The funding’s that are available for entrepreneurs in the early stage of the company are:
- Self-Funding – This option is available to entrepreneurs who are highly motivated and committed to using personal resources to launch a company.
- Moonlight and Part-Time Consulting – this is a very important option where the entrepreneur may not want to quit their full time position, as the income from the job can help support the owner during negative or low cash flow and provide working capital to expand the business cash flow.
- Bootstrapping – is a self-funding often can be used by small businesses. It can reduce costs from the current operation and overhead.
- Friends and Family – this source of funding is very popular because they are not as worried about quick profits as professional investors are.
- Micro-equity and micro-loans – this is a new form of help organization for entrepreneurs. For a small percentage of ownership of your company, they will provide you with sufficient money to live for a few months near their offices.
- Bank loans – this source of funding allows the entrepreneur to not have to give up any part of ownership to receive the funds.
- Factory and Supplier Funding – if you are unable or willing to provide personal or asset-backed guarantees, but you have purchase orders from reputable customers, you maybe possible to use these orders to secure funding rom factors.
- Government funding – this funding is available to small businesses.
A virtual company is a company that has no offices and few employees loaded with benefis, no communication costs, low video conferencing. They allow the entrepreneurs to conserve cash and maintain flexibility in their plans, where monthly fixed costs are minimized.
The seven bootstrapping techniques are:
- No or Low Rent
- Bartering for Goods and Services
- Trading Intellectual Property Rights
- Renting or Leasing Equipment
- Used Equipment
- Cooperative Purchases
- Outsourcing
Bootstrapping is very important because it allows the entrepreneur to own the whole company without giving anything up. This method also allows them to show what determination they have to starting up a company with no outside help.
Factoring a purchase order is taking on a full loan from a bank, but they charge high interest.
Suppliers can help in providing working capital to an entrepreneur in ways where they see that the company will become a hit and may provide a line of credit to them as the company is starting up.