ENT 650

Individual Funding through Bootstrapping – ENT 650-Week 2

Individual Funding through Bootstrapping

“Bootstrap is 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.” (Staff)

Bootstrapping is very risky because of only relying on one’s own personal savings to where it may take a while to see a profit and make any money back on their savings. You may not have enough investment to get a company up and going that could be successful but fails before it starts. On the upside you don’t have to worry about investors, and meeting their needs, you can focus on your business and your customers and making them happy and meeting their needs. The entrepreneur is able to have control over all decisions in a bootstrap company, basically they are the investor of their own company. Part of being an entrepreneur is being able to do things the way that you want to do them and make your business how you want, bootstrapping gives you that freedom.

“Studies show that more than 80% of new startup operations are funded through the founders’ personal finances. The recorded median in start-up capital is reported at approximately $10,000.” (Staff)

Self-funding is always preferred if you have the means. To be able to make your own return and know that whatever profit you make is yours, and whatever profit you make you can put it right back into the business to grow the business even more. Using bank small business loans is another way to finance yourself, the only downfall is that you will need to have enough cash flow to pay your loans. Another option would be to get a business credit card with low or special interest rates. “Credit cards can be a good short-term option to give your new business a boost when first starting out, but shouldn’t be viewed as a long-term financing solution.” (Smith)

When you are spending your own money you make more informed and careful decision, and you know where all your money goes. This makes you more invested in all the decisions that need to be made. Your startup costs are low and funding is more sustainable through your customers being your investors, they provide the feedback and help you to improve your product based on what the customer wants, and that’s what drives your business.

 

Mackensie Jimison is an Administrative Assistant and getting her Master’s in Entrepreneurship at Western Carolina University. Webmasters and other article publishers are hereby granted article reproduction permission as long as this article in its entirety, author’s information, and any links remain intact. Copyright 2017 by Mackensie Jimison. www.kensiekreates.com

 

Resources:

Staff, I. (2015, August 28). Bootstrap. Retrieved September 05, 2017, from http://www.investopedia.com/terms/b/bootstrap.asp. September 5, 2017.

Smith, C. (n.d.). The Best Funding Sources to Efficiently Grow Your Business. Retrieved from https://www.bidsketch.com/blog/resources-and-tools/financing-sources-business/. September 5, 2017.

Gazdecki, Andrew. “5 Benefits Of Bootstrapping Your Small Business.” Small Business Trends, 27 May 2016, https://smallbiztrends.com/2016/05/benefits-of-bootstrapping.html. Accessed 7 Sept. 2017.

Loading Facebook Comments ...

One thought on “Individual Funding through Bootstrapping – ENT 650-Week 2

  1. Mackensie,
    I had no idea that 80% of all new businesses were through the founder’s own money. At this point I think that is the way I will have to fund my business and I am trying to figure out how much to take out of my own personal finances before getting a business loan or asking for a family member’s investment. A business credit card at the beginning sounds like a slippery slope the way the banks can change those interest rates.
    Cece

Leave a Reply