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What Is Bootstrapping

The document discusses bootstrapping in business, which involves using existing resources to start and grow a company without external funding. It covers bootstrapping marketing techniques, financial strategies, and various sources of finance categorized by time period, ownership, and generation. The pros and cons of bootstrapping are also highlighted, emphasizing ownership, control, and the challenges of survival and growth.

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Mohd Aqib Saifi
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16 views26 pages

What Is Bootstrapping

The document discusses bootstrapping in business, which involves using existing resources to start and grow a company without external funding. It covers bootstrapping marketing techniques, financial strategies, and various sources of finance categorized by time period, ownership, and generation. The pros and cons of bootstrapping are also highlighted, emphasizing ownership, control, and the challenges of survival and growth.

Uploaded by

Mohd Aqib Saifi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BOOTSTRAPPING & SOURCE

OF FINANCE

PRESENTED BY-
MOHD TUFAIL
MBAB-25
CONTENTS
 What is bootstrapping ?
 Bootstrapping marketing.
 Financial bootstrapping.
 Sources of finance.
 According to ownership & control.
 According to source of generation.
WHAT IS BOOTSTRAPPING?
 Bootstrapping is a term used in business to refer to the process of
using only existing resources, such as personal savings, personal
computing equipment, and garage space, to start and grow a
company.
 This approach is in contrast to bringing on investors to provide
capital, or taking on debt to fund a business’ expansion.
 It’s about stretching what you’ve got whatever that is to get the job
done.
Examples
 Spanx – The Spanx bootstrapped story starts with a brilliant idea.
Unable to find the right undergarment for a party, Spanx founder
Sarah Blakely took scissors and cut the feet off a pair of pantyhose.
 Apple – The Apple bootstrapping story is just as inspiring.
Entrepreneurs Steve Jobs and Steve Wozniak founded this
powerhouse company in 1976.
 Dell – Entrepreneur Michael Dell founded the iconic brand There,
Dell built and sold computers made from stock components. He
eventually dropped out of school as the business grew.
BOOTSTRAPPED MARKETING
“Bootstrapping” is more commonly used in reference to marketing
tactics, where creativity can trump big cash outlays. Some effective,
low-cost techniques include:
 Offer prospects and customers free samples of your products or
services, such as a free 15-minute consultation.
 Build an email list of customers and prospects you can stay in touch
with. Ask happy customers for testimonials to use in future
marketing materials. Creating a blog using Word press, which is
free, to share company news Set up social media accounts on
platforms your customers use.
FINANCIAL BOOTSTRAPPING
Financial point of view , that means keeping overhead low and
avoiding paying too much for anything, or paying sooner than is
necessary. Here are some possible bootstrapping techniques to use:
 Avoid renting work space until you absolutely need to, such as
when you start hiring employees.
 Then, look into low-cost co-working space first, to keep lease
payments low.
HERE ARE SOME ADDITIONAL REASONS
TO USE BOOTSTRAP:

 Bootstrap's responsive CSS adjusts to phones, tablets, and desktops.


 Bootstrap has a big community and friendly support. For resources
visit.
 Bootstrap is easy to set up and create a working layout in less than
an hour.
 You don't need to know HTML and CSS well to use bootstrap, it's a
plus if you're a backend developer and need to do some UI changes.
 It's fully customizable, I can choose which components I'd like to use
and use variables file to get do even more colour and behaviour
customization.
 When you update the version of Bootstrap, you won't see tons of errors
because their core team cares about backwards compatibility.
 Their documentation is great! Here are some resources to check out:
THE PROS OF BOOTSTRAPPING
YOUR START UP ?
 Ownership of Your Business.
 Control Over Direction.
 Keeping Your Business.
 Sense of Accomplishment.
 Being Forced to Build a Business Model That Really Works there.
THE CONS OF BOOTSTRAPPING
FOR START-UP'S
 Chances of Survival.
 Growth.
 Top Level Help.
 Hard Work.
SOURCES OF FINANCE
 Sources of finance for business are equity, debt, debentures, retained
earnings, term loans, working capital loans, letter of credit, euro
issue, venture funding etc.
 These sources of funds are used in different situations.
 They are classified based on time period, ownership and control,
and their source of generation.
 It is ideal to evaluate each source of capital before opting for it.
ON THE BASIS OF A TIME PERIOD, SOURCES
ARE CLASSIFIED AS LONG-TERM, MEDIUM
TERM, AND SHORT TERM:
LONG-TERM SOURCES OF FINANCE
 Long-term financing means capital requirements for a period of more
than 5 years to 10, 15, 20 years or maybe more depending on other
factors.
 Capital expenditures in fixed assets like plant and machinery, land and
building, etc.
 Part of working capital which permanently stays with the business is
also financed with long-term sources of funds.
LONG-TERM FINANCING SOURCES CAN BE IN THE FORM OF ANY
OF THEM:
 Share Capital or Equity Shares.
 Preference Capital or Preference Shares.
 Retained Earnings or Internal Accruals.
 Debenture / Bonds.
 Term Loans from Financial Institutes, Government, and
Commercial Banks.
 Venture Funding.
 Asset Securitization.
 International Financing by way of Euro Issue, Foreign Currency
Loans, ADR, GDR, etc.
MEDIUM TERM SOURCES OF FINANCE
 Medium term financing means financing for a period of 3 to 5 years
and is used generally for two reasons.
 Medium term financing sources can in the form of one of them:
• Preference Capital or Preference Shares.
• Debenture / Bonds.
• Medium Term Loans from.
• Financial Institutes.
• Government, and Commercial Banks.
• Lease Finance.
• Hire Purchase Finance.
SHORT TERM SOURCES OF FINANCE
 Short term financing means financing for a period of less than 1
year.
 Short-term financing is also named as working capital financing.
 Short term finances are available in the form of:
• Trade Credit.
• Short Term Loans like Working Capital Loans from Commercial
Banks.
• Fixed Deposits for a period of 1 year or less.
• Advances received from customers.
• Creditors.
• Payables.
• Equity.
• Preference.
• Retained Earnings.
• Convertible Debentures.
• Venture Fund or Private Equity
ACCORDING TO OWNERSHIP AND
CONTROL
Sources of finances are classified based on ownership and control over
the business.
Owned Capital
 Owned capital also refers to equity.
 It is sourced from promoters of the company or from the general
public by issuing new equity shares.
Borrowed Capital
Borrowed or debt capital is the finance arranged from outside sources.
These sources of debt financing include the following:
 Financial institutions.
 Commercial banks.
 The general public in case of debentures.
ACCORDING TO SOURCE OF
GENERATION
Based on the source of generation, the following are the internal and
external sources of finance:
Internal Sources
 The internal source of capital is the one which is generated
internally by the business.
 These are as follows:
• Retained profits.
• Reduction or controlling of working capital.
• Sale of assets etc.
 The internal source of funds has the same characteristics of owned
capital. The best part of the internal sourcing of capital is that the
business grows by itself .

External Sources
 An external source of finance is the capital generated from outside
the business.
 Apart from the internal sources of funds, all the sources are
external sources. Deciding the right source of funds is a crucial
business decision taken by top-level finance managers.
 The usage of the wrong source increases the for finances and pay
the fee for raising capital again.

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