Ahh…credit cards. They can be very useful if you are responsible and know how to work the system, but if you’re a rookie, they’re like playing with matches and gasoline. You can easily rack up tremendous debt, and with extremely high interest rates you may never catch up if your business stumbles even once… You know those commercials with the guy in the pirate hat singing a jingle in some seafood restaurant because his credit score sucks and he couldn’t get a loan? That’s based on a true story, so don’t be that guy who was naïve about the consequences of over leveraging yourself with plastic cash.
The term “bootstrapping” refers to much more than financing a venture through credit cards, though. Working two jobs, doing consulting work, anything you can do to alternatively finance a new business falls into this category. Consulting work is an interesting source of income, but be careful not to let that “moonlighting” become your full time business (investors are weary of throwing money at the night shift entrepreneur who just turns out only to be practicing for a full time consulting gig). Be prepared though, when you decide to bootstrap, you, the founder and a limited number of early employees will probably forgo steady paychecks and a good nights sleep for quite some time to make your dream a reality.
“People need to look back at bootstrapping, the way the vast majority of businesses in the US are started, as a viable means to incubate during slow times. I’m excited to see what comes out of this time as it is the ideas that were being planted during the last bust that have truly changed our world today. The bust made people reflect, be deliberate, and grow prudently.” – Michael, entrepreneur & blogger
If you’re bootstrapping, you’re going to need evaluate every expense of your start-up down to the ballpoint pens. The trick is to come up with creative and inexpensive ways to get the job done. Remember, especially in your early stages, the pennies you save are sometimes more important than the pennies you make. Start-up with what you need, not with what you want, or you could soon find yourself starring in that aforementioned jingle after all.
Excerpt taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital. In the coming weeks, we’ll be posting even more insightful nuggets from this paper. However, if you’d like to read & download all 33 pages of constructive prose right this moment, it’s sitting on our website: www.dontgosouth.com.