Bootstrap Finance–Thrifty is Nifty

Expediency That Works

Bootstrapping is a craft that is becoming very widely used in the creation of companies. In tough economic times it can be a matter of survival once the business has started. To many entrepreneurs it is a natural behavior, others need an apprenticeship. Here is a page of help.

Before you start, you might want to look at the story of a bootstrapped business that looks like it is taking off: Wondermill. This software outfit produced Freedback a form creation program for small and medium sized business.

Bootstrapping is building a business with little or no capital. The entrepreneur uses imagination, ingenuity and hard work instead of seeking outside finance.

Bootstrap finance often has to do with not raising money and not spending it either, but finding creative ways to achieve your objectives—hence it is often not to do with obtaining finance at all!

Make sales the Job #1

Make cash management Job #2

Make low fixed costs Job #3

How Little Money Do You Need?

Before you start, ask, “How little money do I need?” Some say too much money is worse than too little. You can burn dollar bills very fast at the start and you are going to need every penny as sales begin to take off.

Bootstrapping benefits include:

no equity relinquished—your ownership maintained,

savings of interest—it can compound like crazy,

less time committed to chasing funding,

less debt means you’ll be able to borrow more when you must,

opportunity for higher profits when you get there.

“Going Bedouin” is another expression you may have heard in connection with the lean enterprise. Coined in 2006, it describes the coffee house based, laptop and cell phone carrying geeks of San Francisco, with no fixed corporate office. Wired magazine’s Jargonwatch section describes it:

“Downsizing a business by eliminating all but the core assets: employees and the communications links between them. A company that has gone completely Bedouin lacks a physical location, operating simply as a network of engineering, sales and support staff connected 24/7 by Internet and cell phone.”

An example is Hat Trick Media that helps companies think beyond their own websites and expend into the world of syndication.

If you would like more on financial bootstrapping, then see my articles

Staffing a Startup Without Hiring

Think Big, Start Small

Virtual Seed Money