Bootstrapping Your Small Business’s Working Capital Needs For Free

Can you image a way to finance your small business’s working capital needs – like purchasing inventory, supplies, materials, labor etc – and not having to pay a dime to do it?

Well, not only can it be done but you might have the ability to do it right now.

Working Capital

Let’s start by looking at working capital. Working capital is essentially money that a business uses to manage its operating cycle. A retail business needs inventory to sell. It purchases that inventory up front – then works on selling those products over the coming days, weeks, months, etc. But, the business cannot pay for that inventory until it sells those items. Thus, in the mean time, it has to expend some working capital to purchase those products until it can sell them and recoup its money.

The same with service businesses. They need materials, supplies and even labor to get a job done for a customer. But, the business does not get paid until that job is done. However, it still has to cover those materials and wages in the mean time. It does so with its working capital – paying up front and getting reimbursed when the job is done.

Lastly, working capital for a manufacturing business is its life blood. The business receives an order and has to purchase needed materials to complete that order for the customer. Plus, the business has to pay for utilities, supplies and labor to convert those materials into a finished product and it has to do all of this before it gets paid. Thus, it has to have working capital on hand or it has to refuse to take that new order.

Now, most small businesses, instead of using their own money, like to apply for bank lines of credit to cover their working capital or operating capital needs.

The reason is that they offer a great benefit like the ability to draw on, use and then pay that line back throughout the year – as it earns revenue from its operations.

However, bank lines of credit – especially unsecured one – are very hard to get these days. Banks and many other small business lenders either no longer provide lines of credit or make them too hard to qualify for. Plus, if you can get one, they charge high interest from the moment you draw the line as well as huge fees just to have the line available.

And, if you can’t get a bank line of credit, what do you do then?

Well, you bootstrap of course and if you do it right – you can get all those same benefits without any of the cost.

Bootstrapping Working Capital

Bootstrapping is about using personal resources to start, grow and manage your small business. It comes to businesses that have no other options – meaning that they can’t get business loans. So, they turn to personal resources – like savings, home equity or personal credit cards. And, it is the latter that will provide the greatest benefit for working capital.

Credit cards – personal credit cards – are used by nearly 65% of all small businesses (not just new businesses but all small businesses).

The reason is that these cards provide:

  1. The same ability (benefit) as bank lines of credit – meaning that you can draw on the credit card line, pay it back and draw again.
  2. They are so much easier to get then business loans.
  3. They are unsecured – so no collateral is required. And,
  4. They can be used in your business to cover your operating capital needs.

Most personal credit cards do not have annual fees or any fees for that matter. They do not have to be zeroed out each year (meaning that you don’t have to pay them off and replay every 12 months). And, many provide cash back or other rewards – all things that you cannot or will not get with a traditional line of credit. But, their greatest benefit is that they provide billing cycles and grace periods before interest is charged.

Most credit cards have a 30 day billing cycle. That means that if you make a purchase today, you will not get charged any interest until after the billing cycle is completed. Thus, let’s say that your billing cycle ends on the 15th of each month. Now, if you make a purchase on the 16th of the month, you will not be charged interest on that purchase for at least another 30 days (until the 15th of the next month). And, if you pay that balance in full before the 15th of the next month – you will not be charged any interest at all.

Additional, many credit cards also offer a 25 day grace period to pay after the billing cycle ends – increasing the time until you get charged interest or have to make payments.

This means that you can make purchases on your card and, not only do you not have to pay for those charges for nearly 55 days (almost two months), but you can use that time to run through your operating cycles, get paid from your customers and pay off those purchases – before you get charged any interest at all – and as long as you pay that card off in full, it will cost you nothing.

Credit Cards For Cash Flow

Let’s look at some examples:

A retail business needs to buy $5,000 in inventory and plans to sell those products over the next 30 days. But, it does not have the cash on hand. So, it puts those purchases on a credit card, sells the inventory over the next month. Collects payments from customers – say $15,000 as their mark up is 200%. Then before the card payment is due, take $5,000 from those sales and pays off the balance. In this case, they covered their working capital needs and did not pay a dime in interest or fees for it.

