Photo courtesy of iStockphoto, Jan Paul Schrage


Business coach Robert Moment makes these observations about bootstrapping in a guest column for the Carolina Newswire:

Bootstrapping involves using your imagination, know-how, skills, and hard work as opposed to spending money.

Moment, CEO of The Moment Group, argues there are at least two different approaches entrepreneurs may take to bootstrapping:

Though for some businesses it means beginning with a different and innovative product or service - perhaps with great short-term revenue potential - in order to gain enough cash to fund the "real" business idea, others may apply it by maintaining close control over the early development of the business, in order to see how it goes before larger, more serious commitments are undertaken.

And he sets forth seven tips for practicing the bootstrapping approach, many of which may sound familiar:

1. Start small, grow big... A small business can be started with whatever is within your grasp, and you can grow from there without taking on large financial commitments and risks.

2. Plan for growth... make its focus rapid cash generation, so that you will not lose the drive to evolve it into what you really want to do.

3. Understand the importance of money... for a bootstrapper, cash is the beginning and the end of all things...don't spend money you don't have. Use credit and loans as a last resort, and only as little as is possible.

4. Growth is life... a bootstrapper's main priority is to retain cash from the very small business in order to build up to a larger one.

5. Take as little as possible... a bootstrapper is dedicated enough to revenue generation that s/he will take little to no salary, run the cheapest car and lifestyle possible, and make due without decent holiday celebrations and vacations for a while.

6. Know how to make an appearance... The master bootstrapper must appear much larger and more capable than perhaps it would otherwise seem.

7. Don't make a habit of it... When you bootstrap, don't lose sight of the fact that you're doing it temporarily in order to earn your way to larger things.

I certainly agree with many of these points, in particular, number five which I think may be particularly appropriate in an age of CEO's taking lavish compensations sometimes at their companies' expenses.

But I will quibble with Moment's last point. What's wrong with making bootstrapping a part of your company's culture? (Check out this previous post on a soon-to-be-finished book by Jeff Cornwall with a comment by Ron McDaniel of Buzoodle.)

I suspect the time for a much more fiscally disciplined entrepreneur ready at all stages to look at outside investment or credit as a last resort rather than a first choice to grow a business is at hand.

Other thoughts? Share them below.