Saving money is like raising capital - without the interest

As a small business owner you know how much easier it is to spend money than to make it. Each dollar  your business earns is a result of years of hard work, education and experience, hundreds of conversations with potential customers, time networking with other business people and the careful development of a product or service.

Since it takes valuable time and resources to make money, it is important, as a business owner, to make sure each dollar spent contributes to the growth and development of your business.

The best way for you business to fail is by running out of money. Saving where you can and using your resources as efficiently as possible will help ensure you have enough money to reach a higher valuation.

Bootstrapping: Using your capital to its fullest potential

Bootstrapping is a skill set which allows entrepreneurs to decide where to allocate funds and to find creative ways to use the resouces they have available in order to save money and create additional revenue sources to stay operational and viable. 

Goal of bootstrapping is to save money, find new ways to use your resources to generate new revenue streams and to avoid unnecessary expenses.

Vinturella and Erickson, the authors of "Raising Entrepreneurial Capital" suggest six ways to bootstrap:

Generate Sales Quickly: 

In order to become operational quickly look for small niche markets to which your business can offer a auxiliary servic.

Generate Cash Flow Quickly:

Cash flow is more important to start-ups than profits because cash flow will help pay bills and fund growth. Focus your attention on products and projects that will bring money in quickly. 

Sell High-Valued Products and Services:

Selling high valued products to fewer customers is a better use of time than selling low-cost products to many customers. Since bootstrapping involves the most efficent use of time as well as money, focus your attention on gaining customers for your high value products.

Create the Best Team You Can Afford:

In the early stages of your business focus on attracting enthusiastic employees with an entrepreneurial spirt versus expensive executives and professionals. Your management team will grow as cash flow increases and  your business gains credibility.

Control Your Growth:

Growing too fast may force you to invest in anticipation of sales and create a need for outside financing. More moderate growth may allow you to self finance your business and grow at a more sustainable pace.

Manage Your Accounts Receivable:

One way to improve your cash flow, which will reduce your need for expensive outside financing, is to get customers to pay in advance and to be diligent about billing customers who owe money for a product or service you have provided. 

To successfully bootstrap find ways to do more with less, stay flexible by viewing each situation as an opportunity and save money by avoiding unnecessary expenses.

Resources available to entrepreneurs include capital, employee expertise, network connection, skill sets and personal relationships.