Introducing the ‘Bootstrap Business Plan’

When investor sentiment goes south a successful entrepreneur will often look to create an alternative business plan where they rely upon themselves for any/all financing. This is called a Bootstrap Business Plan.

One great example of a bootstrap plan is George Lucas, who upon filming his epic space opera, Star Wars did not know if it would find an audience. Indeed, he and his distribution partner were said to be extremely nervous about the potential for success. As a way of mitigating the risk for its sequel he imagined two versions, one where Star Wars was successful and another where it was not. We all know what the sequel was called, but what is not commonly understood is that if the original Star Wars had flopped George Lucas would have made a sequel. The story was much smaller in scale and called ‘Splinter of the Minds Eye’.

The bootstrapped plan is not used as a marketing document or driver of an Information Memorandum. It is an agile (not Agile) approach to creating a plan. As a result, the document does not have to include the normal constituent parts of a formal business plan, such as exec summary, share ownership, or exit strategy. Instead, it is meant for you and your team. A plan to help you understand your business.

Below are six key ingredients of a bootstrapped business plan:

1. Broad Strategy – This should be quick and easy for you and does not have to be a novella. What is your platform focused on? What is the pitch to your potentials? How will you get there?
2. Budget – Highlight your costs through the period. Prioritise the cost to ensure that you are spending only what is needed. This is a vital part of managing a bootstrapped business
3. Revenue Forecast – This is where you prognosticate the sales performance of your business. How many widgets will you sell? How many memberships? How much are they sold for? Break it down. Model the numbers for accuracy and logic. Think of it as a best guess that will help you manage your business
4. Tasks – Breakdown your business strategy into individual tasks. What do you need to do? When? Personally, I spend a good amount of time working on this section of the plan and understanding the potential prerequisites to each task and how they relate both to the milestones and the overall strategy
5. Schedule Review – Weekly and/or monthly reviews are an imperative for understanding where the business is and where it needs to get to. Personally, I would set these reviews against the overall plans milestones and garner performance of the tasks against these stated milestones
6. Cash Flow Planning – A cash flow forecast is the most important business tool for every business. The forecast will tell you if your business will have enough cash. Plan your expenses depending upon the available cash