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Bootstrapping 101 – How To Start Your Online Venture With Very Little Capital

By Ryan Gray on March 27, 2015 28

Throughout my 15-year career I’ve never taken on an investment.

I’ve never taken a loan.

I’ve never gotten myself in debt.

All of my companies have been bootstrapped from the bottom up.

In recent years it seems like the term “investor” has became very well known throughout the tech industry.

“I built this awesome app; now I’m just looking for an investor to adequately capitalize my venture.” <- Far to often I hear this at trade shows and when speaking to many Entrepreneurs fresh out of college.

I always follow up with, “well how do you plan on making money from that investment?” Most people I talk to aren’t even sure of that. They just know they need money, the more the better.

To me, this thinking is flawed.

Maybe I’m just talking out my rear here, as I don’t have a fancy Ivy League education (I went to WVU – a/k/a party school) but I have co-founded five multi-million dollar profit companies throughout my career (three of them over the last two years).

As I said above, I’ve developed them without financial help from anyone.

You can’t make money by spending it.

Somewhere along the generations, thinking got flawed.

Both of my grandfathers were Entrepreneurs and came from very little means. They too bootstrapped their ventures turning them into multi-million dollar corporations. They didn’t do it by taking out loans and paying ridiculous interest rates.

But Ryan, I need monies to buy my traffic!

Buying traffic for your websites/mobile apps/affiliate campaigns should be the route you take ONLY after you have heavily capitalized your company.

I personally didn’t buy one click of traffic to my websites until I had a strong six figures in the bank. Why would you?

We’ve become a culture of instant gratification. We want to work our butt off one day and see success the next. It’s how we’re programming ourselves.

Consider how far we’ve come since the 80s.

When you want to talk to someone you simply call or text them using your personalized mobile device.

When I grew up in the 80s we had one telephone in the kitchen with a long cord and a dialer you had to physically turn to enter the number.

We can now tell Siri a name and the phone will begin the call for us!

Instant gratification!

When I built my first website in 1998 I wanted one thing: People To Visit.

At the time I didn’t even think or know that I would make millions from the traffic. I just wanted people to read!

Was this accomplished by SEO?

How about link exchanges?

Well yes, I used every organic traffic channel I could find. From doing a daily email newsletter to optimizing every page for Google and other search engines, I did it all. But people visited my website because of the information on it. Each article published was full of quality containing information they wanted to read.

I’m baffled when I hear stories of affiliates in hundreds of thousands of dollars in credit card debt trying to become successful at buying traffic to send to campaigns. This is ridiculous!

My advice: CUT UP THE CREDIT CARDS

If you want to buy traffic for your campaigns then use a debit card.

If you don’t have enough funds in you account, then you’re not ready.

It’s that simple.

If you’re just getting started and want to have a successful online business, consider every dollar you spend. Did it HAVE to be spent?

From the wise words of Mister Ruckman, crap in one hand and want in the other. Which one fills up first? You’re always going to want.

It’s easy to spend on things you “think” you may need but before you do, make sure it is absolutely necessary.

Once you start making money, remember you don’t have to spend it, just because you have it. Over the years, I’ve met my fair share of thousandaires wannabe millionaires. You know the type. The ones that lease the $350K car so they can cram as many pictures on Facebook as possible to show others that “they’ve made it.”

Don’t do that. Re-invest your profits so you can scale your business. If you make $100K a year, pay yourself $30K and re-invest the rest. There will eventually become a day you can buy that nice automobile, dream home, or insert whatever materialistic object tickles your fancy.

You can become very successful without wasting your time getting an investment or dealing with a bank to get a loan.

You just have to build with quality and don’t give up.

You may fail the first time. I’ve failed many.

As long as you learn from your mistakes and keep building, you will eventually succeed.

PS. Don’t forget to cut up those credit cards. They’ll only hold you back.

Ryan Gray

Ryan Gray is the founder and CEO of NameHero, one of the fastest growing independent web hosts in the United States. Ryan has been working online since 1998 and has over two-decades experience in Internet Entrepreneurship.

Reader Interactions

Comments

  1. Paul Diemer says

    March 27, 2014 at 3:17 pm

    Awesome post – and I need that right now. Is one way to be able to get some advertising in to set up an affiliate program and have a Pay Per Sale type product / offer. They make money only after you make money. The affiliates basically do the advertising for you.

    Reply
  2. liu says

    March 27, 2014 at 3:45 pm

    Interesting. However I don’t get the part where you say to not buy traffic!

    Reply
    • Ryan Gray says

      March 28, 2014 at 8:27 pm

      I’m not saying to not buy traffic. I’m saying, don’t buy traffic until you have adequate capital to do so.

      Reply
  3. Dana says

    March 27, 2014 at 4:16 pm

    Very sound advice Ryan thanks for sharing! Perhaps the biggest take-away for me is to “cut up the credit cards”! It’s so tempting to just whip one out and spend, spend, spend almost like a gambler…I’ll get it all back on this campaign! Keep up the good work guys, it’s been awhile since I’ve come around IMGrind but glad to be back. Thanks Ryan and Ralph.

