The document discusses bootstrapping in entrepreneurship, emphasizing that it involves starting a business with minimal capital, often through personal finances or revenue generated from the business itself. It outlines strategies for bootstrapping, such as testing the market, maintaining a small team, and utilizing various financing methods like trade credit and factoring. Additionally, it highlights the benefits and disadvantages of bootstrapping, along with a SWOT analysis evaluating strengths, weaknesses, opportunities, and threats in business development.

1. ACHARYA BANGALORE B
SCHOOL
SUBJECT:ENTREPRENEURSHIP
TOPIC :BOOTSRAP
PRESENTED BY
MANIKANTA.M

2. BOOTSTRAP

3. DEFINITION OF BOOTSTRAP
(OFTEN THROUGH IMPROVISED MEANS)
 ENTREPRENEUR STARTS A COMPANY WITH A
LITTLE CAPITAL.AN INDIVIDUAL IS SAID TO BE
BOOT STRAPPING WHEN HE OR SHE ATTEMPTS
TO FOUND AND BUILD A COMPANY FROM
PESONAL FINANCES OR FROM THE OPERATING
REVENUES OF THE NEW COMPANY

4. 7 TIPS FOR BOOTSRAPPING YOUR STARTUP
 Test the Market
 Efficiency
 Keep the Team Small
 Interns
 Marketing
 Outsourcing
 Social Networks

5. LIVE EXAMPLE OF BOOTSTRAPPING
 In fact, as Gammalink’s founders learned, an
entrepreneur’s time is rarely well spent courting
investors. Despite a well-written business plan and
excellent contacts, Lutz and his partner failed to
attract venture capital in a year of trying. Eventually,
they contributed $12,500 each to launch
Gammalink. Years later, after their company was a
proven success, it attracted $800,000 in unsolicited
venture capital

7. TYPES OF BOOTSTRAP FINANCING
 Factoring
 Trade credit
 Customers
 Real estate
 Leasing

8. Factoring
 Using accounts receivable to generate cash flow by
selling them to a ‘factor’ at a discount,in exchange for
cash.

9. Trade credit
 If your business can find a vedor or supplier
to extend trade credit and allow you to order goods
on net 30, 60, or 90 day terms, that is another form
of bootstrap financing you could use. If your
business is able to sell the goods before the payment
is due, then you just generated cashflow without
using any of your companies own cash.

10. Customers
 Your business can use a letter of credit from your
customer to purchase materials without using any
company resources. Just like when a contractor has
their customer pay up front and then uses that
money to buy the materials they need to complete
the job.

11. Real estate
 Leasing, refinancing, and borrowing against equity is
a great way for a company to generate capital by
using its own assets.

12. Leasing
 Free up cash by leasing equipment rather than
purchasing outright.

13. Bootsrapping options
 Product development
 Business development
 Minimization of capital needed
 Meeting the need for capital.

14. Product development
 Prepaid licenses, royalties, or advances from
customers
 Special deals on access to product hardware
 Development of product at night and on weekends
while working elsewhere
 Customer-funded research and development
 Free or subsidized access to general hardware
 Turning a consultant project into a commercial
product.

15. Business development
 Foregone or delayed compensation
 Reduced compensation
 Personal savings
 Working from home
 Deals with professional service providers at below-competitive
rates
 Space at below-market or very low rent
 Personal credit cards and home equity loans.

16. Minimize the need for capital
 Buy used equipment instead of new
 Borrow equipment from other businesses for short-term
projects
 Use interest on overdue payments from customers
 Hire personnel for shorter periods instead of
employing permanently
 Coordinate purchases with other businesses (mutual
purchasing of goods)
 Lease equipment instead of buying

17. Meeting the need for capital
 Withhold entrepreneur's salary payment for short or
long period of time
 Seek out best purchasing conditions with suppliers
 Deliberately delay payment to suppliers
 Use the entrepreneur's private credit card for business
expenses
 Obtain capital via the entrepreneur's assignments in
other businesses
 Obtain loans from relatives and friends
 Barter underused products or services with other firms
 Franchise or license the product or business idea to
others for a royalty fee.

18. Benefits
 Total control
 A bootstrapping business has total control over its
destiny – the business owners answer to no VC, bank
or outside imposed board of directors.
 Customer focus
 The business that is focused on funding itself pays
close attention to the needs of its customers. The
distraction of raising, and then managing, investors
or lenders can distract from building the business.

19.  Validating the business model
 A successful business that has grown through
funding itself is has, by definition, a valid and
profitable business model. This is not necessarily
true of VC or debt funded enterprises.
 Overcapitalisition
 “raise as much money as you can.”

20. DISADVNTAGES
 Undercapitalisation
 One of the main reasons for business failures is under
capitalisation; simply not enough money to grow the
enterprise or to put it on a sustainable footing. This is a
constant risk for bootstrapped businesses.
 Inability to focus
 Many owners or managers of bootstrapped businessese
focused on making sales so they can pay the rent and
make payroll; this distracts management from executing
the longer term aims of the business.

21.  Expertise
 In taking an equity partner – either in private equity,
venture capital or angel investor – the founders get the
benefit of the investors’ expertise.
 A good investor who has similar objectives to the
founders can add real value and complement the original
team’s strengths and weaknesses.
 No one size fits all businesses
 Overall there’s no black and white to bootstrapping
versus borrowing money or finding an equity partner; all
of them have their risks and benefits.

22. Flying on Empty
 1. Get operational quickly.
 2. Look for quick break-even, cash-generating projects.
 3. Offer high-value products or services that can sustain
direct personal selling.
 4. Keep growth in check. Start-ups that failed because
they could not fund their growth are legion
 5. Focus on cash, not on profits, market share, or
anything else
 6. Cultivate banks before the business becomes
creditworthy

23. Swot analysis
 Strengths&Weaknesses
 It's one thing to be able to sniff out opportunities,
having the competencies to take advantage of them is
just as important. You don't have to correct all of
your business's weaknesses (that's usually
impossible). The big question is whether or not you
should stick to opportunities where your company
has the necessary strengths, or whether your
company should acquire or develop new strengths.

24. Opportunities &Threats
 Opportunities are areas of buyer need where your
company can perform profitably. The best opportunities
are the ones that are relatively easy for the company to
pursue and that have a high probability of success.
 Threats are the challenges posed by unfavourable
developments or trends that could lead to reduced
profits. Examples of threats could include the
development of a superior product by a competitor, a
high chance of a prolonged economic depression or
unfavourable government legislation. Of course, there
could be many more.