What is the number one question when starting a new business? Where do I get the money of course.
Raising the amount of capital needed is what determines if a new business is going to get off the ground.
A great place to start is with your own resources, or Bootstrap Financing.
Bootstrapping involves using what money you already have and smart business tactics to start a new business.
Your own money is the easiest place to start.
Use any cash saving, 401K's and IRA's.
A home equity loan or other type of loan secured by a personal asset may be an option as well.
You can either contribute money as equity in your new business or make a personal loan to your company.
You may wish to consult your accountant on the best route to take.
The next best source for loans or investments is your family and friends.
It is not unusual for your Mom, Dad, other relatives or friends to have access to more capital than you.
You may be able to obtain a loan from them or give them an equity stake in the company.
A close acquaintance is going to have more faith in you as an entrepreneur than an unknown lender.
Trade credit is another great source of bootstrap financing.
It can be difficult to get favorable trade terms with suppliers when you are new in business.
Many vendors may even require you to pay upfront or COD.
You will have to use your negotiating skills and get to the right decision maker in order to get favorable trade terms.
Ask vendors for 30, 45 or even 60 day terms to boost your inventory without spending a lot of upfront money.
This is one of the best ways to reduce the amount of working capital you need, especially in retail operations where a lot of inventory is required.
Your customer base may be another source.
If a customer writes you a letter of credit, stating their intent to purchase your product, it could help you get favorable terms from suppliers.
Sometimes you may even be able to get existing customers to pay for products and services in advance.
This will give you needed capital up front.
When purchasing necessary equipment for your business search for vendors that are willing to finance the purchase.
Some vendors offer long term financing especially on large equipment.
It might be a smarter choice to lease equipment rather than buy.
A lease generally carries lower upfront cost, and you will be able to avoid functional obsolescence by simply trading the leased equipment when a newer better version becomes available.
There are numerous advantages to using the various methods of bootstrap financing.
If you borrow less money, then your business will be worth more.
This will put your company in a much better position when the need arises to raise more capital from outside sources.
For most new businesses bootstrapping alone won't be enough.
You will probably need to get other types of financing along the way to success.
But bootstrapping and hard work is a great place to start the journey.
Raising the amount of capital needed is what determines if a new business is going to get off the ground.
A great place to start is with your own resources, or Bootstrap Financing.
Bootstrapping involves using what money you already have and smart business tactics to start a new business.
Your own money is the easiest place to start.
Use any cash saving, 401K's and IRA's.
A home equity loan or other type of loan secured by a personal asset may be an option as well.
You can either contribute money as equity in your new business or make a personal loan to your company.
You may wish to consult your accountant on the best route to take.
The next best source for loans or investments is your family and friends.
It is not unusual for your Mom, Dad, other relatives or friends to have access to more capital than you.
You may be able to obtain a loan from them or give them an equity stake in the company.
A close acquaintance is going to have more faith in you as an entrepreneur than an unknown lender.
Trade credit is another great source of bootstrap financing.
It can be difficult to get favorable trade terms with suppliers when you are new in business.
Many vendors may even require you to pay upfront or COD.
You will have to use your negotiating skills and get to the right decision maker in order to get favorable trade terms.
Ask vendors for 30, 45 or even 60 day terms to boost your inventory without spending a lot of upfront money.
This is one of the best ways to reduce the amount of working capital you need, especially in retail operations where a lot of inventory is required.
Your customer base may be another source.
If a customer writes you a letter of credit, stating their intent to purchase your product, it could help you get favorable terms from suppliers.
Sometimes you may even be able to get existing customers to pay for products and services in advance.
This will give you needed capital up front.
When purchasing necessary equipment for your business search for vendors that are willing to finance the purchase.
Some vendors offer long term financing especially on large equipment.
It might be a smarter choice to lease equipment rather than buy.
A lease generally carries lower upfront cost, and you will be able to avoid functional obsolescence by simply trading the leased equipment when a newer better version becomes available.
There are numerous advantages to using the various methods of bootstrap financing.
If you borrow less money, then your business will be worth more.
This will put your company in a much better position when the need arises to raise more capital from outside sources.
For most new businesses bootstrapping alone won't be enough.
You will probably need to get other types of financing along the way to success.
But bootstrapping and hard work is a great place to start the journey.
SHARE
