Bootstrapping for Small Business

In today’s tumultuous environment staying afloat is no longer a challenge, but a monumental endeavor for most small business.

Bank loans are nonexistent, access to capital is reserved for mostly medium to large established enterprises, and even the private equity sector is having trouble raising investment capital.

Where does the small entrepreneur turn to for working capital, expansion funds for new opportunities, and just being able to keep the lights on?

Before even thinking about external funding, entrepreneurs should consider potentially hidden internal sources of cash in their business. Those potential internal resources can generate cash and solve business problems, hence bootstrapping.

There are three main bootstrapping options:

1- Expense Reductions

Using their business financial statements entrepreneurs can analyze : overhead, payroll, and operating expenses

for potential reductions, and savings that can generate immediate cashflow.

Maximizing marketing benefits through word of mouth, social media, referrals, and networking will increase sales and cashflow.

Strategic alliances with other companies to share resources while remaining independent is another way to reduce costs.

Example: Starbucks and Barnes & Noble share space alliance.

Publicity is another option for increasing revenue that is generally free or low cost.

2- Pricing Strategy

Compete on value not price

Use business credit from vendors to establish credit history and optimize cashflow.

Use business credit cards carefully.

3- Customer Financing

Explore: Deposit, Subscriptions, Service, Rewards, and receivable factoring.

If you are overwhelmed by the above, you can always join our CEO Club at http://www.ljosrconsulting.com/plans-pricing

for stress free management advisory services.