A service business has a new customer that will pay $20,000 to get a job done. To do this, the business will have to purchase $10,000 in supplies and added labor to complete the job. The company does not have that cash on hand and puts those charges on a credit card – completes the job in the next two weeks and collects payment from its customer. It then, before the end of the credit card’s billing cycle, pays the balance off with part of its customer’s payment and ends up paying nothing in interest or fees.

Lastly, a manufacturer needs $7,500 in raw materials to create $30,000 in finished product that it has customers lining up for. But, it does not have the $7,500 on hand and uses it credit card to pay its suppliers. Then, when the production run is done and the business gets paid – it promptly pays off the card’s balance and pays no interest, financing charges or fees.

And, there are as many examples as there are small businesses needing operating capital to grow their companies.

Keys To Success

There are two key factors here:

  1. You have to be able to complete your business cycle within that 30 day billing period. If it takes you more time then that to get paid by your customers – then you will start to accrue interest. However, paying interest for a month or two may not be that bad given that if you did not come up with the working capital in the first place, you would not be able to get the inventory or materials needed and would have to turn away those customers. (Just as long as you can earn more from the job or sale – then the product and any financing would cost).
  2. Be able and willing to pay those charges off in full each month – when paid by customers.


There are times that banks and traditional business financing is not the best option for growing small businesses – especially if those banks and financing companies keep denying loan requests.

So, business owners have to find ways to bootstrap. However, bootstrapping does not have to be either hard or expensive. And, like the examples shown, if managed properly, some of the alternative financing options that many small business owners try to avoid (like using personal credit) can turn out to be an inexpensive blessing in disguised.

The Main Reasons For The Growth Of The Home Based Business Industry

“Opportunity does not knock, it presents itself when you beat down the door.” – Kyle Chandler

What is the Home Based Business Industry?

An entrepreneurial business is mainly operated from home, mostly by the business owner himself. Some people refer to it as micro enterprises, working online, or small businesses. A small or micro business may not necessarily be a home based business.

It is important for the development of our home business opportunity to achieve financial independence in the global economy of the 21st century, to have a view of the total size of this industry and some views on possible future development and growth. This evaluation of the trends of the industry will help to dream-it-plan-it-do-it.

Very reliable statistical information is not freely available because these businesses are not well defined and are not part of governmental statistical planning and strategic information data. Some research and other information are available and will help us to get a broad view of the importance and trends of this industry.

Some general trends of and comments on the Business Industry:

The prospect of working from home has gained credibility over the years. It is no longer seen as a kind of part time job that the wife is doing from home while caring for her children. Take into account that most companies, about two-thirds of all companies, begin at home. That includes big companies like Apple Computer, Baskin-Robbins ice cream, Electronic Data Systems, Hallmark cards, the Lillian Vernon catalogue, and Purex.

In the USA, the average income generated by the home based business is substantial, as indicated by the following:

“Plus many home businesses do generate substantial revenue. About 35% have revenues of more than $125,000 and 8% more than $500,000. The median household income is $50,233 for households in general and roughly $75,000 for home entrepreneurs. The income for home based business owner is thus substantially higher than it is for the population as a whole.”

The home entrepreneurs business employs about 13.2 million people in the USA. It is estimated that about 50% of these are home based businesses. The assumption is that the home based businesses employs about 6.6 million people in the USA.

The home business industry is developing fast and becomes more important due to the following:

• The growth in the internet and the people connected to the internet. Two billion people are connected via the internet and this number grows by 200 million each year.

• Growth in the availability and lowering of the costs of broadband communication and connections worldwide has a positive influence on people connecting to the internet.

• The internet, increased online purchasing, money transfer mechanisms (notably PayPal), reliable global shipping, the decline in informal trade barriers and networks created through immigration have all made it easier for small businesses to serve global markets. The internet has been particularly important in enabling small businesses to cost effectively serve small market niches (the ‘long tail’ phenomenon).

