One of the first things most people think about when entertaining the thought of starting their own business is financing. Once upon a time, when the kingdom was carefree with low gas prices and real estate was king, it was relatively simple to find financing for a start up business. But alas, King Real Estate has fallen and lending institutions are much less likely to lend money to just anyone with a new idea. So what is a fledgling entrepreneur to do? There are avenues that may work for certain businesses, but for some the answer comes to us from the ‘olden’ days. I recall my grandfather using the phrase “pulling yourself up by your bootstraps”. Even as child I got the idea that it was something that required a bit of effort.
Now as an entrepreneur, it has taken on an entirely different meaning. In starting my business, it was my goal not to have to take out a loan. I realized that eventually it might become necessary, but I hoped to get through the start up phase without going into debt. So far, so good. Between the equipment and technology I already owned, to finding low-cost and free alternatives for things like software, website and domain name, advertising and business coaching, I’ve managed to get my business not only off the ground, but gaining altitude. Sure, it required time to research and find alternatives. But for me and my business, it’s been well worth the added effort.
Bootstrapping might not work for all businesses, but it is an alternative for some. Especially small, home-based businesses. If the idea of your small business owing money before it is actually making money bothers you, then maybe bootstrapping is the alternative.
But what if you’re already in business and things are getting tight? What once was a highly profitable endeavor is now barely breaking even. Is it too late to bootstrap? I don’t think so. It may require rethinking your way of doing business. For example, do you really need to rent office space for you and your three employees? Could you become a ‘virtual’ office by using an virtual receptionist system and having your employees work from home? And do you need those three full time employees? Could you outsource some of the work to a virtual assistant and save money on employee taxes and benefits? How about becoming a paper-less office? It not only saves money on paper and toner, but it’s environmentally sound. Plus, electronic backups of files require no filing cabinets or office space. And you get bonus points for being ‘green’. Depending on your business, there are dozens of ‘radical’ ideas that can save you money and make your business more profitable.
So before you apply for that business loan, take some time to consider whether you really need it or not. Perhaps all you need is a bootstrap.