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10 Ways to Fund Your Startup: Bootstrapping
Hello all and welcome to part 2 in my series on 10 Ways to Fund Your Startup from Angel Investors to Capitalists, Bootstrapping, Crowdfunding & Seedfunding and more! And in the last one I talked about how you can use the power of the crowd and use crowdfunding to start up your new start up with. In this part I'll be talking about Bootstrapping as a way to raise some, or even all of the funds your start up needs to get it off the ground and into the ether!
So then, Bootstrapping
. What is Bootstrapping? Well in its purest, most rawest essence, it is tapping into the funds that you already have available to you that you can use to put down as funds to help get your business idea up and running. Whether it helps in part, or in full. Or just enough to get you what you need (like products, materials, machinery, stationary etc) to get up and running in the most basic of ways so you can start making some sales and get cash flowing which you can then use to put back into the business to buy more stock with, products, tools, equipment, staff etc to help keep it ticking over like the well oiled machine it was imagined and invented, created and destined to be!
How to Raise Funds by Bootstrapping?
There are several ways you can bootstrap startups. First there's looking at what funds or capital you already have like personal savings, to even using credit cards if you have any that aren't maxed out!
You can make use of your own personal savings, if any, even borrow from a 401 or just your own paycheck from your regular job and use some or all of it to bankroll your new start up idea until you can get/earn/make enough money to keep things running without needing any more outside funding like this. The only problem with using your personal savings to fund your new startup idea is that if your startup flops then you will be out of your life savings. But it can also be very helpful without getting help from else where (loans etc) That's one reason why this is one of the most used methods of bootstrapping amongst entrepreneurs today and pretty much always has been by prideful people for that matter too!
: Don't spend all of your savings on your startup and keep some back as an emergency as there's always going to be clients that don't pay first time, pipes that burst, things, break and need replacing that without your business can't run.
If you have them and your credit rating is good, you can use credit cards to buy the initial equipment and things your business will need and cover some setup costs too. You could save time and fees and interest charges by transferring the balance to other credit cards whilst you're waiting for those first paying clients and customers to come through. It can be risky doing this and using credit cards as a way to pay for those things, equipment etc that your startup needs to get running, and if it flops, you'll have to sell it all and pay it all back as you will anyway. But if you know it is going to be successful, and your credit rating is good, you can always turn to the credit companies and use credit cards to fund your startup, pay it back and the rest is profit!
: You'll be personally responsible for paying off the balance in full on each credit card you use and the interest they charge you. But if done right, and your startup is successful, you should be able to pay these back each money until clear and improve your credit rating for it too.
Other Ways to Bootstrap
There are more ways to bootstrap than this. I've just provided above it's just those are some of the most chosen methods by people bootstrapping their business idea today. Some other ways are to;
- Buy used equipment instead of new stuff to save some extra cash.
- Rent or lease equipment instead of buying it to save more at the start but not over time.
- Sell things like excess, old stock, equipment, machinery etc.
- Barter with people as much as you can like Del Boy Trotter!
- Establish and enforce strict credit collection polices.
- Find out how to get free publicity and advertising without paying for it.
- Do whatever it takes to generate some cash flow and maximise profit!
And that completes part 2
of this series for 10 Ways to Fund Your Startup: Bootstrapping
Do you / have you bootstrapped your new startup or business?
What other ways to Bootstrap new startups are there?