Bootstrapping the Low-Cost, No-Cost Site
Let’s get realistic. If you don’t have access to megabucks, you can always bootstrap your new business. In the case of financing your entrepreneurial dream, bootstrapping is a matter of making a little money go a long way.
- Saving money to make money – Making sure that cash is coming into your business is only your first step. Learning to conserve your ash is the second rule of bootstrapping. Controlling the outflow of money, or how that money is used, is quite important.
- Budget: Monitor and track your income and expenses to avoid over spending necessarily.
- Use other people’s money: Rather than borrow money from banks or investors, “borrow” money from your suppliers and customers. You can negotiate terms with vendors that allows you to pay for supplies after you have receive them. Then ask customer to pay for your products or services up front or in net 15 days. This strategy lets you use your customer’s money, rather than cash out from your packet, to pay for your expenses.
- Find a mentor: Mentoring is an alternative way to get advice from established professionals that costs you absolutely nothing. These experts probably won’t do the work for you, but they can advise you on critical decisions, introduce you to other professionals and suppliers, and sometimes even help find your first customers.
- Be resourceful – In addition to locating experts or finding cash, you need to identify other means of getting what you need.
- Barter and trade: One way to keep a lid on your spending and still acquire supplies and services is to trade with other companies. This is a method of paying for products or services without using cash.
- Test trial versions before you purchase: Software for your online business is expensive, use the free demo versions to try out if it suits your online business before you proceed to purchase the full version of the software.
- Use free tools: There are a lot of business-related software called freeware are accessible over the internet. Be caution of virus on installing the software and aware that freeware may not have technical support.
Finding the Perfect Investors
Investors, either individuals or a group of individuals, buy into your idea and provide the money you need in exchange for stock or a percentage of ownership in your business. You can choose from several types of investors; and each type comes with its own pros and cons. The trick is to find the best type of investor for your needs.
You might probably familiar with the idea of turning to your friends and family network for start-up funds. A major advantage of this strategy is that you have a lot of flexibility in how you structure the terms of agreement.
Here are some advantages of acquiring investors from your family and friends network:
- Obtain the money easily – You have an established circle of friends and family members who already know and trust you. Sometimes, you don’t even need to sell them on your business ideas or show them your business plan. They just want to help you.
- Get cash quickly – Unlike going to bank, you don’t have to go through any lending hoops or participate in a series of drawn-out meetings. Friends and family may be able to get their hands on cash quickly and hand it over to you sooner.
- Potential large pool of investors – You can easily find small amounts of money from lots of different sources.
The disadvantages of this method:
- Problems with unstructured terms – Knowing each other, you tend to keep things informal. That opens door to uncertainty, inconsistency and misunderstandings. Be wary of taking on friends and family members as investors without structured, written agreements that clearly state the terms of their investments in your company or the payback terms of your loan.
- Relationships interfered – Having your most trusted circle of network as investors can lead to heated disagreements, hurt feelings and your fair share of misunderstandings. Slight damages to these friendships or relationships with family members aren’t easy to repair.