Image source: techcitynews.com
One of the many things that all new startups must deal with is setting up and growing the business with limited financial resources. Due to the risks endemic in building up a new enterprise, many startups do not always have the luxury of having a lot of financing options on hand to support them during the critical phases of growth.
Bootstrap or hustle
Opening lines of financing often involves convincing individuals and institutions, ranging from banks and private equity and venture firms to wealthy individuals. It takes a lot of convincing to get these sources to dispense with the funds, and often they would only be convinced when a proof-of-concept exists. Alternatively, entrepreneurs can seek out less conventional sources of enterprise funding such as peer-to-peer lending since banks are less likely to fund small businesses these days.
To achieve that, entrepreneurs have the option of bootstrapping—that is, to self-fund their enterprise from the ground up. Because not all entrepreneurs have the fat bank accounts, this could mean tapping into retirement funds or dedicating portions of their paychecks to building their enterprise.
Image source: fundingnote.com
On popular strategy among startup entrepreneurs is to apply the lean approach to building an enterprise. The lean approach is minimalism as applied to business and involves getting a business to a revenue generating state while expending as few resources on supplies and materials as possible. Many service enterprise startups have begun with no revenue at all, relying solely on supplies that the entrepreneur already owned.
This approach helps conserve the little resources there may be while cultivating a budget-oriented investing mindset that will serve the business well as it grows.