Bootstrapping "extends the runway"

Filed in archive Bootstrapper Resources on March 31, 2007

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Whether you decide to raise external funds or not, bootstrapping allows you to "extend the runway" (delay the raising of additional funds while increasing the viability of your startup venture), says Kauffman Foundation entrepreneur in residence William H. "Bill Payne.

In other words, bootstrapping can help even the externally funded entrepreneur extend the amount of time he/she has to get the venture off the ground and flying.

Here are some key reasons for bootstrapping a business, according to Payne:

• Demonstrate viability
• Increase the valuation when raising money
• Allow the entrepreneur to maximize personal ownership in the company

Payne adds:

Bootstrapping can take many forms, but can be divided into personal or business sources of cash and/or reduction in expenses,...

A chart shows some of the key methods including:

• Keeping a day job
• Having a working spouse
• Delaying or minimizing salary to self/others
• Mortgaging residents
• Using savings
• Maximizing of credit
• Etc.

Read the rest of Payne's observations here, and join us for the next installment from the Kauffman Foundation's bootstrapping series...

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