The Top 14 Metros for Bootstrapped Businesses

by John Egan
November 29, 2016

The Denver, CO, metro area is a bastion of bootstrapping.

A LawnStarter analysis of new data from the U.S. Census Bureau shows that among the 50 most populous metro areas, Denver had the most bootstrapped businesses in 2014. According to Investopedia, a bootstrapped business does not rely on outside money, such as bank loans or venture capital, to start and build the company.

The notion of bootstrapping doesn’t apply just to startups, though.

“Anyone who’s started a business on a shoestring is adept at bootstrapping, or stretching resources -- both financial and otherwise -- as far as they can,” Entrepreneur.com says. “But bootstrapping isn’t limited to the startup state. It’s a valid way for business owners to treat valuable resources at any stage of their business’ growth.”

Bootstrapped businesses forgo bank loans and business credit cards.
Photo: Flickr/Mike Mozart

Giving Banks the Boot

We wanted to look at bootstrapping activity in the 50 most populous U.S. metro areas to get a sense of where lawn care companies might be doing the most self-funding. Many lawn care businesses are entirely bootstrapped, never taking a penny of outside money.

To compile our ranking of the top metros for bootstrapped businesses, we dove into data from the Annual Survey of Entrepreneurs. Results of the first-ever survey, based on 2014 business activity, were released in September 2016 by the Census Bureau, Ewing Marion Kauffman Foundation and Minority Business Development Agency.

Bootstrappers do not rely on credit cards.
Photo: Pixabay

For each of the 50 most populous metro areas, we examined the number of businesses that had not:

Borrowed from a bank or other financial institution in 2014, including business credit cards with balances or business loans.
Taken money from outside investors in 2014, including angel investors and venture capitalists.

The more businesses that had not borrowed money from a bank or taken money from an outside investor, the higher a metro area ranked on our bootstrapping index.

60-40 Split

To come up with our final tally, we assigned 60 percent of each metro’s score to the banking category and 40 percent to the investment category. Why the 60-40 formula? Businesses are more likely to borrow money than they are to accept investment funding, so we put more emphasis on the borrowing factor than the investment factor.

Our ranking did not take into consideration money pitched in by the owner or owners; friends, relatives and employees; or government agencies.

When all was said and done, Denver landed at No. 1 on our bootstrapping index. Observers aren’t surprised by the Mile High City’s ranking.

Observers cite Denver’s thriving startup scene as a factor in bootstrapping activity.
Photo: University of Denver

‘Favorable Cocktail’

Emily Wilson, communication director for Innosphere, an incubator for science and tech startups with Colorado offices in Fort Collins and Denver, says many startups in Colorado are advised to bootstrap as long as they can before seeking angel funding or venture capital from outside investors.

However, bootstrapping isn’t easy, as it “requires a lot of creativity, discipline and pure grit,” according to P2Binvestor, a Denver-based lender for small and midsize businesses. Still, it’s sometimes the only way to get a business off the ground, P2Binvestor says.

Krista Morgan is CEO of Denver-based P2Binvestor.
Photo: Paul Talbot/23rd Studios

Bud Michael, software and hardware program director at Innosphere, says Colorado’s startup-friendly environment plays a role in the popularity of bootstrapping in the Denver area.

“While the cost of living has gone up significantly over the past few years, Colorado remains about as good as it gets for economic vitality, lifestyle, work-life balance and political diversity. This all makes a very favorable cocktail for starting new business ventures,” Michael says.

He adds: “The sustainability of this cocktail will be determined by Colorado’s ability to attract and retain investment capital, and the ability of the college and university systems to foster new entrepreneurs.”

Top Metros for Bootstrapped Businesses

With Denver atop the list, here’s our ranking of the top 14 metros for bootstrapped businesses. Data for the rankings comes from the 2014 Annual Survey of Entrepreneurs.

1. Denver, CO

Photo: Hilton Garden Inn Denver Downtown

Number of businesses with paid employees: 60,064
Number of businesses that did not borrow money from banks: 32,815
Percentage of businesses that did not borrow money from banks: 54.63%
Number of businesses that did not take outside investments: 44,456
Percentage of businesses that did not take outside investments: 74.01%
Bootstrapping score: 9.73 out of 10

2. Tampa-St. Petersburg, FL

Photo: Clear Channel Outdoors

Number of businesses with paid employees: 55,764
Number of businesses that did not borrow money from banks: 29,486
Percentage of businesses that did not borrow money from banks: 52.88%
Number of businesses that did not take outside investments: 40,175
Percentage of businesses that did not take outside investments: 72.04%
Bootstrapping score: 9.22 out of 10

