What is a bootstrapping strategy and give an example.

• A. Financing a business with minimal external funding; example: using personal savings, delaying hiring, pre-sales.
• B. Seeking venture capital within six months of launch.
• C. Relying on bank loans for all initial costs.
• D. Outsourcing product development to reduce costs.

Answer: (A)

Bootstrapping means funding a startup with little to no external capital, using personal funds and the business’s own cash flow rather than investors or lenders. An example is investing your own savings, keeping costs tight by delaying hires, and using pre-sales or early customer deposits to finance initial production. This approach preserves ownership and control, avoids equity dilution and debt, and forces disciplined cash management and lean operations. It also helps validate demand with real customers before scaling. The other paths rely on outside money or commitments (venture capital or bank loans) or rely on outsourcing to cut costs, which moves away from funding the venture mainly from internal resources.