Bootstrapping your business simply means starting out a business with very small capital, usually from your own pocket. It also entails relying on internal funds rather than on external funding sources.
Below are practical and effective guidelines on how to bootstrap your business.
Remember that debt and loans will never result in wealth. Despite the temptation of buying what you think your business needs, try not to give in to it. You will have a hard time saving enough funds for your business to make it a going concern if you spend income from the business the minute you get your hands on it.
Settle your debts
Always settle your debts whenever you have extras. While borrowing funds can help you with starting a business, make sure that it is your last resort. Banks will always want to sell you their product and you might be lured into availing of their loans even if you don’t need it yet or ever.
A multi-millionaire businessman is of the opinion that one doesn’t need to borrow if you know how to make money. According to him, interest on loans can be high and at the end of the day, you might end up shelling out twice your loan amount because of exorbitant rates.
Leave little in your savings account
Savings account while generally, a safe place to keep your money won’t give you much return. Due to the very low-interest rate (sometimes less than one percent!), it’s virtually like putting your money in your wallet. The interest is so minimal, you won’t even notice that it is earning. It is better to invest your money in a brokerage. Try investing in various index funds. Those who do so reportedly get about 5 percent and up without much effort.
Save more, spend less
You have to save money and curb your spending even if your business is already doing well. Some people may advise you to enjoy your money, after all, it is yours and you have worked so hard to grow your business. While enjoying what you’ve earned from your business is fine, it is more practical to save enough while you are young. This gives you some assurance that you will be retiring with more than enough to enjoy your twilight years.
Try to plow back the income you’ve realized back into your business. This means you have to pay your suppliers, your staff, your creditors (if you happen to have a loan) and your landlord if any. Also, settle your everyday business expenses. Do all these before even thinking of buying items that don’t fall under necessities.
Bootstrapping isn’t a daunting task if you have a keen understanding of how to accumulate wealth. Also, reinvest your money in the business rather than spend it on personal necessities that do not help add up to your wealth. Following these guidelines entails sacrifice but it will all be worth it in the long run.