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!
My daughter started making jewelry for family members as a hobby this summer. Before I knew it, she had opened an Etsy store and started tracking her expenses and revenue on a spreadsheet. She made some changes to her store and tracked the resulting increase in views. She has been researching what makes for a successful store and getting ideas off the internet. She has been involved in social networking and posting pictures on Instagram for her over 3000 followers.
She has done this all on her own and really seems to be doing relatively well without input from anyone. She made 2 sales in November and already has 2 in December with a goal for making another four. She has been on college break for the past week and has been adding to her inventory for sale. And despite the fact that her expenses for supplies have exceeded her revenue, she is optimistic that she will make a profit since she has enough stock to make a lot more jewelry.
Which all begs the question — Are Entrepreneurs Made or Born?
Honestly, I don’t really have the answer. I am sure that there are many entrepreneurs that come by their skills naturally while others have been able to learn and refine their skills through intentional development and education.
I do know that she has watched me purchase rental houses throughout the years, and I have explained a lot about economics, building businesses, expenses, revenues, profits and losses on long drives in the car. I have also explained the concept of inflation, supply, and demand. So do these discussions have a role or is the fact that I am interested in these topics mean that there is some genetic component. I really don’t know. I suspect there might be a little contribution from both.
What I do know is that all the mental gymnastics and planning don’t mean a thing until you actually get out and do something. I also know that virtually every successful entrepreneur has multiple failures and struggles in the early years that we seem to forget when looking at their successes.
Needless to say, I am really proud of her getting out their and doing and learning on the go rather than sitting back and just thinking about doing it.
So if you want to check out Kayla’s Etsy store, you can do so. Plus, if you order something type in GRAND as a coupon code when checking out and you can get free shipping.
What are your thoughts about entrepreneurship? Do you think it runs in families? Is there more of a genetic component or environmental influence at work? Do you know of any good studies?