"Bootstrapping is Starting a Business With Zero Funds"

If you have an idea for a business, but no money to start it, you may become discouraged. However, it's very possible to start a business with zero funds.

What is Bootstrapping?

Starting a business with zero funds is called Bootstrapping. Bootstrapping is commonly practiced and quite successful. Starting a business with zero funds does require creative thinking, flexibility and a good knowledge of your product or service.

Many entrepreneurs who start a business with zero funds often find that their new company is actually much healthier for it. When a business is funded with a large amount of venture capital or an infusion of cash from patient investors, there is actually no immediate need to make money.

Some of the Benefits

Starting a business with no money also provides excellent preparation for future growth. Businesses have often failed when their growth accelerates at a faster rate than their cash flow. Entrepreneurs who have survived the bootstrapping process are fully prepared to deal with times of high uncertainty and change.

Many experts identify knowledge as one of the most important resources needed to start a business. They suggest you should identify a subject in which you have a keen interest and then become an expert in that subject. In the process, you will learn a great deal not only about the subject, but also sources, the market for that subject and the major players in that market. As you increase your knowledge about all of these facets of the subject, opportunities will begin to present themselves.

Any attempt to start a business with zero funds will require huge amounts of time and hard work. This is why so many advisors recommend working with products or services for which you have a passion. Bootstrapping a business often requires enormous personal sacrifice, especially in terms of time. In addition to the hard work and the hunger for learning everything possible, starting a business with zero funds also requires belief. Not only belief in what you're doing, but belief in yourself as well.

At the core of any business model is the fulfillment of a need. If you can find a need and fill it, it's possible to start a business with zero funds. Generally speaking, providing services requires much less cash flow at the beginning, then providing products.

Providing products in your business usually means a large cash outlay at the beginning for basic inventory and warehousing the product. On the other hand, when you provide a service, all you really need are the tools of your trade and a place to perform the service. This may seem obvious, but you should try to start a business that costs less to start.

If you're considering an attempt to start a business with zero funds, you should closely evaluate your own strengths and weaknesses. If you believe that you do have some weaknesses in critical areas, it may be possible to balance those with a partner. However, any time you build a partnership, you risk the dilution of your vision and passion. So proceed into partnerships cautiously.

If you do need resources, especially things like a place to work or a place to stay while things are getting started, ask your friends and family. You may not have considered them before as a source of business resources, but they could surprise you. Another innovative way to start a business with zero funds is to work half days on the business and work a job during the other half of the day. Again, the idea is to provide living expenses until your business begins to generate cash flow.

Don't forget the power of bartering. By exchanging products or services with other businesses, you may be able to obtain what you need without the exchange of money.

Although the idea of starting a business was zero funds may seem like an insurmountable task, it's really more common than you think. If you succeed, the company you create will almost certainly be stronger, more flexible and creatively immune to change and uncertainty in the future.

This tutorial was written by Peter Watson, CEO of Business Trader.

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