Forums: Discussions for entrepreneurs and small business.

I`m thinking about starting my own business in a couple of years; I have a sound business concept with a reliable revenue model, but I`m not sure how I will go about starting my business when it comes time to pull the trigger.

I`ve broken down my possible startup entry strategy into two options:

• Bootstrap the project over a couple of years while I work full-time as a means of supporting myself or
• In two years time, secure funding and work on my startup project full-time.

Which option would you pick and why?



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Aaron Stannard
Editor of Working Smarter
Owner of Marketing Ninja

Depends on how much money you have. Anyone would rather have startup capital to invest, that`s for sure. But a lot of us don`t have that money, so we end up having to bootstrap.

If you think you can get a loan, then you`d keep your own savings as secondary backup. If you can`t get a loan, your own capital would be good to have. One thing for sure is that starting a business is very demanding---particularly demanding of your time.

What could happen, and you should give it a lot of thought, is that you work at your regular job, try to start the business, have too little time to devote to it, and it fails. Would you then wonder the rest of your life if you just didn`t put enough effort into it?

Aaron,

Selecting an appropriate capital direction starts with determining what options are available.

Bootstrapping may be an "available" option if you plan to create a lifestyle business. On the other hand, if your vision is to build an international enterprise - the business will probably need external capital at some point, so it`s best to plan for that in the beginning.

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Robert,
That`s a really well-put, succinct statement regarding bootstrapping. I know we`ve been involved in lots of discussions about the pros and cons of bootstrapping (a.k.a. "cheap"), but I don`t think we`ve ever highlighted that distinction before. Excellent! :-)

Craig,

Thanks for the nice words.

In some situations, bootstrapping can ultimately be quite "expensive" - although it may be hard to identify the final "cost".

 

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Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

I think Robert is absolutely correct that “bootstrapping” can be quite expensive, especially if you consider “time” to be a factor in the equation. Many entrepreneurs think that if they spend years trying to get a business off the ground despite having a regular day job, they didn’t loose anything if it didn’t work out. Well, they did.

It sounds like you are not too worried about the possibility that your window of opportunity may close on you, so why don’t you take the time to develop a business plan that defines your revenue potential along with your capital requirements?

While I don’t think that a lot of businesses require the set up of an international enterprise to take shape, the revenue potential of your business and your estimated capital requirements will certainly define, whether investors are willing to pitch in and invest.

If raising capital isn’t an option and you are unable to get a loan from your bank, you are indeed left with bootstrapping, which can still be worth your while, if, let’s say, you’ll make more money or spend less time making the same than with your current day job.

I hope this helps.



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Jackson Steiner
http://www.JacksonSteiner.com

Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.
http://www.Publications.FastVentures.com

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Mike Michalowicz
Author of The Toilet Paper Entrepreneur