Starting Your Business: It All Boils Down To Making Money and Saving Money
Bootstrapping in the context of business start-ups refers to the use of creative financing approaches such as leveraging personal savings, credit-card debt, loans from friends and family, bartering, and other means to launch a business. Some business founders use bootstrapping because they have no other choice. Just about anyone who has approached a bank has learned that "only established businesses need apply." Bankers typically look for cash flow, assets, an established customer base, and a successful track record on the part of the business that is seeking a start-up loan. Obviously, this is a short list that is impossible to fulfill when you are just getting started.
While many would-be business owners develop a sincere sensation of disgust upon learning these financial facts of life in dealing with bankers, bankers have a pretty good reason for making decisions as they do. When you think about it, what does the bank stand to gain? In the very best case scenario, the bank will get its money back, plus interest. Contrast this to the point-of-view of an investor or co-owner whose position includes owning a "piece of the action," if the business grows. In other words, bankers have no upside. What's the upside worth? Well, a whole lot, if you happen to be someone who was on the ground floor of a company like Microsoft or FedEx.
Bootstrapping is not necessarily a tool used only by business community "have-nots." Some bootstrappers are awfully proud of the money they save (and the money they make). Not many people brag, "Hey, I paid full price for my [company or personal] car-and I'm darned proud of it! And when the dealer tacked on $1347.00 for administrative fees and undercoating [which the car already had from the factory], I said 'sure, no problem.'" For some of us, it's not simply an issue of having plenty of spending money, or not. Rather, there is a mindset that says, "I want fair value for my dollar, and I hate feeling ripped off by paying 'way more' than something is worth."
In many ways, bootstrappers develop their knowledge and personal skill-sets and use their abilities as a substitute for cash. There's also a certain satisfaction that comes from becoming more self-sufficient. After being confronted with a contractor's very expensive building renovation estimate to convert a retail space and make it suitable for a bookstore, one start-up entrepreneur and her husband reacted by visiting a local home improvement store. A few home improvement books, a sledge hammer, and a reciprocating saw allowed these nascent entrepreneurs to save thousands, and she said it was actually fun knocking down walls! "It's a great stress reducer."
The entrepreneurial couple also acquired a set of simple plans for bookcases, courtesy of the book distributor who would become the store's supplier, and built 100 bookcases themselves in production-line fashion for $40.00 each, as compared to an original estimate of over $200.00 each. Then the book distributor stocked their store and provided generous repayment terms. The savings the couple amassed through techniques such as those above allowed them to whittle down what had been a two hundred thousand dollar start-up estimate to the cost of a typical mid-priced car, an amount they could afford as a result of several years of saving to start their business.
Simply put, there are only two basic methods employed by bootstrappers: 1) finding ways to gain control of resources, and 2) using what they can get their hands on effectively. In other words, it all boils down to making money and saving money (inflows and outflows). There are some important considerations in choosing a business model that is amenable to bootstrapping. Start-up entrepreneurs without capital should think seriously about selecting a business that entails compensation prior to the delivery of a product or service. For example, consulting, mail order, or a niche oriented Internet business; all of these examples do not require a significant infrastructure or capital outlay. Other options could be an agency or brokerage-type business: if you can connect a party who needs to sell, with a party who needs to buy, with a profit margin for you as a go-between, you just might have a viable business model.
When most people think of entrepreneurship, they tend to conjure up a "one size-fits-all image." In other words, the idea of one big business, and only one business, comes to mind. There's nothing wrong with making money from several sources: trading cars, selling on the Internet through one's own or turnkey Web sites, selling from a company's catalog, dabbling in real estate, publishing reports, earning speaker's fees, occasionally consulting, and investing in other people's start-ups (with either cash or sweat equity labor) could be a pretty good mix. Regardless of your particular list of sources, you can take comfort in knowing that a lot of rich folks out there got that way by diversifying.
By trading on skills, bootstrappers can also band together to stretch limited dollars. For example, cohabitation could create a very logical arrangement: a desktop publisher, a photographer, a publicist, and a small ad agency might do well by sharing an office space. The possibilities are virtually endless for a creative thinker.
One possible problem that can arise from constantly adopting a "do-it-yourself" approach is that the business founder may fail to make good decisions and delegate tasks that should be handled by another person or a supplier. If meeting with a prospective client could possibly generate a significant sale, and yet the entrepreneur is consumed with other tasks that could be and should be farmed out, then the business may not ever realize its full potential.
