Finance Roll

Most entrepreneurs start their businesses with no outside financing from investors or banks, which is known as "bootstrapping". Bootstrapping can be a very stressful situation for entrepreneurs as it usually occurs while the future is very uncertain and a lot is riding on the success of the venture. Although bootstrapping is a very creative process and every entrepreneur has their own unique way of tackling problems, there are a few things you can do to try and improve your chances of success.

Evaluate Expenses Very Closely
The first thing most entrepreneurs think about when they decide to bootstrap their venture is where they are going to personally get the funds from. While this is a crucial question to ask, it should not be the sole focus of the financial situation. Keeping expenses as low as possible is just as important as the source of start-up funds. It's probably safe to say that you will not be working with very much capital, so you must preserve that capital as best as possible.

Whenever you purchase something for your business, comparison shopping is necessary but might not be enough to keep costs low. Evaluate if you need to make that purchase right now or at all. Is there a free alternative? Will you use it? Is it necessary? In the very early stages of a venture, you will want to spend majority of your money on operating expenses, or on something that will give you a direct return on your money.

Don't Plan On Outside Investments in the Near Future
When bootstrapping, assume you will not have outside financial assistance for some time. This will force you to plan accordingly and keep the focus on growing cash flow organically and as quickly and efficiently as possible. This way, when outside capital approaches you, it will be a luxury but not a necessity - giving you the advantage. It will also keep your business plan much more attainable, as securing outside investments is much more difficult then it sounds.

Test the Market Gradually
Don't expect to roll out your product or service and hit the ground running with your final product right from the beginning. Great ideas adapt to market conditions, and I guarantee that your first product or service will be vastly different in the future. Write a marketing plan that allows you to gradually introduce your product or service to different segments of your target market, and then bring your product or service to market at a methodical pace according to the plan. This will allow you to perfect your business, sales pitch and logistical details while preventing you and the business from overheating. This will also prevent you from making investments much too risky for a venture in its early stages.

Write a Business Plan
All entrepreneurs think they know their business inside and out, know where the business has come from, what the business will look like in the future and what implementation plan must be fulfilled in order to reach that point. While this might be partially true, writing a business plan allows entrepreneurs to work out the most intricate details of future business plans. By working out those minor details you may or may not have been aware of, you can easily avoid minor roadblocks that can cause major problems in the future, as well as implement your plan much quicker as you know exactly what to expect at every stage. Start-ups have many moving parts, so writing a business plan will allow you to see how everything will work together as far as time and money. Eventually, whether it is to compete in a competition or to pitch your business to investors, you will need to have a business plan. It is much less stressful to update an existing business plan then completely write a new one.

Choose the Best Financing Strategy for Your Situation
Bootstrapping is about creativity and quickly adapting to whatever situation you and your business are confronted with. It would be irresponsible to name a "best" financing method, since every situation is unique and must be adapted for the business. However, it is safe to say that financing will be secured through a number of different sources. Here is a couple of idea on how to finance your start-up without venture capital investors.