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.
Financing: Key Documents
Strategies for successful bootstrapping are based on the
following seven recommendations:
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.
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
opportunities that large firms regard as distractions.
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
sales tactics can substitute for a large
Forget about the crack
Small bootstrapped firms do not have the financial means to afford and recruit
management team of seasoned veterans. Reliance on
inexperienced personnel is common - and not always a disadvantage.
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.
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.
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
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
Guide To Venture Financing
Minimize the Need for
Meet the Need for Capital
Venture Map To Financing
The Funding Round
Term Capitalization Planning
Finance, Administration, Marketing, Sales
for a Start-Up Venture
Top 10 List of “Easiest Businesses To Start”
The First Few Steps In the Right Direction
Venture Evaluation and Reality Check
VC Is Not the Only Way
Start-up Capital Formation Process
5 Tips for
Success Factor for New Ventures
What Changes as Company Grows
7 Routes To High Profits
How To Succeed in Business
7 Simple Steps to Small