The BizFilings blog covering business tips and trends.
Bootstrapping: The New Norm
Published on Aug 18, 2010
Read 'Bootstrapping: The New Norm' at 'Time to Start Up,' the small business blog by BizFilings.
Entrepreneurial finance and ethics expert Dr. Jeff Cornwall recently revealed in his blog that, "Even the optimists are saying that we have at least two more years of economic stagnation. Other experts are warning of a possible double-dip recession. There is even growing talk in some circles in America experiencing a 'lost decade' in its economy. That refers to the 10-plus dismal years of economic doldrums suffered by Japan in the 1990s ... So what does this 'new normal' in our economy mean for entrepreneurs? For startup entrepreneurs it means you need to be lean ... Whichever path leads you to start a new business, a successful launch will require bootstrapping."
The team of small business experts at Business Owner's Toolkit defines bootstrapping as "generating needed funds by deftly managing cash inflows and outflows." Business Owner's Toolkit also offers a basic list to help guide efforts in monitoring, forecasting and analyzing cash flows:
Collection of accounts receivable - How can you improve credit terms or collection procedures?
Inventory management - Decide if you really need all that inventory. Overloading yourself with unneeded inventory can take a toll on cash and space. If you don't need it to satisfy immediate needs, keep your stash lean.
Accounts payable cycle - If vendors offer 30 days to pay, take 30 days and consider asking for 45 days. Take advantage of early payment discounts.
Expense control - Trim down expenses by auditing current practices. Do you really need the brand-new computer when a used one will suffice for your specific needs?
Mix frugality with sensibility for a helpful combination.
What other things can you suggest to small business owners when it comes to bootstrapping?