In this Recession businesses are forced to examine all sorts of alternative forms of business funding. For successful fund raising for your business, it is really important to understand what forms and types of business finance may be available to you. Many are experiencing the loss of traditional types of business finance, so alternative finance has filled that vacuum and can be a viable option. One of those viable options is Boot Strap Finance, which this article details for you.
Boot Strap Finance Avenues
–Founders Investment: Company Founders need to bring at least 10% Cash to the table to start a Company successfully and 20% owner contribution is optimal. Boot Strapping and leveraging can help you get in the 10-20% Cash Contribution range. See the following sections on other Alternative Funding avenues you can apply in the early development of your Company.
–Friends and Family: Be sure to set limits and rules; ensure done with attorneys; expectations clearly documented; worst case scenario disclosed; not at the undue expense of your friends or family.
–Business Associates
–Personal Savings: Be very careful; not at the unnecessary expense or Suffering of your family.
–Leverage a Mortgage: Non-Debt Home Equity Venture finances: Pledge your Home Equity Appreciation (or Depreciation) to an Investor who supplies cash. No loan payments, an equity deal.
–Life Insurance Loans on Cash Value: Be very careful; not at the unnecessary expense or distress of your family.
–Retirement Fund Loans – 401(K) Small Business Financing: To keep off penalties and the personal 401(K) borrowing limit, the Business Owner transfers retirement funds to a specialization 401(K) Plan for new Businesses, which allows the Business Owner to tap the full account balance. Use of these funds is considered an investment rather than a loan. There are no limits on borrowing, and it carries no tax penalties or minimum payment limits.
–Credit Guarantees
–Letters of Credit
–Pre-Commitment Letters
–Pre-Sale Commitment Deposits
–Insurance Guarantees
–Customer Deposits
Consult Professional Advisors
Always seek the advice of a CPA, Financial Planner and Attorney when considering using personal funds to fund a business. There are risks and penalties involved which need to be discussed and planned for.
Before Bootstrapping Make Sure You Have a Good Plan
Don’t sink your hard earned money or anyone else’s into a business until you have developed a Business Plan that has a detailed Operational Plan, along with a good Marketing Plan and Strategic Plan. You may want to consider the services of an experienced Business Plan Consultant to help you develop these most important business success documents. Good planning and advice ensures you spend that precious boot strap money in the best possible way for the future success of the business.
About The Author
Frank Goley has experience and background as a business consultant, business turnaround consultant, business plan writer, business plan expert, small business consultant, business coach, business plan consultant, marketing consultant, business planner and online marketing consultant, and seo consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over 20 years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog and publishes the Business Success Newsletter.