3. Cleveland, OH

Photo: Hilton Garden Inn Cleveland Downtown

Number of businesses with paid employees: 38,819
Number of businesses that did not borrow money from banks: 19,345
Percentage of businesses that did not borrow money from banks: 49.83%
Number of businesses that did not take outside investments: 28,495
Percentage of businesses that did not take outside investments: 73.40%
Bootstrapping score: 8.99 out of 10

4. Seattle, WA

Photo: University of Washington

Number of businesses with paid employees: 76,403
Number of businesses that did not borrow money from banks: 38,300
Percentage of businesses that did not borrow money from banks: 50.13%
Number of businesses that did not take outside investments: 55,090
Percentage of businesses that did not take outside investments: 72.10%
Bootstrapping score: 8.77 out of 10

5. Minneapolis-St. Paul, MN

Photo: Millennium Hotel Minneapolis

Number of businesses with paid employees: 70,520
Number of businesses that did not borrow money from banks: 34,226
Percentage of businesses that did not borrow money from banks: 48.53%
Number of businesses that did not take outside investments: 53,708
Percentage of businesses that did not take outside investments: 76.16%
Bootstrapping score: 8.53 out of 10

6. Kansas City, MO

Photo: Hispanic Contractors Association of Greater Kansas City

Number of businesses with paid employees: 37,161
Number of businesses that did not borrow money from banks: 18,580
Percentage of businesses that did not borrow money from banks: 50.00%
Number of businesses that did not take outside investments: 26,494
Percentage of businesses that did not take outside investments: 71.30%
Bootstrapping score: 8.44 out of 10

7. Raleigh, NC

Photo: City of Raleigh

Number of businesses with paid employees: 23,591
Number of businesses that did not borrow money from banks: 11,452
Percentage of businesses that did not borrow money from banks: 48.54%
Number of businesses that did not take outside investments: 17,368
Percentage of businesses that did not take outside investments: 73.62%
Bootstrapping score: 8.27 out of 10

8. Detroit, MI

Photo: Detroit Young Professionals

Number of businesses with paid employees: 75,836
Number of businesses that did not borrow money from banks: 37,452
Percentage of businesses that did not borrow money from banks: 49.39%
Number of businesses that did not take outside investments: 53,508
Percentage of businesses that did not take outside investments: 70.56%
Bootstrapping score: 7.84 out of 10

9. Indianapolis, IN

Photo: The E.W. Scripps Co.

Number of businesses with paid employees: 32,259
Number of businesses that did not borrow money from banks: 15,401
Percentage of businesses that did not borrow money from banks: 47.74%
Number of businesses that did not take outside investments: 23,506
Percentage of businesses that did not take outside investments: 72.87%
Bootstrapping score: 7.45 out of 10

10. Virginia Beach-Norfolk-Newport News, VA

Photo: City of Norfolk

Number of businesses with paid employees: 26,544
Number of businesses that did not borrow money from banks: 12,712
Percentage of businesses that did not borrow money from banks: 47.89%
Number of businesses that did not take outside investments: 19,153
Percentage of businesses that did not take outside investments: 72.16%
Bootstrapping score: 7.38 out of 10

11. Chicago, IL

Photo: Hotel Blake

Number of businesses with paid employees: 187,796
Number of businesses that did not borrow money from banks: 91,972
Percentage of businesses that did not borrow money from banks: 48.97%
Number of businesses that did not take outside investments: 131,454
Percentage of businesses that did not take outside investments: 70.00%
Bootstrapping score: 7.35 out of 10

12. Milwaukee, WI

Photo: The E.W. Scripps Co.

Number of businesses with paid employees: 28,428
Number of businesses that did not borrow money from banks: 13,464
Percentage of businesses that did not borrow money from banks: 47.36%
Number of businesses that did not take outside investments: 21,041
Percentage of businesses that did not take outside investments: 74.02%
Bootstrapping score: 7.33 out of 10

13. Portland, OR

Photo: DoubleTree by Hilton Hotel Portland

Number of businesses with paid employees: 50,369
Number of businesses that did not borrow money from banks: 23,760
Percentage of businesses that did not borrow money from banks: 47.17%
Number of businesses that did not take outside investments: 36,607
Percentage of businesses that did not take outside investments: 72.68%
Bootstrapping score: 7.33 out of 10

14. Salt Lake City, UT

Photo: Hotel Monaco Salt Lake City

Number of businesses with paid employees: 24,671
Number of businesses that did not borrow money from banks: 11,547
Percentage of businesses that did not borrow money from banks: 46.80%
Number of businesses that did not take outside investments: 17,611
Percentage of businesses that did not take outside investments: 71.38%
Bootstrapping score: 6.10 out of 10

Top Photo: City and County of Denver