You’ve got an incredible new business idea and you need financing. It’s as easy as a quick trip to the bank, right? After the bank’s loan officer manages to stop laughing enough to talk, he may suggest you try bootstrapping until your business is more successful.
Before you head for the closet to find that ratty pair of hiking boots from last summer, I’d better tell you that bootstrapping actually has nothing to do with shoes. In business, this term simply means starting a new business and keeping it running without financial backing from a bank or investor. Instead, you fund the business yourself and only buy the things you absolutely most have. (Despite what the guy at the office supply says, an executive leather swivel chair is rarely a must.)
I know what you’re thinking – If I could fund the business myself, I wouldn’t be asking for a loan! Actually, even most wealthy entrepreneurs ask for loans or find other investors when they are starting new businesses, because they don’t want to tie up their money.
How Bootstrapping Works
Many people use credit cards to fund their new business. Some simply pay off one credit card with the other as the monthly bills roll in. (Paying one credit card with another is not a good idea, by the way.) Others try to pay at least part of the monthly balance with household money, which brings up another source of income-friends and family. Sure, finding a big investor is hard, but maybe you can convince good ol’ sis to vacation in her backyard this summer and lend you the three thousand she was going to spend on a luxury cruise. Just don’t overdo the borrowing; you don’t want to create hard feelings.
Once you have a way to purchase the necessities, be creative with the rest of your needs. Comparison shop, ask for specials, or trade services with someone else. For some terrific ideas on how to make your money stretch while bootstrapping, check out Secrets of Bootstrapping.
By the way, I’d love to hear your ideas for starting a new business on next to nothing, and I’m sure everyone else would, too.