• The development of computer technology, software, printers, dedicated telephone lines, and mobile phones creates new opportunities for the home based business and makes it more viable to operate a business from home. Affordable and powerful new technologies will continue to create new opportunities for the home based business. These technological developments will help to keep this industry growing.

• New innovations like:
o Express parcel delivery, distribution, cloud based IT services.
o Outsourcing, freelancing, communication technology, and the availability of skilled people in foreign countries makes it possible to not to have to perform all tasks at the premise of the home based business. It is easier to operate from a small premise at home.
o New business models have created new job opportunities for the development of home based business. Two examples are the network marketing industry, or multilevel marketing, and franchising.

• The growth of the knowledge and service based industries requires little office or working space and economies of scale does not apply.

• People are making lifestyle changes and prefer to work from home as it gives them flexibility, it saves time, and it eliminates commuting costs.

• The computer home business is not exclusively dependent on the local market to generate income, or for its financial existence; that makes this kind of business less vulnerable to economic cycles.

• Many people do need an extra source of income due to debt or other financial reasons and start their own home based business part time to generate a second income stream.

• With employer benefit packages being cut and the chances of losing a corporate job increasing, many view starting a home based business as no more risky than traditional employment. Job and income security drives people to start looking for and to develop an extra source of income for them.

• Due to demographic and social shifts. Aging baby boomers, women, Gen Y and others are all seeing home based business ownership as an increasingly viable work option. An interest in achieving work/life balance, flexibility, the opportunity to pursue a passion and working for your self are some of the reasons given for starting a home based business.

• There is a lack of corporate jobs. Large corporations have been battered by the recession. Even if the economic recovery is strong, it is unlikely that these companies will dramatically increase hiring. Instead of hiring full-time staff, they will stay flexible and lean through the increased use of technology, contractors, partnerships, and outsourcing. As a result, starting a home based business will be the best, and in many cases, the only option for corporate refugees.

“Nevertheless, owners are much more satisfied with their quality of life than other small business owners. However, the majority of owners do not appear to have made a financial trade-off in order to secure this quality of life.”

The number of people connected to the internet is growing very fast. Broadband is becoming more available in the world. The internet support technology and mobile applications of communication is growing at an astronomical rate. These developments create new opportunities for the internet related businesses.

It is being considered by some researchers that these developments will have a greater influence on the world economy than any economic revolution in history.

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas A. Edison

“The first one gets the oyster, the second gets the shell.” – Andrew Carnegie

These technological developments and innovations will create more and new opportunities to dream-it-plan-it-do-it big. The home business opportunities and the industry will boom. The true entrepreneurs will grab them. Do you want to be part of this? Join the team.

The Energy of Busy

Got a minute?

Just about any human being I work with or have in one of my classes tells me that “busyness” and lack of time are to blame for much of their internal stress and churn.

Not. So. Fast.

I’m not going to spend a ton of time on this. You and I both know better than that. Let’s do this instead…

“Busy” has an energy about it.

Try it on. “I’m so busy.” “I’m so busy.” “OMG, I’m soooo busy.” Feel it. Say it. Be it. Notice what happens in your body. Ugh.

Of course, you can insert any energy that doesn’t serve you here: “It’s hard” or “It won’t work” are two of my favorites for sabotage, letting ourselves off the hook, and/or retreating when we’re scared.

Now take that energy to your colleague. To your kids. To your partner. Helpful?

Probably not.

It’s not your “fault”. It’s a default. A great place to rest. Awesome place to “check out”. But, back to busy…

Busy is a farce.

It makes us feel good. Important.

It gives us an excuse to say “no”.

It can hide our fear of confrontation or disappointing someone else.

It is a hiding place. A cop out. A scape goat. A self-fulfilling energetic prophecy. A reflection of our inability to say “yes” and “no” to the right things.

Busy is stressful. And it’s contagious.

Try it on for yourself. Think of your version of “busy”. Think of the story you tell about it. How often you tell that story. Who you tell it to.

