How bootstrapping can help budding businesses

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Dear Professor Bruce:After 15 years in the business, I've climbed to the top of that corporate ladder and am now a senior advertising executive at a well-respected advertising agency. I'm itching to jump ship and start up my own business. I've already lined up three other partners ready to make the leap with me. We have complementary skill sets and our cell phones are filled with potential client contact information, but we have limited cash. So, how do we finance the start-up of this business?Answer:"Bootstrapping comes from the notion of lifting oneself up by those little leather straps sewn on the sides of boots or in business terms, it's using your own initiative to build your business with minimum outside capital," notes Gina Tedesco, a serial entrepreneur, professional business consultant and Graduate Professor of Entrepreneurial Finance at Fairleigh Dickinson University (FDU).Bootstrapping can actually be a competitive advantage for budding businesses. It forces the entrepreneur to develop a laser-like focus on selling the product or service to collect that much needed cash quicker. At the same time, money is scarce, so the business owner forgoes spending on frills and perks that are not related to bringing in the sale. Instead of purchasing the most expensive desk or traveling first class, a "bootstrapping" entrepreneur sees bringing in customers as the ultimate measure of success.As a service business, advertising executives have the luxury of starting up without a large up-front capital investment. Cash is king in any start up so Professor Tedesco recommends focusing on how many clients they need to bring in each month to pay the most critical bills. Entrepreneurs should try to bring in cash quicker by negotiating upfront retainers from potential clients. They need to conserve as much cash as possible by not only just "doing it well but doing it economically. They could opt to work out of the house initially to save rent costs until they start hiring more staff. In addition, they should use valuable but inexpensive resources whenever possible. Hiring interns, students or part-time help saves on personnel costs.For further information E-mail gina(at)opusint.com.Bruce Freeman is president of ProLine Communications, a marketing and public relations firm in Livingston, NJ and author of Birthing the Elephant (Ten Speed Press). E-mail questions to Bruce(at)SmallBusinessProf.com.