When you make this “leap in faith” in the decision to begin your own business, it could be challenging to get funding. This is the point where brand new entrepreneurs can take an oath from a “cheapskate”. If you’ve made a pitch to several investors, but nobody has bought into the concept, yet it’s a great idea, it might it be the right time to decide to take the matter on your own. Bootstrapping is the process of figuring out ways to fund the tools required to start an enterprise with the least cost of out-of-pocket costs. If you’re starting out with a small bank loan or you’ve got to save, making each dollar count is essential.
Here are some ideas to stretch every dollar to help get your business started:
1. Lease Equipment
When you lease equipment, you don’t have to pay the entire cost upfront. This can lower the initial cost and also means that the equipment is put into use right away. Make maintenance costs part of the lease, even if the business continues to grow. When the lease is up the lease, there’s usually an option to buy out, which means the piece of equipment is available for purchase at the difference between the amount that was paid in advance as well as the price for the work of equipment. In essence, the equipment is less expensive as your business grows enough to allow you to purchase equipment using cash.
2. Use Trade Credit
Certain suppliers offer credit for trade that lasts for 30, 60 or even 90 days. In this period, the payments are to be made only when the period expires. This gives the company time to begin generating revenue that can be used to pay for orders placed. When the company is growing, and it’s possible to start to pay for supply orders upfront, make use of the early discount on payments to save money on the order so that the company has a little cash in the bank.
3. Letters of Credit
If you’re producing an item, consider getting a buyer to write you a credit line. This is helpful when the business doesn’t have the money to cover large or ongoing orders. A credit card allows you to buy the labour and materials needed for the production of the product.
4. Financing Real Estate
Locating a location to conduct business is an essential step in the beginning process. The option of financing real estate is an excellent option in the event that you do not have the funds to purchase the space you need. Gradual payment mortgages permit the borrower to begin with a modest amount at first, but when time goes on, as the mortgage grows, the payments will become higher. This should allow you to have enough time to have your business operating smoothly, and more significant mortgage payments should not be a problem. Another benefit of buying real property is that it usually increases in value, meaning you are able to use the property to borrow money if required. Be careful, however, and only make use of it when absolutely necessary to ensure the survival of your business.
Following the steps mentioned below will not ensure the success of your business; however, they can certainly aid in keeping the initial costs as low as they can be. Like any venture that is entrepreneurial, there’s a certain amount of risk, and keeping the costs at a minimum could assist in the event of a business failing. If the method of sourcing capital isn’t practical for your company, but you are determined to succeed, you must write an adequate budget and get started on bootstrapping without spending one cent. The way to success lies mainly in your determination. Good luck to bootstrappers!
Phillip Wiseman is a Management Trainee for one of the largest auto retail stores in the world. He obtained the position through the undergraduate degree he received in Management at the University of North Carolina at Chapel Hill. He is currently studying for the Masters of Entrepreneurship Degree Program at Western Carolina University. Webmasters and all other article publishers are granted copyright permission so long as this article in all its entirety, including the author’s details, the links are intact—copyright 2016 by Phillip Wiseman.