The most dangerous person to tell that story to is of course… ourselves. The more we tell it, the more we believe it, the more we embody it. We become “busy”. Welcome to the swirl.

I watch this time and time again. I get to witness people say that the thing between them and their dreams is “busy”. The thing between them and being a good leader, getting more sleep, working out, taking care of their body, even eating good food, having a better marriage, giving feedback that could change a life, bringing in new business, whatever… is busy.

Busy has a lot of power. And what’s worst is that we feed it. We are our own worst enemies when it comes to “busy”.

What if it’s simpler than that? What if we could make busy our… friend?

What if busy was just a lack of presence, intention, and prioritization?

What if, you’re not actually busy? But rather missing presence, right here, right now, in the moment.

And what if this busyness and lack of presence is simply shading your clarity and wisdom for the right “yes’s” and “no’s”?

Breathe and think about it.

Presence and intention are the antidotes to busy.

Breathing heals busy.

A solid “yes” or “no” is worth a hundred foggy “yes’s”.

Perspective, priorities, and values clarify and tame “busy”.

When we actually befriend busy, we can take it apart and make it work for us.

“Busy” and “lack of time” are here to stay. We have to get better at leading our energy through them, telling the truth, valuing our time, and partnering with them. We have to get better at being present and intentional in our lives. And we have to listen.

I had a client years ago who was busy, busy, busy. So busy, people found it nerve racking to be around her. They didn’t want to engage with her. And they’d never ask her for direction or support – she had an energetic force field around her that said “Back off, I’m busy”.

When we drilled down to what her relationship was with “busy” – she found it was a protector for her. Being busy all the time kept her off the hook for having to say “no” and disappoint people who she didn’t want to hang out with or work with. It also made her feel important in her job. The problem was that she so bought into her story that she had fully embodied it. She spoke faster, wasn’t fully present with people, was experienced as unapproachable, and she didn’t feel good. Busy actually manifested itself in her physiology.

Once she got honest and clear about what busy was about for her, she was able to partner with it, instead of resisting it or using it as a “bat”. She did 3 things:

  1. She made a conscious effort to breathe in the moment and pay attention to her physical body. This was key. She also, in the moment, checked in with the truth… Was she going to die? Was she truly running out of time? Was a tiger going to get her if she didn’t get it done? (Ironically, these are often the physiological responses we have to the story of busy.)
  2. She made a conscious effort to be fully with someone when they were talking to her. Ironically it took the same amount of time, but without the resistance and internal chatter, it was easier and more enjoyable.
  3. She made a conscious (though difficult) decision to say NO to people when she didn’t want to do something. She held it as a YES to herself. Ironically, as hard as it was, it was so much cleaner to navigate it this way, that she felt physically and mentally better. The mental energy she’d spent, holding busy to avoid disappointed, was hers again. For the better.

For you…

  • What is your relationship with busy? Be honest here. No one’s looking. This is for you.
  • What does it give you? What does it keep you from?
  • What are the three things – or even one – that you sense would help you create more space? (Intuition is good here, use it.)
  • What are the, unnecessary – even draining, things that you participate in that contribute to your energy of busy? (Gossip, not telling the truth, avoiding conflict, working around people, television, procrastination, and not taking care of ourselves are just a few common ones.)
  • Find a word that means something to your soul… If you were to replace the word or feeling of “busy” with this new word, how might that change things? For example: If you were “on purpose” instead of “busy” what would you do differently? If you were “engaged” instead of “busy” what would that do? There is gold in this question. Dig in.

What if you could tame your busy with some presence and intention? What if taking a step back, breathing, and being incredibly intentional with how you use your energy and time, were the solution to busy?

What if? What might you lose?

I’m not gonna lie and say that “busy” never creeps in for me, it does. But in those moments, when I get that visceral reaction, I’m quicker to turn to it, love on it a bit, get present, nurture what needs to be nurtured, say “no” where I need to say “no”, and step into intentional, delightful, full, and on purpose. By choice.

Don’t get busy, get present, tell the truth, choose consciously, and go.