Bootstrap Your Way to Startup Success

by Michael E. Gordon, PhD

Bootstrapping is the process of conserving financial resources to the extreme during a business’s startup phase. It means pulling yourself up by your bootstraps by doing most of the work yourself.

Because you want to go into any new business enterprise with your eyes wide open, let’s take a look at some of the pluses and minuses of bootstrapping...

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Rich are not Smart?

"How come you're not rich if you're so smart?" goes the popular putdown.

In general, we expect very smart people to be also very rich, don't we?

But there does not seem to be a strong correlation between IQ and income and wealth, according to a scientific study conducted by Ohio State University's Jay Zagorsky.

Zagorsky's study of 7,403 Americans who participated in the National Longitudinal Survey of Youth between 1979 and 2004 showed that smarts and riches are very loosely connected. Each additional IQ point corresponded to only an additional $202 to $616 of income a year.

Other complicating factors: You can have high income but if you don't save, you won't be wealthy. Or, you can be wealthy on paper but if your wealth is tied up in non-liquid assets (like real estate with mortgage) then again you may not have a lot of income.