Finance Individual Funding Through Bootstrapping

Bootstrapping is when an entrepreneur using their own finances and savings to start a business and build from that only using the money made from the business and putting it back into the business to grow the company. Bootstrapping is very risky because of only relying on one’s own personal savings to where it may take a while to see a profit and make any money back on their savings. You may not have enough investment to get a company up and going that could be successful but fails before it starts. On the upside you don’t have to worry about investors, and meeting their needs, you can focus on your business and your customers and making them happy and meeting their needs. The entrepreneur is able to have control over all decisions in a bootstrap company, basically they are the investor of their own company. Part of being an entrepreneur is being able to do things the way that you want to do them and make your business how you want, bootstrapping gives you that freedom.

Around 80% of new startup businesses are through bootstrapping, the average startup funds for bootstrap companies is $10,000. Self-funding is always preferred if you have the means. To be able to make your own return and know that whatever profit you make is yours, and whatever profit you make you can put it right back into the business to grow the business even more. Using bank small business loans is another way to finance yourself, the only downfall is that you will need to have enough cash flow to pay your loans. Another option would be to get a business credit card with low or special interest rates. If your business needs financial help temporarily credit cards would be a good way to help you get through that temporary low until you can get better financing solutions, but it does not provide a long-term fix.When you are spending your own money you make more informed and careful decision, and you know where all your money goes. This makes you more invested in all the decisions that need to be made. Your startup costs are low and funding is more sustainable through your customers being your investors, they provide the feedback and help you to improve your product based on what the customer wants, and that’s what drives your business.

Bootstrapping is my choice of financing for my start-up. I don’t feel comfortable asking others for money, and whatever I generate I can put back into the business and try to grow the business from that standpoint. I will know that I don’t owe anyone and any more coming in would be a profit. With this type of business plan I know it will be a slow start-up process where I will keep my day job until I can generate enough funds to actually make a living off of my business. This may be a longer process of doing things but I feel it is also the safest way, I feel more secure and assured of my business using my own money versus using other people’s money where you have the pressure of guaranteeing your shareholders a return on their investment.