One concept that very few start-up guides do not emphasize enough has to do with time. Have you thought about starting a business seven years from now? With seven years to "play with," you could start collecting office supplies in your basement, conduct research, introduce yourself to suppliers, buy 100 books on your subject, read all of your chosen industry's trade magazines-for years-and otherwise "know your stuff," as well as have all of your other ducks-in-a-row. Just remember, falling down usually happens a lot faster than climbing up. Give yourself the gift of time, keep the faith, and develop yourself as the number one asset of your business to-be.
Dr. Robert Lahm is the founder of several businesses and Web sites, an entrepreneurship professor, a public speaker, and a writer. His typical topics include creativity and innovation, careers, start-ups, and small business marketing. Webmasters and other article publishers are hereby granted article reproduction permission as long as this article in its entirety, author's information, and any links remain intact.
Copyright 2005 by Dr. Robert J. Lahm, EntrepreneurshipClearinghouse.com.
 Google News Updated : Thu, 24 Jul 2008 06:51:44 GMT Zimbabwe Parties May Sign Unity Deal Soon, Business Day Reports - Bloomberg
Bloomberg - By Carli Lourens July 24 (Bloomberg) -- Zimbabwe's ruling and opposition parties may sign a power-sharing agreement soon as they have already agreed on a wide range of issues, Business Day reported, citing people it didn't identify. Fearsome Zimbabwe militias are afraid Delayed Zimbabwe Power-Sharing Talks Seen Beginning Thursday Publ.Date : Thu, 24 Jul 2008 06:23:06 GMT Discovery may boost statin safety - BBC News
BBC News - Scientists have pinpointed a gene mutation as a major cause of a rare side effect of the cholesterol-lowering drugs statins. They hope the discovery could lead to a simple test to identify patients at increased risk of myopathy - severe muscle pain and ... Gene May Predict Cholesterol-Lowering Drug Risk, Study Says Genetic Cause of Statin-Related Muscle Pain Found Publ.Date : Wed, 23 Jul 2008 23:14:24 GMT Billionaires Back Antismoking Effort - New York Times
New York Times - Bill Gates and New York Mayor Michael R. Bloomberg announced their antismoking initiative on Wednesday in New York. By DONALD G. MCNEIL JR Bill Gates and Mayor Michael R. Bloomberg announced on Wednesday that they would spend $500 million to stop ... Video: Gates, Bloomberg Pool Riches to Fight Smoking The $500 million war on smoking Publ.Date : Thu, 24 Jul 2008 06:23:48 GMT Karadzic lived the good life with wine, song - Reuters
Reuters - By Ivana Sekularac BELGRADE (Reuters) - Radovan Karadzic lived the good life while hiding from justice for 11 years: he watched his diet, fell in love and hung out in a small bar where hardliners gathered to sing about his wartime exploits. Video: Karadzic's arrest sparks clashes - 23 Jul 08 Karadzic's secret life enthralls his fellow Serbs Publ.Date : Thu, 24 Jul 2008 04:05:33 GMT Rapper 50 Cent sues Taco Bell over ad - New York Daily News
New York Daily News - BY THOMAS ZAMBITO The rapper - real name Curtis Jackson - is suing the fast-food chain for using his hip-hop persona to tout its tacos. 50 Cent sues Taco Bell over ad campaign Rapper 50 Cent says Taco Bell stole his endorsement Publ.Date : Thu, 24 Jul 2008 06:15:09 GMT Christian Bale's lady sidekick: Sibi Bale - Los Angeles Times
Los Angeles Times - Like the Dark Knight/Bruce Wayne, Christian Bale is a real-life man of mystery. Averse to personal publicity, he is well-known for not wanting to discuss his private life. Christian Bale, Wife "Solid" at Knight's Spain Premiere Bale's family feud led to scuffle Publ.Date : Thu, 24 Jul 2008 02:10:31 GMT Favre's heir? With backing from mates, Rodgers waits patiently - USA Today
USA Today - By Matt Ludtke, AP By Larry Weisman, USA TODAY He no longer sounds like a retired player after seemingly passing on the opportunity to lead a talent-laden Packers squad. Video: The Rift Between Favre and the Packers Finding new home for Brett Favre won't be easy Publ.Date : Thu, 24 Jul 2008 02:06:18 GMT RSS Feed Reader |
PARLOT::Ebooks, Scripts,
Websites, and more... How often do the words "I need" come out of... Read More Our client in Chicago did, located right outside downtown too...a... Read More Okay, I'll begin by telling you that I've been divorced... Read More It's very important to get your business name right. You... Read More Every business has to start somewhere. What truly makes this... Read More I've seen terrible images today on the television and internet-bodies... Read More Richard Branson, billionaire founder of Virgin Records and Virgin Atlantic... Read More Many of us slave away for years for one uninspiring... Read More Times are tough. The economy is in a constant state... Read More Any time you make changes in your life you are... Read More In "The Incredible Hulk", mild-mannered scientist Bruce Banner discovered that... Read More The words you see onscreen trigger subconscious responses. Dark images... Read More Why, exactly, do you want to go into business for... Read More Communication is the key to vendor relations. In your small... Read More Running a business is not an easy endeavor, it takes... Read More For those of us who grew up with parents who... Read More Select the best response to the statement below:As a solo... Read More The successful entrepreneur is generally more inclined, once a business... Read More I'm convinced that asking the right questions is one of... Read More I sat watching a documentary on U.S. Navy SEAL Team... Read More ? Beginners often rush into business without any planning.? Unless... Read More Cooking isn't much different than building a business. You have... Read More Dwight Payne and Gary Heap reside in Santa Barbara, CA,... Read More Habits get a bum rap. When you think about your... Read More As a service provider you may not want to think... Read More
Adsense
websites
Needs Versus Wants For Entrepreneurs
Salon Marketing Using Wireless Broadband Internet Access
Face The Fear, Ladies
Business Name - How to Choose One
Lets Not Forget About The Little Guy
Hurricane Katrina, Death, and a Different Type of Entrepreneurship
Business Ideas
Six Steps to Guarantee Your Business Success
Why Most CEOs & Entrepreneurs Fail?
