All-time we were talking about investor money or taking a loan to fund a small business. Be it VCs, Angel Investors, Grants, Traditional loans, or Fintech Loans. All try to change you in their way. Some will guide you to miss your vision about the product and some will have an undercover mission to take control of the firm. Taking money from others has always given a bad vibe. In recent years we have seen founders exit with tiff in the board meetings. Founders leave eager to show funders are bad and funders try to find a reason that founders are incapable.
Either way, money from others will pain the business. In this case, we have an option to bootstrap the firm. Bootstrap is the traditional way of finding money around you. Bootstrapping is digging in your own pockets, finding relatives as an investor, taking help from siblings, borrowing money from your spouse, and keeping austerity as a driver of the firm. When things go your way, it will give you free hand and make a better growth plan.
The easiest way is to do business that doesn’t need capital. Entrepreneurs need to understand that firm can sustain itself without capital. That can be done if you think about a firm that can sustain, grow, and reach multiple geographies without an influx of funds. Fund small business as you run a company than going for funds outside.
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Here are the top 10 ways to be an entrepreneur avoiding funding your small business:
1. Start a business that needs zero or very less capital
2. Be in a business that generates cash quickly
3. Adopt austerity and run a firm with fewer expenses
4. Use your savings to start a firm
5. Work from home and don’t rush to start an office
6. Insist on value and not staggered payment terms
7. Keep analysis of cash flow insight
8. Avoid impulsive decisions to grab business which will eat away your cash
9. Lease your equipment
10. Have a business plan with future proof
If you apply these thoughts while you start a firm, it will help you avoid going for investment. It will keep you warm and not out of fuel. Fund for small businesses is an easy option, but the complication which it attracts makes you drag afoot. It will lead to the passionless running of the firm.
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There are many reasons why you shouldn’t rush in for fund a small business and here is Bootstrapping v/s funding:
|Pros||Will have full control over the firm; decision making is under you||A reason to grow the firm, with the investor fund|
|Founder own money and in the hand of firm||The Investor gets the firm extra shine.|
|Founder focus on product and firm||With money, the founder can plan a fast growth|
|The founder is wiser in spend||Skill and tech is available easy|
|Cons||Profits are just on paper as it is reinvested in firm||There is a high chance of misunderstanding|
|Growth is comparatively slow||The Founder can lose control of the firm|
|Bootstrap is a good idea but not for all||The funder will control over payments, involvement decision-making|
|Competition with the fund will go aggressive||The founder will end-up in the smaller pie of firm|
Some companies that succeed in bootstrapping are instead fund a small business:
- Meta (Facebook)
- Plenty of Fish