Filed under Start Up
by Ignorant in Illinois | May 25, 2012
My new small business is experiencing some cash flow problems. I asked a banker friend if he thought I might qualify for a loan, and he said I ought to concentrate on bootstrap financing at this stage. I thanked him and said I'd act on his suggestion immediately, of course. And I will--if you can tell me what bootstrap financing is and where I can get some.
Ignorant in Illinois
You have a wise friend. Bootstrapping is the first line of defense for businesses experiencing cash flow problems. Oscar Wilde once said that experience is the name everyone gives to their mistakes, and a bad cash flow experience is often the result of some pretty fundamental mistakes. Bootstrapping, or financing with internal sources of funds, is a way to rapidly reverse these mistakes and restore your cash flow.
Bootstrapping is a buzzword that basically means generating needed funds by deftly managing your cash inflows and outflows. Improving cash flow should be a daily task, like housekeeping. Monitoring, forecasting, and analyzing cash flows is essential to liquidity and profitability, even for the Fortune 500 crowd.
A basic list of areas where your "mistakes" can be addressed would include:
Learn from your experience. A little frugality and sensible use of available resources will pay big dividends in the long run. The old cliche "watch the pennies and the dollars will take care of themselves" is the bootstrapper's mantra. Make it yours and you'll have fewer mistakes and better experiences!