Bootstrapping Entrepreneur-Joshua D. Mosshart/Joshua Mosshart

Bootstrapping is a creative way to finance your venture rather than traditional sources of funding like a bank.

This is a highly resourceful way to fund your business when you have very limited capital.

Bootstrapping may include a major reduction in your current expenses.

Creative funding solutions may be utilizing personal earnings, tapping into personal savings, obtaining cash values from your insurance policies, maxing out personal credits cards, second mortgages, equipment loans, asset-backed lines of credit, loans against income streams (like annuities), cash for invoices, inventory lending, personal guarantees etc.

Developing you businesses products or services can make or break your company. The key is using existing relationships with suppliers and potential customers. Bootstrapping strategies for research and development (R&D) could include:

1. Prepaid licenses
2. Prepaid royalties
3. Advances from customers
4. Advances from suppliers
5. Cutting a deal for using product development facilities on weekends or after hours
6. Grants
7. Commercializing University-based research
8. Tax-credits
9. Monitizing purchase orders
10. Federal or state subsidies

Bootstrapping for Business building:

1. Forgone or delayed compensation
2. Working from home
3. Barter agreements
4. Special financing terms for customers
5. Buy used equipment
6. Borrow equipment from businesses
7. Hire part time workers
8. Lease equipment
9. Coordinate bulk purchases with other businesses
10. Buy on consignment from suppliers
11. Obtain lines of credit from suppliers
12. Share business premises with others
13. Employ relatives or friendsat below market salaries
14. Loans from friends and family
15. Paying employees with stock

                                          Strategic Bootstrapping Alliances

Building alliances is another form of bootstrapping to generate revenues and reduce costs. Business alliances are coorperative agreements with one or more businesses to utilize resources for mutual benefit.

Here are some of the benefits of forming a strategic alliance:

Faster market penetration, access to sales and marketing channels, co-product development, complementary products, joint venture versus competing for market share, joint bidding on projects, geographic knowledge, access to customer data, product credibility, economies of scale, gain skills, marketing leverage and manufacturing capabilities.

An effective bootstrapping alliance is good for the early-stage firm with inadequate resources, but these alliances might change once you reach a healthy cash flow with self-sufficiency. This could be a good alternative to funding when equity investors are hard to come by.


Joshua D. Mosshart Bio