TYPES OF BOOTSTRAPING
10 RULES FOR BOOTSTRAPING
10 RULES TO LAUNCH BUSINESS
20 WAYS TO BOOTSTRAP YOUR BUSINESS
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Entrepreneurship is the act of being an
entrepreneur, which is a French word
meaning "one who undertakes innovations,
finance and business acumen in an effort
to transform innovations into economic
This may result in new organizations or
may be part of revitalizing mature
organizations in response to a perceived
opportunity. The most obvious form of
entrepreneurship is that of starting new
businesses (referred as Startup Company);
however, in recent years, the term has
been extended to include social and
political forms of entrepreneurial
When entrepreneurship is describing
activities within a firm or large
organization it is referred to as
intra-preneurship and may include
corporate venturing, when large
entities spin-off organizations.
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Bootstrapping or booting refers to a group of
metaphors that share a common meaning:
a self-sustaining process that proceeds without
The saying "to pull yourself up by your bootstraps"
was already in use during the 1800s as an example
of an impossible task.
Bootstrap as a metaphor, meaning to better oneself
by one's own unaided efforts, was in use in 1922.
This metaphor spawned additional metaphors for a
series of self-sustaining processes that proceed
without external help.
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There are different
types of bootstrapping:
Minimization of the
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Ten Rules for Bootstrapping Your Business
1. Lead the Life
Cut Your Overhead. The first rule of bootstrapping
is to cut your overhead costs to the bone.
To achieve the bootstrapper’s mindset, the mental
tai chi of becoming singular in your business focus,
you must learn to lead the life.
Payments for fancy houses and cars will slowly tear
away at your personal resolve. Fancy meals at
restaurants and lavish parties will compromise your
And high-end offices with luxury furnishings will
put you at a negotiator’s disadvantage.Frugality
is not a skill that can be turned on and off.
It’s a concept you must become married to.
Every needless penny you spend will jeopardize
your ability to succeed.
2. Never Blame Others
Do It Yourself. As soon as you find yourself
blaming other people for things not being done,
just take a deep breath and do it yourself.
It becomes so easy to let yourself off the hook
by simply blaming someone else. But in doing so,
you put your company at risk. You have to be the
emotional leader driving your business forward,
with an unusual level of loyalty for what you’re
Frustrating as it may seem, you can’t expect
others to have your same level of drive and
commitment. Ultimately, you are singularly
accountable for your company’s success or
3. Don’t Plan for Failure
Remove the Guardrails at the Cliff. Planning
for easy bailout options has a way of
undermining your resolve. Every startup goes
through tumultuous tough times testing the
mettle of the entrepreneur.
And the tough times are what separate the
survivors from the many strewn casualties
lying alongside the startup highway.Planning
for failure almost invariably leads to failure.
Every step that the early stage entrepreneur
takes on the startup tightrope will have them
looking for an easier option, a soft landing
so to speak. Removing the soft landings has a
way of clearing your focus and strengthening
4. Test Your Limits
Constantly. Expanding skill sets and relentless
passion are two key ingredients. But blind passion
without the skills can be a very destructive force.
When is the last time you went outside and physically
ran as fast as you possibly can? For most, this was
a long time ago. But how will you know how fast you
can run if you don’t test yourself.
This is similar to the business world where knowing
your limits is the best way to manage your options.
5. The Business Plan Fallacy
In Quest of Low Hanging Fruit. Contrary to what
academicians teach, successful bootstrappers
seldom write business plans. I’ve not met many
that have. This is a luxury few can afford.
But more importantly, bootstrappers have a constant
need to keep their options open. Their relentless
drive for revenues forces them to keep their
peripheral vision intact as they view the
opportunity landscape.In the early stages of a
startup, bootstrappers have little accountability
for their actions.
Their primary need is to prove a viable concept in
a viable market. And this means revenues come before
6. The Transitional Business Model
Search for Low Hanging Fruit. Potential revenue
streams come in odd shapes and sizes, but you
begin by selling yourself. For that matter,
every transaction begins with you selling
yourself as a competent, credible person with
Often times the first revenues for a fledgling
startup come from individual consulting contracts.
Selling your own expertise pays the bills and can
set the stage for you to metamorphose into the
business you wish to become.
Many would-be entrepreneurs fail to think through
the options of creating a transitional business
model where you begin with an easy entry point
and transition into the business you ultimately
want to become.
This approach will invariable take unexpected
twists and turns along the way, so be flexible
and know when to make the next turn.
7. Little Things Matter
Micromanage to Your Advantage. Sometimes the
littlest details will throw your startup company
into a tailspin. Blind trust is a luxury that
startups can ill afford. Understanding your
business inside and out will give you much
better operational control.
