I know this may go against everything my readers will have seen before about starting a business. But I am Soculitherz and these other writers are not.
Sure, there will be exceptions. If you come up with a brilliant new invention that you’re going to manufacture there may be no alternative but to borrow to make the prototype, to protect the intellectual property and so forth. Even then, if you can get the money through your own means or with your family and friends it is usually better than borrowing from a bank or an investor.
In my opinion from everything I’ve investigated, when most people ask the question ‘Where can I get the money to start a business’, they’re looking for a loan to tide them over with their personal and business expenses until they start making money.
With a formal loan from an institution or an investor, the new business owner loses vital control of the business. The plug can be pulled by the lender or they start interfering in your business – it’s like having a boss again – it sucks.
Bootstrapping, which I do recommend, means pulling yourself up over the business hurdles in front of you, by your own bootstraps.
So what kind of things would you do as a bootstrapper? You make some money to invest in your business. You borrow short term from friends and family. You might do credit terms deals with suppliers, you might do deals with customers to get some payments up front, some interim payments, perhaps, even a bonus on delivery or for outstanding service.
You get free help to build your business from your network, you work from home, you use the cloud, you use ‘cheap as chips’ (a Brit expression) apps and open source software, you earn from a job as well, you do deals to raise money and you sell your CD/DVD/Books/Jewellery/Antiques/Batman/Clothes (not shoes) collections. You may even sell your car or house or get a repayment holiday on both.
You trade on e-bay, Amazon and Etsy, you become a film extra and you sell your sperm (probably more applicable to men). You barter and you get free, volunteer help from friends and family (repay them when you do get money) Do you get the idea? Make money to invest in the products and services that you can trade to get more money to invest in your business.
Do it yourself and be in control. It may seem slower but trust me it is better. The big risks in business come from owing an investor or an institution before you’ve even learned how to succeed in your own business.
Down the way, once you’re a proven success and have assets for lenders to secure loans against, you can have your loan. Never get a loan to cover your salary. Business doesn’t work like that.
I should come clean with you about one naughty, risky, little boot-strapping trick many of us business owners have done in desperation. You must realise that I’ve been more desperate than most having Tony Robinson OBE as my agent.
The naughty trick is that we’ve used our personal credit cards to either buy stuff to sell or cover some of our personal and business expenses whilst we’re waiting for customer payments. What am I like?
As long as we can repay most of it within the month we get away with this naughty trick as a last resort. Never, ever max out the credit cards unless you know the sales and profit to come will allow you to pay it all off pronto. So, natch, I’m not advising you do this but, hey, it’s bootstrapping too.
For more from Soculitherz come back every weekend or purchase the Kindle book ‘Freedom From Bosses Forever‘ by Tony Robinson OBE (with Soculitherz) from Amazon.