
Cash Shy? Try Bootstrapping - Boostrapping - ciscoriordan
http://www.entrepreneur.com/money/financing/article203914.html
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jacquesm
I wished all the writers of bad books would put a few chapters online, it
would save a ton in returns.

So, maybe we should re-write that chapter ?

Here is my take on it:

No investors bite but you have a plan and are determined to see it through ?
Try Bootstrapping.

Bootstrapping is literally lifting yourself off the ground by your shoelaces.
While in the physical world this is an impossible feat, the business
equivalent, getting off the ground without outside financing is definitely a
possibility.

Bootstrapping involves several main components:

\- turn small bits of cash in to slightly larger bits of cash in a cycle that
you repeat over and over again.

\- finding alternatives for things that you would spend money on if you had
it, for instance instead of spending money on marketing you will want to
mobilize others to do your marketing for you (virals).

\- trading what you do have (time, energy) for what you don't have (cash on
hand)

Disadvantages of bootstrapping:

\- it is slower

\- competitors might get the wind of your offering while you are still
vulnerable

\- you tend to be more focused on making _any_ money than making money in the
field that you intended to pursue

\- some, but not all investors bring more to the table than just money, for
instance experience in dealing with all kinds of things you will find when
growing your business.

The advantages are:

\- No reporting requirements

\- nobody interfering with the decision making process (but, see above, this
may also be a disadvantage)

\- the satisfaction of doing it under your own power

\- a more realistic set of goals, and therefore a much better chance at
actually reaching those goals. For instance, an investor might shoot for an
IPO or bust, whereas for you a million dollars per year in turnover would be
plenty.

How to bootstrap:

First of all, it helps to have some kind of base income, so you'll need to
find a way to realize that. A day job that leaves you with enough time to work
on your fledgling company is a good choice, but there are others (for
instance, consulting in a field related to your effort).

Then you have to figure out how much you need for living expenses, getting it
as low as you possibly can.

Any savings you have will help as well, but technically should not be
required, best to keep those until you really need them.

So, now you have to make a decision on how to spend your time.

When you're bootstrapping you wear a lot of different hats.

You code (or do whatever it is that your product involves), do administration,
do whatever you do to stay afloat, sell and market your product.

As you find ways to sell your product you get in to contact with more and more
end-users. Keep very open channels with them, make it seem as though they are
your only customer from a customer satisfaction point of view.

Solve their problems, and keep on solving them. Make sure that they understand
that you are more than willing to go the distance, and choose a model that
allows you to spend as much time as you need to make them happy.

For me, the model I choose when I was in this phase was selling a basic
'license', with a per-hour fee for modifications.

Those modifications would then become part of the standard offering 3 months
later.

If you've been doing this for a while, and you have been saving money
diligently then you will find that you come at a point where you could make
more money if you could devote more time to your product.

At this point in time the temptation to let go of your 'buoy' is very large,
but I would hold off for a while.

Once you have roughly 6-9 months of living expenses in the bank and your
income has shown a steadily rising line (and that's money in the bank, not
invoiced!) you can let go of your day job and devote full time to your
product.

If you choose the consulting route then you can change the 'mix' gradually as
you go.

Some employers may be sympathetic to you starting on your own, and may make a
deal where you work part time for a while.

I hope this helps someone!

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me2i81
That's some serious drivel.

------
donaq
<snark>I define crap as gold. Anyone noticed that gold has a funny smell these
days? </snark>