    Reply
    • Ryan Gray says

      March 28, 2014 at 8:28 pm

      Yup sure is. Especially the cards that let you “pay over time.”

      It’s easy to justify in your head that you’re going to make the minimum payment and re-invest the other money back to campaigns in hope of making a lot more the next month.

      DANGEROUS approach! So cut them up!

      Reply
  4. PeterNicho says

    March 27, 2014 at 5:38 pm

    Great post once again from Ruck, l remember him starting out and it was tough in the early days, there was and still isn’t any quick get rich schemes about but Ruck has not quite told you the truth in this post. He worked very hard to learn Internet marketing and was in a lot of forums that taught him a lot, but then he did something not a lot of people do and that is he applied it until he was successful. He always then tried to be honest in his posts and teach others what he had learned, his posts were always to the point and made people think even if they did not like what he said and thus he developed a large following who have stayed with him.
    He is an 15 yr old overnight success meaning he worked at it and eventually it all clicked you can do it to if you work hard enough and apply it.

    Reply
    • Ryan Gray says

      March 28, 2014 at 8:29 pm

      Hehe I’m Ryan, but yes, Ruck also worked very hard to get where he is.

      Reply
  5. Eric Williams says

    March 28, 2014 at 4:51 pm

    Great advice. Pretty much everything I’ve done online has been done with very little capital. Having minimal money forces you to make smarter and more creative decisions. You can’t just throw your cash around.

    Reply
    • Ryan Gray says

      March 28, 2014 at 8:30 pm

      Well said man!

      Reply
  6. Deron says

    March 28, 2014 at 5:16 pm

    Great read Ryan. I’m in the boat where I am shifting my focus to the mobile advertising realm. I’ve gone from auto detailer > civil engineering > graphic design > web design > web development > ppc advertising. Looking to utilize all that for mobile now. I’m in the boat where i have a mortgage, bills, wife, 2 kiddos – all that fun stuff. I’m looking to cut back where I can and re-prioritize that revenue towards mobile.

    I’ll be blogging my journey – should be interesting to look back on one day 🙂

    Reply
    • Ryan Gray says

      March 28, 2014 at 8:30 pm

      Sweet man. Mobile is definitely where it’s at nowadays!

      Reply
  7. Ryan Gray says

    March 28, 2014 at 8:29 pm

    Yes, if you want it bad enough, you will make it happen, no matter what sticks in your way.

    Reply
  8. Mal Campbell says

    March 28, 2014 at 8:49 pm

    Most people don’t want to hear that they need to go through the motions and pay their dues to learn how everything works and that it’s not as simple as simply throwing money at a campaign and making it work.

    Even worse, those that do end up spending their early winner-campaign profits on a lifestyle that they assume they can maintain for a long time to come… Just to discover that it was a one-hit-wonder and next thing you know…

    They’re gone.

    It all starts with a solid foundation, you have to understand things before you can just make money.

    Fortresses aren’t built overnight.

    Cheers

    Reply
  9. euhero says

    April 3, 2014 at 8:41 pm

    Awesome post. Very inspiring and informative. Starting a business is really hard and I’m glad I found this article before starting and investing.

    Thanks again, I’m new to imgrind. 🙂

    Reply
  10. ted says

    April 5, 2014 at 12:15 am

    Okkkkkay, but you seem to miss on the “leverage” aspect of the business world. Its easier to borrow $100K and build up with instead of working years to save that. Credit is great is you can have it interest free. I paid off my student loan by leveraging interest rates of credit cards. When you can have a $50K limit for zero interest for 18 months, then you call the bank, ask negotiate an extension for almost nothing above their prime, the spread can add up nice.

    Reply
    • Ryan Gray says

      April 6, 2014 at 3:29 pm

      I think Ruck summed up a response nicely.

      Student loans are something else I’m dead against.

      If you don’t have the money for school – why go?

      “Credit is great is you can have it interest free.”

      I’m assuming this was meant to say “Credit is great if” (gotta love that financed education) but “interest free” is just another way to pull in suckers to make them think they can afford something they can’t.

      I guess you can just call me old school.

      Reply
  11. ruck says

    April 5, 2014 at 2:35 pm

    ^^^ You’re talking about as if the majority of people are as smart as you. Congrats on being disciplined and working to that point but let’s face it, you are talking about 50K and 100K, our smallest business generates over 2 Million a year…

    Leveraging the business world as you say it by way of loans…No matter how much sugar you coat that shit with, it just shows how much growing you need to do.

    Any business person with common sense knows that following protocol means you rely on the protocol to work. We’re not the only ones who do things this way: https://www.youtube.com/watch?v=KYneLGRTgy8

    The post was about bootstrapping…not leveraging business loans, so make sure you read the post and understand it before you offer up a conflicting opinion that has nothing to do with what we’re talking about…You can already imagine what you look like to the people who’ve read this post.

    But to each his own.

