What is financial bootstrapping and what does it mean for ownership and profits?
Bootstrapping originates from the expression “pulling yourself up by your bootstraps”. In practice, it means using your own money, money from co-founders, or money that the business generates from customers to finance growth. Bootstrapping keeps full control with owners and founders, who also retain all profits. One of the most appealing by-products of bootstrapping is that it forces entrepreneurs to operate efficiently or organise the business model so business finance is covered by operating revenues. With successful financial bootstrapping, you can demonstrate cashflow and profitability, placing yourself in a greater position to secure the first choice of external finance on more favourable terms.
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The The Bootstrappers guide from Seth Godin is now a book – but here’s a summary from J.D. Meier.
WHEN: You are setting up your business or are considering raising any type of finance for growth.
WHY: Seth is one of small business’s most respected advisers on bootstrapping.
WHAT: A free online book and toolkit reviewing all aspects of bootstrapping and making your business more effective and valuable as a result. Seth challenges entrepreneurs to see external finance as only a last resort for effective growth.
WHEN: You are considering bootstrapping.
WHY: Seeing a clearcut pro and con list will help you determine if the process is right for you.
WHAT: A short article that summarises key for and against arguments.
WHEN: You are considering bootstrapping but don’t know how to implement it.
WHY: Discovering best practices will help you roll out the methodology in the best possible way.
WHAT: A PDF with thorough data, helpful infographics and explanations on how startups and small businesses are financing their businesses.
Bootstrapping case studies
WHEN: You are considering bootstrapping but aren’t convinced it’s right for your sector.
WHY: Getting honest, real world insight from a variety of sources helps you match the idea of bootstrapping to actual models and events.
WHAT: A selection of short comments from entrepreneurs across different sectors on their experience with bootstrapping and financing.