In nearly every case there is a direct correlation
between the decisions you make and the revenue
streams you have coming in. Understanding this
cause-and-effect correlation is absolutely critical
for you to succeed.
8. Bankers are not Your Friend
Line up Tons of Credit Before you Start. Few would-be
entrepreneurs can imagine the difficulty of finding
credit once they leave their steady income jobs.
Credit scoring systems have a way of branding you as
a terrible risk almost instantly as you enter the
startup starting blocks. So plan ahead and line up
credit in whatever forms you can find, and lots of
it.Business never works the way you have it planned.
Chaos theory is alive and well, and will be knocking
at your door when you least expect it.
9. Find a Mentor
Surround Yourself with People Who Look Like What
You Want to Become. Entrepreneurs need to surround
themselves with other entrepreneurs. And it’s even
better if you can surround yourself with people who
are successful in the same type of business you are
entering into.Successful people often can’t tell
you what it is that makes them special, but if you
hang around with them, they will teach you through
their actions. Sitting in on a negotiating session,
or being in the same room when they deal with a
personnel issue, will give you unique pieces of
information that has never been captured in books.
10. Reckless and Relentless
The Bootstrapping Difference. The bootstrapper
business model is different than that of a
“funded” company. Bootstrapping is more about
drive and determination than it is about
intelligence, and more about getting things
done that doing things right. It’s better to
get it done than to get it perfect.
That’s not to say that you shouldn’t be bright
and try to do things right, but successful
bootstrappers tend to be more reckless and
driven, and necessarily so, than their
‘funded’ entrepreneurial counterpart.
Funded companies demand accountability, and
consequently this restricts the latitude
with which they operate. People investing
in a startup want to know that their money
has been invested wisely, so recipients have
more of an obligation to curb impulsive
directional changes in the business.
Bootstrap startups have that touch of raw
freedom people crave. And this kind of
freedom is intoxicating.
By Thomas Frey
Ten Rules for Bootstrapping Your Business
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Below are 10 rules that you need to follow
to successfully launch a business with very
1. Think twice before borrowing.
It would be ideal if you will not have to borrow
money to start your business. After all, you want
your own business to give you an additional source
of income, if not the main paycheck. You do not
need another bill to pay.
But sometimes, you really have to borrow money to
keep going. A major reason why many small businesses
fail is inadequate capital. If you really have to,
you must be prepared to take on the right kind of
debt. Not all debt is bad debt. You have to ensure
that before taking on a debt, you must see a way to
pay it back through your business.
As much as you want to be optimistic about your venture,
there is always the possibility that your business can
fail. Instead of fattening up your bank account, you
could end up selling your house, your car and
withdrawing your children’s college tuition just to
pay off the debts. Be a smart risk taker.
2. Be lean and mean.
If you have limited capital, set aside any thoughts of
a fancy store or great office. Start home-based and
explore the advantages of working at home. Or if you
must be “out there” selling your products, rent a
small section at a flea market or fair. You may
consider renting at the mall only when you see
money coming in.
In terms of legal structure, you can save tons of
money by starting as a proprietorship. A Corporation
is expensive to set-up, requires vast amounts of
record-keeping, and will tax you twice as an
individual working for the business and as a
Plus, you have to operate as tightly as possible.
As a sole business owner on a budget, you do not
have the luxury of wasting supplies, making
unnecessary long-distance calls, and spending
office money without a thought. Now every expense
comes from your own pocket.
Spend money only when you really have to. In fact,
you can save tons of money if you select a business
based on equipment that you already own. For example,
consider starting a photography business if you
already have your camera and photography gear. You
may want to start a daycare business if you already
have enough space in your house rather than spending
money at the start of the business constructing new
rooms in your house. If you must buy equipment, do
so only when you have already landed your first
account. Otherwise, consider renting it for the moment.
3. Choose your business carefully.
Your choice of business will spell the difference
between making your business a success on a
shoestring budget or not. Some businesses, such
as a file storage facility, require enormous
capitalization. Other businesses, like a wedding
coordination business or a computer consulting
business can be started on a thin budget. Choose
a business that can be started even with little
If your dream business requires a significant
investment to start, you may want to downsize
your dreams first and start a business that
you could afford to start. It may be a smaller
version of your original vision, or another
business interest altogether. This will allow
you to acquire the needed entrepreneurial
skills, learn how to start and run a business,
and save enough capital for your dream business.
Even if you are not able to save enough, your
track record as a businessperson can make it
easier to borrow loans from banks.
4. Make sure that there is demand
for your business.
If you do not have enough resources, you have
little room for trial and error. Your business
can only survive if it generates enough demand
to sustain it. Be sure that the business you
are about to start can give the results that
you desire. Otherwise, you may even lose the
very few resources that you have.