    Reply
  12. Kiley says

    April 7, 2014 at 12:36 pm

    I respectfully disagree here. There are very few, if any universal truths, both in business, and overall life in general. What works for one, may not work for the other. Bootstrapping is not the end-all-be-all to long-term/success profit. How about all of the Shark Tank success stories?

    Reply
    • ruck says

      April 7, 2014 at 1:41 pm

      LULZ ^^^ That fact you said shark tank and compared it here…c’mon man, you really just throw some reality tv shit in here?….

      Start with no capital.
      Work for getting capital.
      Give up some of your venture starting out.

      Follow the herd mind massively and take a chance at winning…

      Or do it yourself and control your own destiny.

      Most of the time…you see people with that type of mentality typically working for themselves all the time, while always stuck on launching their stuff successfully through realizing and acting on their own potential. I’m pretty sure I just hit the nail right on the head with you Kiley.

      To each their own though…you’re definitely right about that.

      Reply
      • Kiley says

        April 7, 2014 at 2:21 pm

        You know I love you, Ruck. Not looking to get into a pissing match. It may be reality TV, but the fact of the matter is, a lot of those companies are now debt-free and profitable.

        Another example is crowdfunding. No banks, equity, etc. So MANY companies have been wildly successful through crowdfunding, of which a few I have personally invested in.

        Shark Tank, crowdfunding aside, the point is, not to each their own, but rather, that there is no universal way, for lack of a better term. Some may be in a very unique position where, should they need to take on financing, be able to scale wildly and pay back that debt in a very short amount of time. IMO, to take on financing, one need to REALLY know their business, and be able to manage their money well.

        Like I said, no up for a debate, t’was just offering my opinion.

        Reply
        • Kiley says

          April 7, 2014 at 2:28 pm

          A quote comes to mind:

          “Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.” -Marcus Aurelius

          Reply
    • Ryan Gray says

      April 17, 2014 at 2:45 am

      That’s fine to disagree. I am not saying my way is the end all be all. It’s worked for me, even when “the economy was bad.”

      But I am saying companies (especially start-ups) are to quick to accept funding when they don’t even have a clear and sustainable business model in place. So because of this, a lot of them fail, and a lot of them lose money. Everyone with a “great idea” doesn’t a business model.

      PS: I tried to watch an episode of Shark Tank once but I think Mark Cuban is a douche.

      Reply
  13. ruck says

    April 7, 2014 at 3:46 pm

    I would never get into a pissing match Kiley over investments, financing, crowd funding…or whatever other scheme we are talking about to acquire money.

    We simply cut out all the noise, focus on our own visions, create the manageable steps to take action on daily and the results speak for themselves.

    I hear you and totally respect your opinion. And when you say – IMO, to take on financing, one need to REALLY know their business, and be able to manage their money well….

    ^^^ That’s really the underlying issue. It’s not getting funding whether it be from loans, funding, investments, the arthritis in your hands from pounding the keyboards yourself…the problem isn’t getting it…it’s growing it.

    Reply
  14. William Waldon says

    April 17, 2014 at 2:11 am

    As someone who has built many sites and sold just as many I know from first hand experience that you don’t need to spend a lot of money to make a lot of money. You have to make a product that people NEED and love. And if you fail? So what?! You pull yourself up by your “bootstraps” and start over again. I’ve also done that a few times 😉

    Reply
  15. Sean T. McBeth says

    April 17, 2014 at 3:14 am

    I have a project that I’m currently bootstrapping. The programming of it is no worry, but I’m a raw beginner with marketing and sales. I have some spare cash right now and will have more the further away I get from tax season, so I’m paying for Google AdWords right now, but I find myself at a loss for determining if it’s doing any good.

    You mentioned not paying for clicks, and having not had to pay for clicks. What do you mean, specifically? People in the blagosphere talk about submitting projects for review to other blogs. Is that it? Is it really just having the hubris to write an easily adaptable intro and shamelessly plugging it to everyone I run across? How is that ethically any different than spamming?

    Reply
  16. Cyril Mazur says

    April 17, 2014 at 4:02 am

    Amen. I also built several successful online businesses without spending a dime, they are not making millions yet but little by little this money will grow, be re invested and eventually make big money.

    Work hard and smart, and never give up. Move to a country where life is cheap if you need to hold longer on a tight budget to develop your business. Then when you succeed you’ll move back to your country, in a way nicer house.

    Great post!

    Reply
  17. Darryl Smith says

    April 28, 2014 at 1:58 pm

    It made refreshing reading after hearing horror stories of how some marketers say how easy you can make money doing CPA ‘with a small budget’.
    The small budget with a cc becomes a river out your pocket if you do not know what you are doing – like me – and then you live to regret it. You are so right, learn first, get your solid base, then use cash to fund the budget. It has taken me a long time to learn this, but I learnt it well. (The hard way!)

    Reply

Trackbacks

  1. Bootstrapping 101 - Developing A Savings Plan That Allows You To Heavily Capitalize Your Company - IMGRIND says:
    April 6, 2014 at 4:44 pm

    […] covered this in my first bootstrapping post. Starting a new venture with a credit card or financing from a third party lender is dangerous. […]

    Reply

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