WEEK 6 : FEB. 23 BOOTSTRAP FINANCE MBAX 6860 : Bootstrap Tactics for Entrepreneurs BOOTSTRAP FINANCE February 23, 2007 BOOTSTRAP

OVERVIEW Sources of bootstrap financing Keys to successful bootstrap finance My take on it… Comments from Tasks Week 7 February 23, 2007 BOOTSTRAP

SOURCES OF BOOTSTRAP FINANCING Friends & family Credit cards Home equity loans, mortgage SBA loans Customers Vendors Angels Strategic partner February 23, 2007 BOOTSTRAP

KEYS TO SUCCESSFUL BOOTSTRAP FINANCING “Cash is king!” PROCESSES Accounting (cash flow statement, balance sheet, income statement…do them!) General infrastructure – merchant account, PO system, QuickBooks, etc. Prepare contingency plans Credit cards, factoring, 90 days with suppliers February 23, 2007 BOOTSTRAP

KEYS TO SUCCESSFUL BOOTSTRAP FINANCING Keep your eye on the ball Sign all checks Review A/R, cash flow, payroll and other reports WEEKLY Take global view of financial position at least every quarter Plan ahead – cultivate bank & angel relationships, set-up factoring if needed, etc February 23, 2007 BOOTSTRAP

MY TAKE ON IT… Have 2x burn rate in cash or equivalent liquid asset Insurance!! Protect your hard-earned money Grow organically unless you have injection of cash from Angel, VC, strategic partner, etc. Grow too quickly, without planning = cash trouble! February 23, 2007 BOOTSTRAP

MY TAKE ON IT… Sources of funding CUSTOMERS!! Pre-sell, pay ½ up front Vendors – ask for longer terms Credit cards – as a safety net Bank line of credit after established Angels – ones passionate about your industry Strategic partners February 23, 2007 BOOTSTRAP

MY TAKE ON IT… Sources of funding GET CREATIVE! Sell assets on ebay Sell another product to self-fund Factoring Use equipment from “partner company” Barter! February 23, 2007 BOOTSTRAP

WORKING AGREEMENT TOPICS Government resources FEDERAL SBIR grants SBA guaranteed loans (LowDoc Loan Program) SCORE – low-cost/free advice from “retired executives” STATE Colorado Enterprise Fund CAPCO CITY Office of Economic Development Enterprise Zones February 23, 2007 BOOTSTRAP

TASKS COMMENTS Surveys Partnerships Past behavior is a strong indicator of future behavior “what do you like about your current solution ?” “What don’t you like….” Partnerships Adds credibility Ready access to resources CUSTOMERS! Information Best practices February 23, 2007 BOOTSTRAP

TASKS COMMENTS Research/intelligence Shows and associations Have a supportable story! Sources! If can’t get specific, 100% relevant data, ASK EXPERTS! Much better than “I dunno” Shows and associations NETWORKING! February 23, 2007 BOOTSTRAP

TASKS COMMENTS Segmentation Competition KNOW your customer…so you can market to them Age, sex, income, where they hang out, what they like, what they read, etc Competition Don’t just ID them – analyze how you plan to compete against them – how are you DIFFERENT in your customer’s eyes February 23, 2007 BOOTSTRAP

WEEK 7 Next Week : Bootstrap HR Speaker : Cinda Daggett Readings Midterm Study Guide Posted Tasks Financing sources Term sheet February 23, 2007 BOOTSTRAP

“We make a living by what we get, but we make a life by what we give” --Norman MacEwan February 23, 2007 BOOTSTRAP