5. Look Big. Many home business
entrepreneurs are faced with the
“Should I tell my customers that I work solo
from my kitchen"; or “Should I pretend that
I am running a well-oiled machine?”
In most businesses, your success hinges on
how customers perceive your venture. Letting
customers know that you a one-person home
business may be the kiss of death for your
fledging enterprise. Customers prefer dealing
with a business that shows professionalism and
ability to deliver what it promises qualities
often associated with large businesses.
Looking big does not necessarily mean spending
tons of money. You can start with sharp looking
business cards and stationery. If you have a web
site, you can create one that looks just like
one of the big boys. Your phones must be answered
professionally as possible, making sure that no
dogs can be heard on the background. Barry Edwards,
Louisiana’s Small Business Entrepreneur of the Year
Awardee for 2000, even changed his voice when
answering the phone to pretend that he has an
assistant when he was just working from home.
6. Be creative.
You will only survive as a bootstrapper if you are
able to use your wit and creativity to extend the
meager resources that you have. As you start your
business, you need to think ways to get things done,
as cheaply and efficiently as possible. The less
cash outlay, the better. After all, splurging on
one aspect of your business say, buying a top of
the line laptop computer may leave you with
nothing to market your business.
You need to be creative and resourceful in finding
ways of stretching your thin budget. Need a business
card? VistaPrint offers 250 cards for free. If you
need a web site, go to the public library, borrow
books on Web design, and begin learning how to
create Web sites.
One reality of having little cash is that you have
little recourse in doing things. You do not have
the luxury of a 30-man Web design team, or a
battalion of sales people to sell your products.
You have to force yourself to learn new things,
and find ways to bring in the buck. If you want
to survive, you need to rise above being a
cash-dependent entrepreneur to a wit-dependent
7. Run your business with a passion.
Starting a business is hard, doubly so if you
have a limited capital. It is like going to a
battle full of heart but with little ammunition.
It doesn’t mean that you can’t win, but you have
to act smartly, maximize your resources, and go
after your goal with a burning passion. If you
are passionate in what you do, you tend to work
harder and go that extra mile. After all, you
need to put in more time and effort to compensate
for the lack of capital.
In your clothing business, for example, you will
have to do the designing, sewing, finding and
selling to buyers, and writing the press release
to market the business. If you lack passion, you
will not have the strength or the patience to do
all these, and more. Passion will help you sustain
your enthusiasm and energy to do what is required
to get the business off and running. It is what
sets successful bootstrappers apart from other
8. Your customers are your gold mine.
You may not have the resources to aggressively
seek out new customers. Nor do you have the
deep wallet to offer grandiose customer loyalty
programs. But if you take care of your customers
really, really well, then your customers will
take care of you. Customers go back to businesses
that offer them quality and timely service, help
them make informed choices and make their lives
Every business owner knows that the customer is
king. If you do not have the money to easily
acquire new business, you will make sure that
you always roll out the red carpet for those
that you already have.
9. Think cash! As a bootstrapper,
you do not have money.
You do not have the luxury of waiting for 60
or 90 days before you can get paid for services
that have already been rendered or products
already provided. You need cash, and you need
Therefore, you must always make sure that your
business generates cash fairly quickly. Will
Davis, in his book “Start Your Own Business
for $1,000 or Less,” advises shoestring
entrepreneurs to always select cash payment
opportunities. As Davis says, “Select a
business where you get paid quickly in cash.
If your work will take time to complete, get
a partial payment at the start. Often this
will be enough to pay for the job’s expenses.”
One strategy to make sure that you have cash
is to avoid or limit inventory. Inventory
means that your cash is held up in your items.
Purchase only what you can sell. Avoid
overstocking items particularly slow moving
ones. Unless you can move inventory quickly,
do not tie up your money on excess inventory.
10. Keep the money rolling.
As soon as your business starts earning, make
sure that you keep a certain percentage of the
profits for the growth of your business. Avoid
using your earnings for your personal use.
There are many shoestring entrepreneurs who go
on a personal shopping spree after receiving
their first check, without any regard for the
next inventory requirements, PR and marketing
campaigns, or new equipment to purchase.
You may allocate a certain portion of your
income as your salary, which you can then
use for whatever purposes. The rest should
be placed in your business account. Your
business needs all the resources it can get
for it to reach the next level.
If you regularly plow back the money to your
business, you are then in a better position to
expand and grow the business.
10 Rules for Starting A Business on a Shoestring Budget
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1. Start A Service
Service businesses generally require less startup
capital than product based businesses and you can
bring money in right away.
