Bootstrap is a situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances .

1. All About
Bootstrapping
By:
Rashmi Kumari, BBA-6, AGBS Patna

2. What is 'Bootstrap'
– Bootstrap is a situation in which an entrepreneur starts a company with little
capital. An individual is said to be bootstrapping when he or she attempts to
found and build a company from personal finances .
– It is a Primary types of Funding (i.e., Sources)

3. Why Bootstrap?
 Often necessary for small businesses to get started
 Preserves the value and wealth of a business (as it is internal financing, there is
no load of paying to the shareholders, so, wealth can be used for enhancing
product’s quality)
 Difficulty in raising and using money for growth (entrepreneurs find it difficult to raise
funds as there are chances that their idea may not be a successful one, which might lead
to credibility loss with lenders )
 E.g., danger of misallocation
 E.g., credibility loss with lenders

4. Bootstrap Marketing
– Know your customer
– Impact of message more important than “volume”
– Remember your market space or niche and the benefits you bring . . . spend
your marketing dollars carefully
– Marketing is a process, not an event

5. Human Resources Bootstrapping
– Employee “stretching”
– Independent contractors
– Employee leasing and temporary employees
– Student interns
– Equity compensation
– Non-monetary benefits

6. Administrative Overhead Bootstrapping
– Space
– Furnishings and office equipment
– Administrative salaries

7. Operations & Inventory Bootstrapping
– Outsourcing: Outsourcing is an effective cost-saving strategy when used properly. It is
sometimes more affordable to purchase a good from companies with comparative
advantages than it is to produce the good internally.
– Just-in-time inventory techniques: Just in time (JIT) is an inventory strategy companies
employ to increase efficiency and decrease waste by receiving goods only as they are
needed in the production process, thereby reducing inventory costs. This method
requires that producers are able to accurately forecast demand.
– Effective cost accounting: Cost accounting is a type of accounting process that aims to
capture a company's costs of production by assessing the input costs of each step of
production as well as fixed costs such as depreciation of capital equipment. Cost
accounting will first measure and record these costs individually, then compare input
results to output or actual results to aid company management in measuring financial
performance.

8. THANK YOU
