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    1 Reply Latest reply on Jun 9, 2010 12:18 PM by phanio

    Small Business Bootstrap Financing Tips: Financing Your Own

    jessicanz Wayfarer
      1. Operate a Home-Based Business
      Operating your business from home could save you a fortune. First of all, you eliminate the costs of expensive commercial rent, commuting, et cetera.

      As well, your business use of home expenses would be deductible for income tax purposes. Since your home is your base of operations, your travel and automotive expenses from your home to clients would be deductible.
      Operating your business from home could save you a fortune. First of all, you eliminate the costs of expensive commercial rent, commuting, et cetera.

      As well, your business use of home expenses would be deductible for income tax purposes. Since your home is your base of operations, your travel and automotive expenses from your home to clients would be deductible.

      2. Accept Credit Cards

      Rather than financing receivables and assuming the risk for bad debts, why not accept credit card payments?

      3. Drop Ship Products

      Rather than financing and stocking inventory yourself, consider drop shipping.

      With drop shipping, when you make a sale you contact the manufacturer or authorized distributor who ships the product to the customer with your invoice and shipping label. Advantages include no warehousing, shipping, or inventory costs.

      4. Use Your Customers' Money

      Selling memberships, subscriptions, gift certificates, and coupon books are just a few ways of getting your clients to pay upfront. Obtaining advance deposits and retainers from your customers can help finance your business operations and reduce or eliminate the need for bank financing.

      5. Licensing

      Instead of trying to finance the manufacturing and marketing of your invention, which could cost millions of dollars before you have your first sale, why not license it to a company with the necessary expertise and capital? You will then receive royalties in return for your idea.

      6. Other Bootstrap Financing Methods

      Aggressively control costs, barter, get extended terms from suppliers, establish strict credit and collection policies and procedures, rent (or lease) instead of buying equipment, buy used equipment instead of new, sell off excess inventory and equipment, obtain free publicity instead of paying for advertising, and do whatever else is necessary to generate cashflow and profits.

      In these ways and many others not listed here, you may be able to start and grow your business successfully with very limited capital. Thus, you will avoid having to obtain expensive debt or equity financing.

      Many who were unable to obtain financing from any other source have successfully bootstrapped their way to business success.
        • Re: Small Business Bootstrap Financing Tips: Financing Your Own
          phanio Pioneer
          Very good information. The idea (in good times and bad) is to redcue cost while still opoerating efficiently and keeping your customers happy. If you focus on your core and the expenses related only to that - you can control your expenses and prosper in business.

          When seeking financing to get started, as it take money to make money, know that your bank is not the only option you have - not only are their ways to bootstrap your business - but, there are private lenders out there (offering loans and financing options for all sorts of needs) that are usually eaier to qualify for, don't have all the onerous requirements of banks, and work with new or home based businesses.

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