It’s not easy out there for UK start ups right now. Sourcing business funding is, frankly, a blinkin’ pain – especially for those hoping for conventional funding from their bank. Entrepreneurship is no easy road even when the banks are open for business, but in these tough times, aspiring business owners must work doubly hard to find the funding to get their baby off the ground.
There are plenty of options out there, but none of them are a saunter through the park. Business funding is now available online from Everline, through online crowd funding platforms like Kickstarter or can even be sourced from an angel investor. These routes are not suitable for all businesses, B2B start ups typically fare poorly in crowd funding websites, while angel investors are not always ready to take a leap on an ‘out there’, creative project. If you’re out in the financial cold, but are still passionate about your business, there’s really only one thing for it…Bootstrapping.
What is bootstrapping?
Bootstrapping is a general term referring to doing, well almost anything, yourself without assistance from outside sources. You’ve heard of pulling yourself up by the bootstraps, well now it’s time to take a good hard look at your personal resources and make it happen in business.
Within a start up business, bootstrapping really is an all or nothing approach. It involves putting your own assets into your business – so you really have to be sure that you’ll see a return. However, it’s also a very good benchmark – after all, if you’re not prepared to risk your own finance on your start up, why should an investor? If you’re not confident about what you’re doing, maybe you should stick to the day job…
How to bootstrap
Most entrepreneurs ease their way into this solution, taking the time to evaluate the risks and gradually putting more and more into the enterprise as success becomes increasingly likely. This gives you freedom which straightforward investment simply doesn’t. It also gives you complete control over the initial development of your business – without the interference of investors. Many business owners start by simply ‘financing’ with their own time. Moonlighting on evenings and weekends to grow their new business. This is very hard work, but it ensures there is money coming in, and you’re not risking your future on a pipe dream.
The big steps…
Once success looks close and the day job becomes unsustainable, many entrepreneurs quit and start to think about putting their own finance into the business. Some will remortgage houses, sell cars and max out credit cards to get the business ball rolling, others will approach relatives to find finance.
An interesting idea
One interesting way to free up some capital is to employ staff in return for equity or deferred payment. If your offering is exciting enough to attract employees tempted by this set-up, you’re likely onto a winner. It ensures you team work harder for you than any other staff anywhere else, and it keeps costs down too – what’s not to love?
Know your assets
Of course, the resources available to each bootstrapping start up business will vary considerably from entrepreneur to entrepreneur and this finance really is all about doing it yourself. So look at what you have, and don’t just think in terms of capital, take a really close look at your assets – then focus on turning them into a way to boost your business.
Very good luck, start ups!
December was so busy that I didn’t write a single post for this blog emphasizing the fact that it really is a hobby for me and when life gets busy, the hobbies have to take a back seat.
Why was it so busy? Well, things finally got moving on the legal front with purchasing a business and lots of things had to be done before my wife, family, and me left on vacation from December 19th to the 30th. We hustled for the two weeks before leaving and could do absolutely nothing while away due to lack of internet access. Now we are continuing to finalize things and hope to have things in order and running smoothly over the next few weeks.
Items we have had to deal with:
- Negotiating and dealing with bank on the final loan documents through the lawyer. Hopefully these will be signed in the next day or two despite having hoped for 1/2.
- Finalizing the LLC Operating Agreement. Got final draft yesterday and running through the few members. Should not be a problem.
- Getting Federal and State Tax ID numbers. This is done along with the certificate to collect sales tax. Now we just need to go through the process of filing at the end of each month.
- Working on getting health insurance for employees. Somewhat of a cluster. Getting short term monthly policies while working out the details of a more permanent solution. The insurance broker was a little slow in getting it together.
- Getting leases for production equipment. This was a little tough given the circumstances. We have the majority of equipment, but no official lease yet. In process but more of a formality.
- Meet tomorrow to go through payroll process. And the good news is we will collect enough money to meet payroll this week.
- Getting credit card machine and ability to run cards on site and direct deposit.
- Host of other little decisions involving vendors, credit apps, website, etc.
Needless to say, it has been quite busy. The polar vortex and foot of snow has slowed some things down, but all should work out by the end of the week when the weather will warm up. Obviously, I will know a lot more by the end of the month and have a real good sense of business at the end of the first quarter.
The good news is that I suspect it will ultimately be worth it, but I still want to maintain a healthy skepticism.
Bottom line for me is: No time for new year’s resolutions, I have a business to run.