Bootstrapper's Primer: Plastic potential

Filed in archive Bootstrapper Tips on March 27, 2007

More than one bootstrapper has started in business with nothing more than a credit card, but financing a start-up with debt must be done carefully and thoughtfully.

Partners Bill Dayton, Phil Cooper, and Larry Lee started Encore Productions in 1988 to serve a burgeoning audiovisual market for conventions and other large gatherings entirely on credit cards.

With steady jobs at the Tropicana Hotel and Casino in Las Vegas they took full advantage of their credit worthy status at the height of the credit card boom and managed to secure $500,000 in credit lines between them to start and operate their business.

From the beginning they paid the cards off fast to avoid interest charges. Read their stories and those of others who used plastic power to fuel their start-up efforts at Inc.com.

The website also offers some other important tips for using credit to start your business:

• Keep business and personal cards separate

Don't use your personal cards to pay for business expenses or you will put your personal credit at risk

• Resist the allure - don't get too many credit cards

Limiting yourself to one or two cards for your business makes tracking spending easier

• Know your credit history

Making sure your credit report is correct and up-to-date could make the difference not only in whether you get the card or not but at what rate.

Entrepreneur Dennis Ngin and two business partners launched their business One Greek Store in Gainesville, Florida, using credit to buy equipment and set up their on line store. In a comment on a previous post, Dennis, who also blogs at youngmoneyblog.com, explained:

I used a credit card to jump start my business. It has helped us out immensely. However, we do closely monitor and manage all of our credit card expenditures.

Watch for a profile on Dennis and his start-up efforts in a series of future posts.