The rise of the side hustle culture has been remarkable in recent years. Approximately 36% of working Americans are engaged in one. For many, a side hustle isn’t just a passion project; it’s a financial necessity. Forty-four percent rely on the extra income to make ends meet, while 43% use it for savings or additional spending power.
While venture capital and business loans are popular funding routes, bootstrapping—building a business with minimal external funding—offers significant advantages. It allows entrepreneurs to maintain full control, develop financial discipline and grow their business on their own terms. This approach is particularly beneficial for those considering a career pivot, as it enables them to generate income while transitioning, reducing financial risk.
Operating with limited resources encourages entrepreneurs to spend wisely and allocate funds efficiently, creating a solid foundation for sustainable growth. Starting small and scaling gradually helps refine the business model and test market demand without the stress of repaying large debts or meeting investor expectations.
Lydia Fenet, CEO and founder of Lydia Fenet Agency, a boutique auctioneering agency, comments, “What I love the most about bootstrapping is the business is mine. Good or bad, I am the one who is accountable for every decision made. No one is more dedicated to making this business succeed, so I sleep well knowing that I have the power to build a company that I believe in without being overlooked by anyone else.”
Start Lean
One of the biggest mistakes entrepreneurs make is overcomplicating their business early on. Instead of launching with a complex website, expensive marketing or unnecessary features, focus on the core offering.
Ask yourself:
- What problem am I solving?
- Who is my target audience?
- What is the simplest way to deliver my product or service?
Use the MVP (Minimum Viable Product) approach, launching with just the essentials. For example, if you’re starting a freelance design business, don’t spend thousands on branding. A simple portfolio on a free platform like Canva or Behance will do.
Use Free And Low-Cost Tools
Bootstrapping means making the most of free or affordable resources. Here are some tools to keep costs down:
- Website and hosting—Start with free platforms like Wix, WordPress.com, or Carrd. When you need an upgrade, go for cost-effective hosting like SiteGround or Bluehost.
- Marketing and social media—Leverage free social media channels to build an audience. Use Canva for free graphic design and Mailchimp for email marketing.
- Finance and accounting—Track expenses with tools like Wave or Zoho Books instead of paying for expensive accounting software.
- Project management: Trello, Asana and Notion offer free versions to help organize tasks and streamline workflows.
Validate Your Idea Before Investing Too Much
Before you invest in a logo, website or inventory, test your business idea with real customers. Offer your service to a few people at a discount or create a small batch of products and gauge the response.
For example, if you’re selling handmade candles, first promote them on Instagram or at local markets before investing in a professional website or bulk inventory.
Fund Your Business Through Smart Cash Flow Management
Since bootstrapping means relying on personal savings or revenue from sales, effective cash flow management is critical.
- Reinvest profits—Use initial earnings to fund growth instead of withdrawing profits too soon.
- Avoid unnecessary expenses—Only spend on things that directly generate revenue. Fancy office space or premium software can wait.
- Consider pre-sales—If your business is product-based, offer pre-orders to fund initial production costs. Platforms like Kickstarter and Indiegogo can also help.
“When you are bootstrapping a business, there are a few things to consider to ensure you can continue bootstrapping to own 100% of your company,” Fenet continues to explain. “Cash is King. Keep your expenses as low as possible by using free resources, bartering services or using things that are at your disposal instead of services or things simply because you think you should.”
Barter If You Have To
Bartering is an effective strategy if you need resources without spending money. Instead of paying for services, you can exchange skills or products with other entrepreneurs. Bartering not only conserves cash but also builds strong business relationships. Platforms like Simbi and TradeAway facilitate barter exchanges for services and goods, making finding like-minded professionals willing to trade easier.
When To Bring On Investors
Bringing on investors is a significant step for any entrepreneur, and timing is crucial. If done too early, you risk giving away equity or control before proving your concept. If done too late, you might miss out on growth opportunities.
“Investors will look for several different profit margins when they think about investing in your business,” states Fenet. “First and foremost, they will look at your gross profit margins to see if you have room to scale your business and have priced your product competitively. They will look at your operating margins to ensure your overhead costs aren’t so high that they are eating into your profits. The most important thing most investors look for is a clear path to profitability so they know they will have a strong return on their investment.“
You’ve Validated Your Business Model
Investors want to see proof that your idea works. This means having a tested business model, a growing customer base and revenue. A pre-revenue startup without clear traction is a tough sell.
You Need Capital To Scale, Not Survive
If your business is struggling to stay afloat, investors may see it as a risky bet. Instead, investment should be used to accelerate growth—whether that means expanding operations or entering new markets.
You Can’t Grow Fast Enough Without Funding
Outside funding may be the answer if your business is profitable but growth is slow due to limited resources. For example, if you’re turning down orders due to a lack of inventory or missing marketing opportunities due to budget constraints, investors can help scale the business more rapidly.
You Have A Competitive Edge But Need Speed
In highly competitive markets, speed is critical. If you’ve developed a product with strong differentiation but need capital to capture market share before competitors catch up, it’s a good time to seek investment.
You’re Ready To Share Control
Taking on investors means giving up some control, whether in decision-making, equity, or both. If you’re not ready to take advice or meet performance expectations, it might be better to continue bootstrapping.
Bootstrapping your side hustle allows you to stay in control and prove your business’s potential—so when the time comes to seek investors, you do it on your own terms.