Bootstrapping to stay debt free

Filed in archive Bootstrapper Resources on October 30, 2007

A big problem in business startup and operation remains the possibility of being crushed by debt.

When drafting a business plan a few years ago for a small community newspaper, debt was one of my partner and my greatest concerns since it created an additional hurtle to profitability.

But bootstrapping can be one possible solution even when a business cannot be started or operated solely on cash flow and requires at least a modest investment to get going.

Here, from Associated Content via the Apple Cider 4769 blog, are three important techniques to do so derived from an earlier article at Entrepreneur.com originally also covered here.

They include:
• Lease instead of buy-Remember leasing will save you money and avoid crushing debt early on in your business especially before you've figured out your business model or potential profit.
• Sell accounts receivable-Sell your accounts receivable and let someone else collect the money you're owed while you use the money upfront to operate/grow your business. This assumes you're already operating and have something to sell and also will require you to sell at a discount to get the money up front.
• Use customers to secure credit-As opposed to the best case scenario of the customer who will pay you up front giving you the cash needed to fill an order, this solution has the customer advancing a letter of credit to help you fill the order with the understanding that payment on the order will cover The Debt. (No waits. No interest.)