In the last couple of years, I have heard more business owners discussing how they want someone else to fund their business. They also say, there’s no reason to fund small businesses themselves, or they are going to make others do it via a crowd-source site. The majority of the time, the person has little knowledge about business let alone financing a business. Being inexperienced is fine (everyone has to start somewhere) as long as you do more research before you embark on any of those paths.
Going along with our back to basics focus, we want to break down various topics in the creative small business world when it comes to sourcing capital for your business. We have written Fund Your Dreams and want to expand on one of the various types of business funding. First, we will cover bootstrapping. This is a method people are less familiar with and it sometimes gets a bad wrap.
According to Investopedia:
“A situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.
Compared to using venture capital, boot strapping can be beneficial as the entrepreneur is able to maintain control over all decisions. On the downside, however, this form of financing may place unnecessary financial risk on the entrepreneur. Furthermore, boot strapping may not provide enough investment for the company to become successful at a reasonable rate.”
Make sure you know how bootstrapping is defined and why it matters to your business. Here are 5 things you can do to make this method work for your business.
Your Savings Account
Everyone has a savings account, and as a current or future business owner you should have one. If opening a bakery has been a dream since you were a kid, then financing it has come to your mind at least 10 times (hopefully). We suggest doing automatic deposit into your savings account each month until you reach a goal that helps you launch your business. We do 20% every week into ours. If you already have a nice egg basket in your savings account, create a logical and feasible plan for the money. Do not just withdraw all it! We suggest at least leaving 25% in there for cushion just in case.
Cleaning out your house and storage
Last year, I personally cleaned out my closet and garage and I sold the things I could and donated the rest. These are two great things for a young business. In total, I made $500 dollars. That is great, and will go into my company’s budget. Go through your closets, house, storage and garage. Take all your clothes to resale or consignment shops. Sell all the other stuff on Craigslist. I sold my old dress forms for $40 a piece. No matter how small your town is, somebody is going to buy your stuff, trust me. A women drove 45 minutes to buy one from me. In addition, if you need more tech stuff verse actual monetary funds look into trading your stuff into Best Buy. They will give you store credit, and you can use that towards camera, printer, laptop and so much more.
First, this is different than the business you are trying to launch. A side hustle is something you can do quickly with little effort. Walking dogs, mowing lawns, running errands or even babysitting can be a side hustle. A lot of magazines write articles on various ones every month. Even signing up to freelance or offer a service on Odesk or Fiverr. We wrote how we love using Fivver for freelance services.
Ask For A Raise
If your are currently working a full time job and have been there longer than a year, maybe it’s time to ask for a raise. Don’t just walk in saying you want a 15% raise. Compile a list of all the things you have accomplished that has brought in; extra clients, additional leadership roles, more revenue for the company’s bottom line or saving the company money. In addition, if you have earned an extra degree or certification, bring this with you too. You want to treat this like a presentation, as if you were presenting to a client to sign with your company. Go in there knowing your numbers. What is the US average yearly salary before taxes for your position? Even break it down by region to further expand on why a raise is vital to your growth at the company.
Part Time Job
You are probably thinking I am trying work for myself not another employer. We get that. However, 15-20 hours a week at a part time job such as The Gap or Starbucks will help your bottom line, and if you are managing your time well, working part time job wont effect you building your dream company. Think, an extra $1000 a month can do a lot for your future business.
It is very important to note the extra capital you make should go into a savings account that is not linked to your checking. The money you make in several months could yield you the extra capital to get the ball really rolling with your dream business. Have a debit card too. You don’t want to have access to your savings and think, oh, I will just use this money and put it back later. Later never happens. I am a fan of all the tips listed above. They truly do work if you become committed to your business’ success.
If you have any questions or comments about bootstrapping, please leave them below.