Beware the Opposition!
Identify the Growth Factors
Ancient Warrior Secrets For The Modern Entrepreneur
Are You Sure You Want To Start Your Own Business? Part Two of a Series
Vendor Relations
Staying Ahead of the Perils, Excerpt of Entrepreneurial Motivation Speech
The Desire For Money, Do You Have Business Sense?
Boundary Setting 101 for Solo Entrepreneurs
Business Planning Overview
Good Questions, good Answers; Bad Questions, Bad Replies
A Secret To Extraordinary Accomplishments
Secret Revealed In The Business Code
Business Development: The Basic Ingredients
Used-Book Case Study
5 Habits Of Successful Entrepreneurs
Book Yourself Solid: The Simple Selling Process
Affordable and Reliable Web Hosting Starting at $4.49/Month
Top Ten Ways to Increase Your Profitability
1) Go back to basics. Take a couple of steps... Read More
Competitive Edge
In his book, The Road Ahead, Bill Gates of Microsoft... Read More
Do You Have What it Takes to be a Successful Entrepreneur?
Print off this page, take the quiz and find out... Read More
Confidence = Preparation + Courage
It always amazes me when I see someone on television... Read More
Expand Your Resourcefullness!
The success and failure for the entrepreneur is largely dictated... Read More
Be Where the Pucks Going To Be
The "Great One" said it bestHockey legend Wayne Gretzky, when... Read More
Entrepreneurial Business Plan The Down And Dirty Way
Does the idea of running your own business sound exciting?... Read More
Which Niche To Conquer?
I'm sure that you've heard about how many start up... Read More
My Nemisis
Living in the twilight zone has its advantages. In the... Read More
Starting Up and Keeping Going
So you had that fantastic business idea, the one that's... Read More
The Entrepreneurial Difference
Who would ever have imagined that going door-to-door in my... Read More
Differentiation ? Smart Marketing Strategies for the Solo Entrepreneur
Are you ever frustrated or hesitant when you talk to... Read More
What Makes a Person an Entrepreneur?
Entrepreneurship is generally characterized by some type of innovation, a... Read More
The Risks of Entrepreneurship
The "spark" for many entrepreneurs is seeing an opportunity that... Read More
Independent Auto Detail Shop VS Biz Op or Franchise
Owning a detail shop can be an exciting and rewarding... Read More
Securing Second and Third-round Venture Capital Financing
Widget sales are booming ? the competition is scrambling, demand... Read More
Business Is No Guarantee of Riches
Q: I'm thinking about starting a business since that seems... Read More
History of Enterprise Car Rentals
So few really understand the drives and motivations of entrepreneurs.... Read More
Ancient Warrior Secrets For The Modern Entrepreneur
The words you see onscreen trigger subconscious responses. Dark images... Read More
How to Start a Franchise
Franchising InformationFranchise oppotunities are all around us today. You may... Read More
Good Questions, good Answers; Bad Questions, Bad Replies
I'm convinced that asking the right questions is one of... Read More
Key to Starting Your Own Clothing Company
Starting your own private label clothing company is not as... Read More
Walt Disneys Failures Could Inspire Entrepreneurs
You are a struggling entrepreneur and sometimes it feels like... Read More
The Danger Of Hate
As you have shown an interest in starting a business... Read More
Business Ideas
Richard Branson, billionaire founder of Virgin Records and Virgin Atlantic... Read More
Entrepreneur |