Venture Financing:

Bootstrapping

Strategies for Successful Bootstrapping

 

Osnabrugge,M.V., and Robinson, R.J.,, the authors of  Angel Investing

 

Employing bootstrapping measures to grow a small firm clearly relies greatly on networks, trust, cooperation, and wise use of the firm's existing resources, rather than collecting new financial resources from outside.

Venture Financing Funnel

Venture Financing: Key Documents

Strategies for successful bootstrapping are based on the following seven recommendations:

  1. Get operational quickly.  Use a copycat idea in a small target market to get a firm off the ground fast. New and bigger opportunities are certain to develop once the firm is in business.

  2. Look for quick, break-even, cash-generating products. Firms that are making money build credibility in the eyes of customers, employees, and investors. Therefore bootstrapped firms may wish to take on profit opportunities that large firms regard as distractions.

  3. Offer high-value products or services that sustain direct personal selling. Since it is usually difficult and costly to persuade customers to switch from a familiar product or service to a substitute offered by a new firm, successful entrepreneurs usually choose high-ticket products and services where their individual passion and virtuoso marketing and sales tactics can substitute for a large marketing budget.

  4. Forget about the crack team. Small bootstrapped firms do not have the financial means to afford and recruit a well-balanced management team of seasoned veterans. Reliance on inexperienced personnel is common - and not always a disadvantage.

  5. Keep growth in check. Since bootstrapping supplies only limited financial means for growth, bootstrapped firms should take care to expand at a rate they can control. Too many start-ups fail because they grow beyond their financial means.

  1. Focus on cash (not on profits, market share, or anything else). Because of their financial means, bootstrapped firms cannot afford to pursue a number of strategic goals. Bootstrapped firms cannot pursue loss-making strategies to build a market share or a customer base. Having a healthy cash flow is critical to survival, so their sales strategies must ensure healthy returns from the outset.

  2. Cultivate banks before the business becomes creditworthy. Bank financing is usually unavailable to start-up firms, especially if little or no collateral is offered. However, bank financing is quite important for all small firms once they are established and making some profit. Keeping good books, immaculate records, and sound balance sheets from day one allows you to approach your banker with confidence once the firm has been in operation for a few years and is creditworthy.

 

 

6+6 Drivers for Entrepreneurship

 

 

Step-by-Step Guide To Venture Financing

Bootstrapping Methods

Product Development

Business Development

Minimize the Need for Capital

Meet the Need for Capital

Venture Map To Financing

Venture Planning

Business Planning Chart

The Funding Round

Long Term Capitalization Planning

Finance, Administration, Marketing, Sales

Business Operations

Would-Be Entrepreneur

Reality Check

SWOT Analysis for a Start-Up Venture

Top 10 List of “Easiest Businesses To Start”

The First Few Steps In the Right Direction

Venture Planning Checklist

Customer Assessment

Venture Model

Financial Assessment

Overall Venture Evaluation and Reality Check

Startup Company

VC Is Not the Only Way

Start-up Capital Formation Process

5 Tips for Internet Startups

Startup Company IP Strategies

Protecting Your Business Name

Venture Management

5 Critical Success Factor for New Ventures

What Changes as Company Grows

Entrepreneurial Success

7 Routes To High Profits

How To Succeed in Business

7 Simple Steps to Small Business Success