By Akosua Edwards From The Next Women

Akosua Edwards shares what she’s learned from talking to women in the Caribbean who are bootstrapping their businesses.

Starting a business can be an exciting journey! Believe me, it is not for the faint hearted. It’s like embarking on a journey with a final destination in mind but not knowing exactly how you will get there!

Everyone taking the entrepreneurial path must decide how to finance their business. Many entrepreneurs have defied all the seemingly insurmountable odds to start and grow a company without exploring the traditional funding avenues. This approach is known as bootstrapping.

What is bootstrapping?

Bootstrapping is the use of creative methods to finance the start and growth of one’s business without the need for external debt (e.g. business loans/equity) or outside investment (e.g. angel/seed funding or venture capital investment).

Some world class companies such as Apple and Dell Computers were bootstrapped:

Steve Jobs and his partner sold an old Volkswagen and an HP programmable calculator to raise $1,350 in seed capital; they built the first Apple in Job’s garage in 1976.

Michael Dell started selling his computers from his dorm room in 1983; Dell’s sales now top over $10m annually.

Over the past year, I have been speaking with women entrepreneurs, most of them based in the Caribbean, who have used bootstrapping techniques. These women all run successful businesses and have incorporated these methods, motivated not only by cutting cost, but by the determination to own a business no matter what.

Other motivations for using bootstrapping techniques include freedom of action; risk reduction; and the belief that finance institutions are not particularly helpful in providing assistance to startups.

Top seven tips from women bootstrappers in the Caribbean:

1. Focus on Cash Flow

Cash is king! Bootstrapping techniques first and foremost should allow a business to save cash. Focus on cash flow in the early days as opposed to profit, as a business can be making profits but still have little or no cash. Cash pays the bills. Focus on collecting cash on time from your customers. Make a list of your best paying customers and do your best work for them to ensure that the cash keeps coming in. Think about scheduling payments to allow for maximum cash flow: some business owners mentioned that they pay bills on the last day allowed in their suppliers’ payment terms.

2. Use family and friends in the early days

Make use of the skills held by your friends and family to save costs. One entrepreneur, Karen Agard, owner of Kissi’s 2, arguably Trinidad’s premier natural hair beauty salon, mentioned that she persuaded everyone in the family to paint her new premises rather than hiring professional decorators. They made it a weekend event filled with food and laughter!

3. Pay yourself only when the business gets off the ground

Many of the business owners I spoke to forfeited a salary in the early days of the business, using the saving to pay their basic bills such as mobile phones and transport. “If we had paid ourselves a salary, the business would have taken at least another six months to break even.” said Alison and Alicia Greene of Judavi Limited.

4. Use your credit cards

Nadella Riley, owner and director of Creative Joint Limited, a creative consultancy company, approached the bank for financing the purchase of equipment for a video production, but the bank were reluctant to help, as they weren’t sure how they could the equipment as collateral. As they pondered on their decision, time was slipping away, so Nadella used her personal credit card to purchase what she needed. She was keen to stress that the balance should be paid off when it’s due, or as soon as possible.

5. Start the business at home

“Having the business at home was one of the most creative methods that we have used to make the business successful” Nadella Riley commented.

6. Practice barter instead of buying and selling of goods and services

Many women use bartering, whereby goods and services are exchanged instead of money, to reduce costs.

Women owned and led businesses are an integral and important part of the global economic landscape.  Around the world, dismal economic conditions, high unemployment rates, and divorce catapult women into entrepreneurial activities. “Desperate to put food on the table for their children, women are defying societal norms in order to survive.” Jalbert (2000).

Despite the growing role of female-owned businesses, the growth rate and size of women-owned firms is still lower than that of male owned business.

The fact that female founded enterprises are still likely to be small or micro enterprises in low growth sectors can in part be attributed to lack of access to capital. However, the entrepreneurs I spoke to have demonstrated that this obstacle needn’t stop women from pursuing their dream to own a business.

They are living proof that with a great idea, a market and creative methods, women can start, grow and expand their businesses without vast amount of up-front financing.

Akosua Edwards is the founder of the Enabling Enterprise Project  in Trinidad and Tobago, her native country, targeting women entrepreneurs. The Project aims to assist women and young adults to start and grow businesses.The project has also recently launched NiNa, a youth entrepreneurship programme in Trinidad and Tobago. She is currently working in Uganda to produce and implement a Gender & Entrepreneurship Policy within the Agricultural Sector in the conflict areas in the north of the country, with a leading female-founded seed company. She has abeen selected as the Caribbean’s representative of the World Network of Young Leaders and Entrepreneurs (WNYLE).

Image courtesy of Salvator Vuono.

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http://www.thenextwomen.com/2013/07/23/six-tips-women-bootstrappers-caribbean