The paper “ Need for Bootstrapping in SMEs in the Context of Global Financial Crisis” is an engrossing example of business coursework. It is important for every business to estimate the development and start-up costs involved. As a matter of fact, there is every possibility to start a small business with little capital (Neugebauer and Spies, 2012). Bootstrapping is the activity, which can enable a business to start up with a small amount of capital. It provides an entrepreneur with the advantage of spending the capital amount as per his capacity.
The business functions without any external support and within the means available. Entrepreneurs can, therefore, assist the business to be less wasteful and more resourceful. Bootstrapping enables the production of cost-effective services and products (Abdulsaleh and Worthington, 2013). Bootstrapping refers to a situation, where an entrepreneur starts a business with personal finances and without any help from external sources (Van Auken, 2013). Any individual is said to be bootstrapping if he attempts to develop a company through personal finances or operating revenues of the new organization. Compared to venture capital, this activity provides greater benefits to entrepreneurs as they can have a reasonable amount of control over a number of business decisions (Van Auken, 2013).
At the same time, bootstrapping can create unnecessary risks for an entrepreneur. There are millions of small companies bootstrapped at some point in time. For instance, the founders of Hewlett-Packard expanded the business from a garage in California. Companies such as Sony, Motorola, Disney, and Microsoft, were also involved in bootstrapping (Neugebauer and Spies, 2012). A number of studies showed that small business enterprises mostly obtain the initial capital from family, personal savings, and friends, as opposed to external sources.
The study conducted by Harvard University related to the Inc 500 companies had pointed out that almost 80 percent of them were initiated with a personal fund of the founder (Neugebauer and Spies, 2012). The fastest-growing firms needed a modest amount of $1000 and the slow-growing ones required lesser capital (Neugebauer and Spies, 2012).
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