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Bootstrapping your business
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Small businesses receive financing through various sources. Some are started by outside investors through limited offerings. Some take out and rely upon loans from banks and other creditors. Some receive venture capital or assets from an angel investor.
And then there are bootstrappers. Bootstrapping is starting and running your business as a lean, efficient and self-sufficient machine. You're not thinking of a large posh office; maybe a home business or shared office will do. You don't look for the most expensive top of the line equipment for that restaurant, instead you browse the for sale section of Craigslist because you know during bad times, deals may be had.
You do all this because you are not looking for sources of capital outside yourself, and your friends and family. Maybe you know you will not qualify for a line of credit (especially in light of the current credit crunch) or you do not want to have the burden of satisfying outside creditors or investors.
So you go lean, efficient, sufficient. You pare your business down to only the absolute essentials. You ask yourself, "What is the least I can buy to do everything I need to do?" Do you need that top of the line computer and printer when your product or service does not depend on a fast computer? A voice over IP (VOIP) phone system work for you, if you will barely be on the phone and do not depend on it that much.
Bootstrapping may be much easier for service businesses as opposed to one that requires inventory, but the concept is still the same. Keeping more frequent tabs on inventory and needs so that you never run out of products, but you never are overstocked much either.
Starting a small business is scary, especially in these tough economic times. Some of you may be forced to start your own business after a layoff, some of you chose to do so. Either way, a penny saved is a penny earned, especially when it is your penny to begin with.
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