Discover the power of bootstrapping, a strategy embraced by 78% of startups to turn ideas into reality. Whether outlining your business plan or setting up the right business banking essentials, we break down concepts and help connect the business dots.
Businesses come in many shapes and sizes. While some require substantial upfront investment, others can find their stride with minimal resources.
Financing a business requires capital, which are the tools and resources needed to create products and provide services, like money.
What determines how much capital you need and when you need it? It all comes down to the type of business you want to start!
Bootstrapping
Bootstrapping is a term that essentially means self-funding or self-financing.
When your business is self-sustaining, has a modest initial cost to start, and you can finance it with personal savings or by reinvesting the profits back into the business, this is known as bootstrapping. Raising funds from your community is also common in this method.
According to a 2019 SCORE report, “78 percent of startups use solely their own money to launch their businesses.”
Many small businesses will pursue funding at some point along their business journey, though that may only hold true for some types of businesses. When looking to grow the business, some startups will turn to loans like our small business loan backed by the Black-led fintech, Lendistry.
A great example of a business that works well with bootstrapping is graphic design.
Imagine you are a second year undergrad student who just ended your internship in content marketing. Student organizations around campus have started to refer to your design work as “certifiably LIT.” Although you have a heavy course load, you just finished your internship and can afford to take on a couple of projects in your downtime to make extra cash.
It’s time to start our business and secure the bag!
How do you start? No worries, we got you. Let’s get you ready to design your way across campus.
Steps to Start
1. Level Up with Education
If you are starting your business or have been running it for a while, it’s always best to start with the essentials. Back to the basics! Our Financial Education Center features courses like “Small Business Essentials” to help you set out to succeed.
From mapping out your business plan to understanding how to use credit, our courses can help you get up to speed.
2. Lock into Business Accounts
The services that financial institutions offer to help small businesses will be broken down in one of our courses. Having the proper infrastructure in place is essential for managing your finances and operating your organization.
*Business bank accounts, like business checking and savings, help you manage cash at hand and keep your business separate from your personal banking accounts.
We make opening a business bank account easy! Check out our overview to understand the step by step process of opening your account. For more information, visit our branch and discuss which Business Membership makes sense for your needs with one of our expert staff members.
*Business bank accounts can only be opened in one of our branches (not online) for businesses in our market areas of Boston, Los Angeles and Miami.
3. Set Up Your Financial Plan
Now it’s your turn! Getting your financial plan and budget right are crucial steps for any business.
- Start with outlining your initial costs, from one-time purchases like a computer and graphic design software to ongoing expenses like software and internet bills.
- Then, project how much your business will make over specific periods based on your pricing and amount of clients.
- Build a budget that helps you accommodate your costs while reaching your business goals, taking into consideration personal funds that will help you get started.
- Put your business cap on – time to think about how the cash coming in and out interact and stay balanced. That’s called managing cash flow.
- Unexpected costs always arise. Treat them as expected costs instead! Build your reserve fund where you routinely set aside a portion of your income. Consider setting up an automatic savings plan to regularly deposit a certain amount or percentage of money into your savings account.
If you start small with graphic design services, you can shoot for the stars and build a larger agency! Congratulations on learning about how to approach bootstrapping your business.
Navigating business terminology can be confusing and information is often inaccessible. We aim to increase access for Black-owned businesses across the country and #BuildBlack!
Shoot for the stars, go after your dreams, grow your business, and create generational wealth!
