Even during a global pandemic and social unrest in our country, one of the silver linings is that we live in a country that embraces entrepreneurship. Ultimately, all entrepreneurs need capital to start any business. While it’s natural to think of contacting angel investors or venture capital firms to raise cash, bootstrapping can be a more compelling alternative.
The unfortunate reality is that for Black women entrepreneurs, bootstrapping is significantly harder. Specifically, systemic racism and institutional biases make bootstrapping much more unattainable. Yet even with these obstacles, Black women entrepreneurs can rely on a strong community to combat the disadvantages that they face when bootstrapping.
Systemic Bootstrapping Obstacles for Black Women Entrepreneurs
Bootstrapping is essentially the act of starting and building a company with nothing but your personal savings. From there, entrepreneurs who bootstrap rely on their business’s sales and operating cash flow to scale their businesses. Entrepreneurs who bootstrap typically grow slower than those entrepreneurs who raise capital. Having said this, they can take their time to find product-market fit and can maintain full ownership over their businesses.
The benefits of bootstrapping are clear. Nonetheless, Black women entrepreneurs who want to bootstrap face plenty of obstacles.
The unfortunate truth? Many of those obstacles are the product of centuries-long inequalities and systemic racism.
But let’s back up. When Black women entrepreneurs are looking to fund their new businesses, they often have no choice but to bootstrap. This is because venture capital funding is a rarity among the Black women entrepreneur community. In 2017 alone, only 2.2% of $85 billion in venture capital money went to women entrepreneurs. Women of color received less than 1% of that $85 billion. Startups led by Black women entrepreneurs received even less.
Simply put, Black women entrepreneurs are often precluded from receiving VC funding. They also find it difficult to obtain traditional business loans and SBA loans. They have no choice but to dip into their savings to get their businesses off the ground.
That presents another problem. For one thing, Black women have less in savings than their white counterparts. This is especially true when talking about liquid savings. As you can guess, this makes it more difficult to find that initial capital to get their businesses off the ground. Black women entrepreneurs need to start extremely lean and generate cash flow quickly to survive.
But even beyond this, Black women entrepreneurs need to navigate systemic forces that are working against them. This idea of “bootstrapping” triggers images of the rugged individual metaphorically pulling themselves up by their bootstraps. The unfortunate reality is that many doubt that Black men and women can raise themselves up by their bootstraps because of long-standing myths about laziness.
Yet Bootstrapping Can Result in Success
These stereotypes are difficult to hear. They can be discouraging. However, that doesn’t make bootstrapping an impossible option for Black women entrepreneurs. There are solutions out there if you want to rely on bootstrapping to grow your business.
One of the most powerful solutions centers on building a community. While bootstrapping a business may seem like a solo venture, it’s critical to find support. It can certainly be family and friends, but it can also be other Black women entrepreneurs. There are plenty of groups and organizations that can help you navigate the bootstrapping journey. One of those organizations is Black Girl Ventures, but there are many others that can offer you their hard-earned insights and advice.
Along with building a community, you can take advantage of free resources on your bootstrapping journey. Combining many of these free resources, you’ll be able to successfully run your business on a shoestring budget. These free resources include everything from graphic design programs to email marketing and inter-team communication programs. Using these tools, you can significantly lower your operating costs and save some valuable cash.
Achieving Financial Independence
Even amid so much uncertainty, there has never been a better time to start a business. Better yet, you don’t need access to venture capital or angel funding to make your business dreams come true. While bootstrapping isn’t necessarily a walk in the park, you can rely on community and free tools to succeed as an entrepreneur.
In the end, the best time to get started is right now.