2. Figure Out What Makes
The Most Money
Don’t spend time doing the things that don’t bring
in money. As a startup you need money in the door
as soon as possible! Defer, delegate, or ignore
3. Get Volunteer Help
High schools and foreign language schools are great
places to get free help to get your business off
the ground (I’ve used both).
4. Hire Part Time
Get someone to do the admin tasks for your business
on a part time basis. You don’t have to hire full
time until you have more money coming in. The first
person I ever hired was working for me one hour per
day to start.
Even better than hiring someone is automating your
tasks! Think about what you do repetitively and
find a way to make it more automatic. It will save
you time and help you avoid having to take on a
staff member’s salary. Automate the regular and
humanize the exception.
6. Form Partnerships
Find businesses who also sell to your customers and
form partnerships with them instead of spending
money on costly advertising.
7. Use Pay Per Click
Pay Per Click (PPC) advertising is not always cheap
but it is measurable. Run small tests and see which
ones are working before committing more money to
8. Use Search Engine Optimization
Even better than PPC is Search Engine Optimization
(SEO). Create useful and relevant content to help
your website rank organically in the search engines.
You can also read my SEO Advice Series for more help
9. Leverage The Media
Choose a hot topic the media is covering and present
yourself as an expert. The media is always looking
for people to comment on the day’s issues so you’re
making their job easier if you have valuable informati
on to share.
10. Think Big, Start Small
Have a big picture plan but get started today. Remember
that little steps lead to big steps and before you know
if you’re a success! Entrepreneurs tend to overestimate
what they can do in the short term and underestimate
what they can do in the long run.
11. Do Something Every Day
For Your Business
Even if it’s answering one email, sending out one press
release, or commenting on one blog, do something every
day to help you move forward. Never let the business
building momentum die.
12. Don’t Quit Your Day
Job Until You Can Afford To
If you quit to go full time and then run out of money
six months later you’ll have wasted the opportunity
to really build something great because you didn’t
have enough time. Start off slowly and make sure you
can support yourself before jumping in full time.
13. Turn Everyone Into A
Your friends, family, suppliers, customers, investors,
etc all have the ability to refer business to you. Let
them know that you’re looking for new clients and that
you would really appreciate their help. You can even
offer a financial incentive for them to help you out.
14. Watch Your Payments
Try to extend your payment dates for suppliers and
also get money more quickly from customers. Starting
a business is a cash-flow game so get money in as
quickly as you can and pay it out as slowly as you can.
15. Start At Home
Don’t expand your business and get an office until
you’ve proven the concept working from home and are
sure you have a revenue base to support yourself.
16. Share Your Office
Once you are ready to move out, try to share an
office. The first office I had was just a desk out
of someone else’s office. Once I had enough money
to expand, I got my own place.
Can you trade what you’re selling for something
you need? If you’re an Internet programmer, for
example, and need business cards, can you design
a website for a printer in return for the design
and cards that you need?
18. Lease Don’t Buy
In the long term it might cost more to lease but
it helps with your cash-flow. When you’re faced
with making a major purchase like a computer, car
or other equipment, lease it to start so you can
ensure your company has enough money to continue
19. Hire Friends / Family
Especially at the beginning, you can usually get
friends or family to help you because they care
for you and want to see you succeed. They might
work for free or you might have to pay them but
you can usually get away with lower than market
rates at the beginning while you’re building.
20. Create A Rainy Day Fund
Every entrepreneur runs into rainy days where a
major financial expense comes up. Maybe your
computer broke down and you need a new one, maybe
your website crashed and you need to hire an
expensive programmer to fix it, or maybe you run
into a serious personal issue and need more money
than before (all three have happened to me). Make
sure it doesn’t put you out of business by
buildling up a “rainy day” fund as soon as you can.
Every little contribution helps!
20 Ways To Bootstrap Your Business
http://www.youngentrepreneur.com / blog / uncategorized-blog / 20-ways-to-bootstrap-you /
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Aalto Entrepreneurship Society (AES)
Beverly Bootstraps Community Services
http://www.motherearthnews.com / Modern-Homesteading / 1982-05-01 / Bootstrap-Businesses.aspx
Bootstrapping Your Startup
http://www.entrepreneur.com / magazine / entrepreneursstartupsmagazine / 2002 / october / 55776.html
Bootstrap Your Business for Growth
Build a farm business plan for your bootstrap market garden
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Economy and Entrepreneurship
The Enterprise Trust
The Ewing Marion Kauffman Foundation
Operation Bootstrap Africa
Small Business Bootstrap Financing Tips:
Starting a Business
Starting a New Business with Bootstrap Funding
http://www.allbusiness.com / business-planning-structures / starting-a-business / 4113485-1.html
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Corporate Social Entrepreneurship
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SMALL BUSINESS INNOVATION RESEARCH
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