Do you need to start or grow your business but have
little money? Before you look to banks and similar
sources of financing, why not bootstrap your way to
A bootstrap is a small loop of leather or other
material that is found on the top rear or sides of a
boot. The purpose of the bootstrap is to help you
pull your boot on.
In business, bootstrapping has come to mean helping
oneself without seeking outside help. It means using
your own resources to finance, promote, and develop
Here, then, are some ways of financing your own
business by using your own initiative and depending
less on outside bank financing.
1. Operate a Home-Based Business
Operating your business from home could save you a
fortune. First of all, you eliminate the costs of
expensive commercial rent, commuting, et cetera.
As well, your business use of home expenses would be
deductible for income tax purposes. Since your home
is your base of operations, your travel and automotive
expenses from your home to clients would be deductible.
2. Accept Credit Cards
Rather than financing receivables and assuming the risk
for bad debts, why not accept credit card payments?
3. Drop Ship Products
Rather than financing and stocking inventory yourself,
consider drop shipping.
With drop shipping, when you make a sale you contact
the manufacturer or authorized distributor who ships
the product to the customer with your invoice and
shipping label. Advantages include no warehousing,
shipping, or inventory costs.
4. Use Your Customer`s Money
Selling memberships, subscriptions, gift certificates,
and coupon books are just a few ways of getting your
clients to pay upfront. Obtaining advance deposits
and retainers from your customers can help finance your
business operations and reduce or eliminate the need
for bank financing.
Instead of trying to finance the manufacturing and
marketing of your invention, which could cost millions
of dollars before you have your first sale, why not license it
to a company with the necessary expertise and capital?
You will then receive royalties in return for your idea.
6. Other Bootstrap Financing Methods
Aggressively control costs, barter, get extended terms from
suppliers, establish strict credit and collection policies
and procedures, rent (or lease) instead of buying equipment,
buy used equipment instead of new, sell off excess inventory
and equipment, obtain free publicity instead of paying for
advertising, and do whatever else is necessary to generate
cashflow and profits.
In these ways and many others not listed here, you may be
able to start and grow your business successfully with very
limited capital. Thus, you will avoid having to obtain
expensive debt or equity financing.
Many who were unable to obtain financing from any other source
have successfully bootstrapped their way to business success.