Thinking of raising funds for your new business?
One can take the help of the external sources i.e. bank to raise funds for setting up new venture. Extensive research should be done on your end in finding the external sources from where the funds can be raised.
If you can not raise funds from external sources, raising funds from internal sources can be a better option. But whatever be your source of raising fund, it can not spur your business growth without “Money Management.” Whether dealing with the home budget or the business, money management plays a crucial role.
One way of raising funds from internal sources is bootstrapping. It helps you to start your venture without start up capitals. This will help you to raise funds internally when they can not raise funds externally. I.e. debt finance and investors
Bootstrapping is highly characterized from internal generated:
• Retained earnings
• Credit cards
• Second mortgage
• Personal savings
• Friends and family etc
This strategic tool is a significant source of initial equity for more than 90% of technology based firms. Initially the owners can start their firms without any difficulty and make their firms acclimatize to the market conditions. By improving their ROI and credibility in the market, the firms can also raise money effortlessly from external sources for product enhancement and expanding.
Most of us may get lucky to raise money from the above discussed sources.But again a question strike us- what if we do not have any personal savings?, what if our friend and relatives say a big ‘NO’, and what if we have no internal sources to raise money?
The whole financial bootstrapping process is based on one crucial factor – “Wise Money Management.” It becomes the reason for the existence of bootstrapping and also manages the business finances which are raised from financial bootstrapping.
Not managing your finances properly will land you nowhere even if you have raised money internally. Each and every aspect of money management should be taken in personal and business life. Some money management techniques necessary in business:
• There should be financial meetings on a regular basis and plans should be made to enhance finances in order to spur up your business growth.
• Making Better Business Decisions Using financial information
• Using Powerful Financial Tools to Analyze Your Organization’s Numbers
• To decide what percentage of profit should be ploughed back into the business for its expansion and enhancement.
This way even the business organization which are not running smoothly due to inadequate retained earnings can also spur up their efficiency. Also in the long run, bootstrapping alone can not help the business to flourish in the absence of good business idea, its execution, market conditions and above all the sound money management.
In times of recession, proper money management along with bootstrapping can help the small scale business, a great deal in enhancing their business growth and leading a debt free life.
A proper blend of money management techniques can be a real life saver for any business owner to take advantage of financial bootstrapping.