If you are actually planning to start your business, I bet you are planning to put a capital from your own money or use the money of others. In other words there might be thousands of crediting or loaning or whatsoever out there, but whatever is that it is called debt or equity.
Debt means using others money barrowing from banks or other lending companies to start your business. Equity is using your own fund or your own savings to start up your business.
The question is which is which? Sounds obvious? Let’s see!
Here’s what we called bootstrapping in equity funding business kick-off. It involves adjusting your own living expenses or using your savings to fund your business. Sometimes I heard it like “shrinking your budget to fit to the size of your dream or shrinking your dream to fit to the size of your budget” – either way you have no choice if the budget speaks.
Ok. For bootstrapping businessmen out there here are your advantages:
• You have complete independence and command over your business. Remember, if things turn worst to worst then you have only your own money to lose without hang-ups over your creditors.
• Bootstrappers tend to be more cautious about using the budget especially if it’s hard-won. Others would tend to be more spend mongers like some credit card holders. It’s not your money anyway.
• The best thing is the lack of budget is a blessing in disguise in the form of honed selling instincts. Because the lack of budget gets you to the edge of the cliff which pushes you to grapple for survival, thus necessitating the sale of the product asap.
• In bootstrapping wastage is damnable and there will be nothing to waste anyway.
Bootstrappers downside are as follows:
• Of course underfunding is one of your major downside. You use your own budget obviously. But for me it really depends on what kind of business you want to establish and how affluent you are.
• Lack of business plans. According to some business consultants this usually happens to bootstrapping business; they usually don’t have plans. Well, perhaps fewer feedbacks or advices to hear from investors. Again, it depends. Individual values speak sometimes.
Credit funding serves great help for a non-saver monkey in the entrepreneur world. It will let anybody allow to start business in a fabulous budget at the expense of the creditor. But you have to be careful because this business start-up fashion gets into the nerve of your business in the form of walloping interest rates.
Your advantages get to be like these:
• It catches your business’ surging overhead even before your capital is drawn out from your hard work.
• Saves you more time – quick and easy – though for credit cards only.
• Credits are good temporary solutions. It comes to the rescue if you comes short of your budget.
• Again with credits you can start with nothing on the pocket or and as long as your business has a promising daylight.
Your disgrace if things get out of rail:
• Of course a debt is a debt until death. Without wiser thoughts on handling debts or credits then you’ll be running through hell.
• You don’t have full control over your business in a sense that creditors keep hacking at your back while you work harder each day or else double it.
• You’ll have constant race between debts and your profit. Unless, business goes well then all ends well.
The final scruple is to never go into business you don’t have knowledge to. That is the very basic principle every businessman knows and follows. Knowledge is queen to building a business, while capital is king.