5 Most Common Bootstrapping Techniques

Photo by Sharon McCutcheon on Unsplash

One way to fund your business is through bootstrapping. Bootstrapping means starting your business without outside funding.

It means you rely on yourself, your family, and your friends to finance your company. Bootstrapping doesn’t mean starting a business that has no outside funding or that will not ever need outside funding.

There are many bootstrapping techniques that can be used to fund a startup, but I think the best ones are those that focus on bootstrapping through marketing.

These include marketing for your product, marketing for your service, and marketing for the companies you sell to. Here are several bootstrapping techniques that can be used to bootstrap your business.

Owner Financing

This is a type of bootstrapping that uses the owner’s personal assets to start and run the business. You don’t need to use all of your own money. In fact, it is usually better if you use only a portion of your own money.

This gives you more options when you run out of cash and less of a temptation to borrow against your assets. Some owners use their personal assets to pay for startup costs and then pay themselves back through their company.\

They do this because they want to avoid having debt tied up in their business and because they want control over how much debt they have. Others use their personal assets for only the initial startup costs, while paying themselves back through the company until the business can pay them back entirely.

Sweat Equity

This is a type of bootstrapping that uses party’s contribution to run the business. The contribution may be in cash, goods, or services.

You need to pay yourself back out of your own sweat equity (your time and energy). This is the most popular type of bootstrapping because it is usually the least expensive way to bootstrap a business.

Subsidy Finance

This is a type of bootstrapping that uses subsidy finance. Subsidy finance is money that is paid to you by the government or by a third party (such as a bank).

It may be provided as an interest-free loan, or it may be provided as grants or tax credits. You may also receive subsidy finance from friends and family members. These forms of subsidy finance are often available only to new businesses.

Selling

This is a type of bootstrapping that uses your products or services to start and run a business. You may need to get other people to buy your products or services in order to get started.

You may also need to sell other people’s products or services in order to make enough money to cover startup costs. This means you have to be able to sell to others before you can start your business.

Operating Cost

This is a type of bootstrapping that allocates the operating cost to cover startup costs. You can start your business without using any outside funding. However, you will need to cover some initial startup costs.

You can do this by setting the operation cost as low as possible. This way, you can use the rest of your cash to make money for your business.

Conclusion

I think there are some great ways to bootstrap a business, but I think the best ones are those that focus on marketing. Marketing is the most important aspect of any business. It can help you grow your business quickly, and it can help you make money for your business.

About the Author

I hope that my post has helped you know more about Startups. Feel free to leave a comment and tag me and I will answer them. Follow my profile (alexanderlhk.medium.com) to get the latest content I post to stay ahead of the curve.

I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces, and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.

Connect with me on LinkedIn (https://www.linkedin.com/in/alexanderlhk) if you have further questions. Let me know that you are a reader of my Medium posts in your invitation message.

--

--

--

Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students teach and learn better. I am also a mentor and investor.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

The Dark Secrets of Successful Digital Nomads

Start Small or Start Big, What is the Best for Your Business?

The Future Of Travel: ”Consumers want things to be simple and all in one place.”

Vlad Lata — I’ve Fallen In Love With The Railway industry

It’s All in Your Head: Startup Founders and the Battle of the Mind

Is Ycombinator really struggling for diversity?

Shelby Herman of Show Your Glow: Why We Need More Women Founders & Here Is What We Are Doing To…

Female Founders: Ginny Santos Of Neolé Inc On The Five Things You Need To Thrive and Succeed as a…

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Alexander Lim

Alexander Lim

Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students teach and learn better. I am also a mentor and investor.

More from Medium

How Owners Influence a Business

Networking — What Are Your Responsibilities

8 Business Lessons I Wish I Knew Earlier

#43 Do Things That Don’t Scale — Paul Graham