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

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

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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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

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