight, treating it like it is something new!