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Bootstrapping: Think big, start small

October 24, 2011 - Tags: Entrepreneurship, Financing, Startup

Istock 000000696474xsmallYou have a great business idea, but money is tight. What can you do? Consider bootstrapping — a strategy that focuses on cutting costs to free up operating cash.

The term bootstrapping comes from the notion of “pulling yourself up by the bootstraps” — in other words, getting things done without outside help. In business, this means getting things up and running with the help of personal savings, cash flow management, and penny-pinching.

During start-up, your focus should be on generating cash flow. It's important to make sales, but don't forget to keep your expenses down — is a sleek designer chair for your office the best way to spend limited funds, or can it wait? It can be tempting to go on a spending spree when money starts rolling in, but reinvesting profits in the business will set the stage for long-term success.

These five tips can help you succeed on a shoestring budget:

1. Look for free publicity. Approach local media with your story or expert opinion and look into the benefits of social media marketing.

2. Barter with other businesses. Offer your products or services in exchange for something you need. For example, you could cater an event in exchange for bookkeeping services.

3. Pay your suppliers on time. Developing a good relationship with suppliers can help you extend payment terms, free up cash, and build a good credit rating.

4. Work from home or share an office. Can't afford high rent? Reduce your overhead until you can afford to expand.

5. Weigh the pros and cons of leasing instead of buying. It may cost more in the long run, but leasing can free up cash during start-up. Our Lease or Buy Calculator can help compare costs.

Don't be discouraged if you are not able to launch your business on the scale you desire — it may take time to grow, but a solid customer base and a positive cash flow will set the stage for future success.

Visit BDC's 7 tips for building your cash flow page to get information on boosting your revenues.

Comments

Bonjour,
J’ai une idée de production de produits de soins corporels mais je ne dispose pas assez de sous. Comme biochimiste j’ai fait mes propre formulations de mes produits que je peux fabriquer moi même. Donc votre Bootstrap vient de me donner du courage pour que je continue ma lancé afin d’atteindre mes objectifs. Merci,

Aminata

By Aminata on October 24, 2011

Hi,

Want to start an Ayurveda Beauty Center, to sell our products and services ...

By Kakuly on November 1, 2011

Hi Kakuly,

Our Starting a Business section has information that will help you plan for a successful start to your journey as an entrepreneur.

One of the best courses of action you can take is to develop a solid business plan. This helps set the foundation for all of your business decisions moving forward. Our Business Planning section can help you get started.

Another key consideration is financing. In our Grants and Finances section, you can search for financing programs offered by governments by selecting parameters such as your industry, your location, your demographic group and/or the reason you are looking for financing.

You may also want to contact the Canada Business service centre in your province or territory or call toll free 1-888-576-4444 (TTY 1-800-457-8466)

Good luck with your beauty centre!

By Canada Business on November 3, 2011

Hi I am 17 and I want to start a business part time after school. But I don’t know if I can go to a bank. I have a business Plan I did in school and I have customers but I haven’t registered my business for real yet are their programs for me?

By Alex on November 4, 2011

Hi Alex,

Our blog post on Opportunities for Young Entrepreneurs can give you information about opportunities for young entrepreneurs like yourself. Our Financing section lists financing programs that you may be eligible for.

You may also want to contact the Canadian Youth Business Foundation to find out about their youth programs and support services.

Our guide to Registering your business will give you information about the steps you need to take to register your business.

Best of luck with your business, Alex!

By Canada Business on November 4, 2011

HiI want to start a private forensic DNA lab in Ontario. I am a scientist and don;t know nothing about doing business but I want to do it. Any suggestion/help will contribute towards my determination. Thank you

By Azad on November 5, 2011

Hello Azad,

Our Starting a Business section and the Business Start-Up Info-Guide have information that will help you plan for a successful start to your journey as an entrepreneur.

One of the best courses of action you can take is to develop a solid business plan. This helps set the foundation for all of your business decisions moving forward. Our Business Planning section can help you get started.

