chapter  11
17 Pages

Bootstrapping

One of the first things that most entrepreneurs focus on is raising external funding to support the launch of their businesses. There are numerous sources of external funding that can be used to capitalize a business. As discussed in the previous chapter, entrepreneurs seek money from sources as varied as family members, friends, and venture capitalists with their untold billions of investment dollars looking for the next Microsoft. The various means of securing external debt and equity financing will be discussed in Chapters 12 to 14. However, before pursuing external funds, the entrepreneur should consider how the business could be managed in a way that reduces the external funding required. One way to is to learn how to manage the cash flow of the business, discussed in Chapter 8. Another way is by using what is commonly known as bootstrapping. Many successful companies were started and built with bootstrapping techniques. Logo Athletic, for example, was started in 1971 with only $250. By 1994 it had grown to over $230 million in revenues. The founder of Yankee Candle started his business with $20 that he borrowed from a friend. Within seven years Yankee Candle grew to over $30 million in revenues. This chapter will summarize a variety of bootstrapping techniques that can help an entrepreneur achieve success without needing to raise a large amount of start-up capital.