Depending on the types of products and services you intend to offer to there may be specific licences or permits that will affect your business. To search for Ontario licenses and permits that will apply to a forensic lab, you can visit the ServiceOntario website and use the online search tool BizPaL

You may also be interested in accreditation and certification for your lab and staff. You can contact the Canadian Society of Forensic Science (CSFS)</a>, the Canadian Association for Laboratory Accreditation Inc. (CALA) and/or the <a href=“http://www.cmlto.com/index.php?opti>College of Medical Laboratory Technologists of Ontario (CMLTO)</a> for more information on their services and requirements.

You may also want to <a href=“http://www.canadabusiness.ca/eng/page/contact/”>contact> Canada Business Ontario or call toll free 1-888-576-4444 (TTY 1-800-457-8466) for more information on starting a business in Ontario

Best of luck with your business!

By Canada Business on November 8, 2011

I have some savings to start my business but will the goverent help me get going with financing or a loan?

By Scott on November 10, 2011

Hi Scott,

There are a number of resources you can look into for financing.

Our Grants and Finances section is an excellent place to start your search. Within this section, you can view or search financing programs offered by governments by selecting parameters such as your industry, your location, your demographic group and/or the reason you are looking for financing. The section also links to some community-based and private sector financing resources.

Our Steps to growth capital guide is designed to help you develop the plan, the materials and the confidence to go after equity financing.

Keep in mind that most lenders will want to see a well-prepared business plan in advance of providing financial assistance. Consult our Business Planning section for more information on how to capture the essence of your business.

If you are still having difficulty finding business financing that is right for you, contact the Canada Business service centre in your region for further assistance.

Good luck with your new business!

By Canada Business on November 10, 2011

Hello,
I used the Bootstrap approach in starting my own small business, a dog grooming business.
I used savings for start up capital and kept an accurate record of all expenditures. When I started getting customers I used a formula of one third the income to pay down start-up cost, one third for operating capital and one third to pay myself. Even though I am only in the second month of business all is going well and I plan on having the start-up capital paid off in less than six months. After that I will go to a 50-50 principal of half to pay me and the other half for supplies and operation cost.
Of course I did all my market research and business plan before launching the business. This takes a couple of months with no income but doing this first, I believe, will help with your operation becoming a success.
By struggling a bit in the beginning you will develop more drive and character to succeed as opposed to having everything given to you.
Hope this helps others achieve their dreams!!!
Paul

By Paul on January 7, 2012

I am looking to start a buisness in romantic settings for couples. I have a very strong sense of business but not a big creative side. Any advice on finding a business partners?

By Patricia on January 26, 2012

Hi Patricia,

Attending trade shows and networking events can be a good way to connect with people in your industry who may be interested in becoming business partners, or who may be able to introduce you to someone in their network.

Searching the Canadian Company Capabilities database for companies that are similar to yours is another way to connect with potential business partners.

Best of luck starting your business!

By Canada Business on January 31, 2012

I want to start a legal services business in a small southern Ontario town. Funds are tight as is office space and I am wondering what kind of assistance is available to me, as I am over 50.

By Lynn on March 28, 2012

Hello Lynn,

Thank you for your comment. There are government loan programs that may be of interest to you, including the Canada Small Business Financing Program and the Community Futures Program.

Our Grants and Finances section is an excellent place to start looking for financing. In this section, you can browse or search financing programs offered by various levels of government by selecting criteria such as your industry, location, demographic group and the purpose of financing. This section also links to some community-based and private sector financing resources. Most lenders will want to see a well-prepared business plan before providing financial assistance. Consult our Business Planning section for more information on how to write a successful business plan. 

For more information on starting or growing your business, contact the Canada Business service centre in your province or territory or call toll free 1-888-576-4444 (TTY 1-800-457-8466).

Good luck with your plans.

By Canada Business on March 30, 2012

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