Her CEO Journey™: The Business Finance Podcast for Mission-Driven Women Entrepreneurs

Weekly show where my featured guests and I explore the financial and business challenges women face on the entrepreneurial journey to success. You'll hear them talk about the money side of their businesses in ways you've always wanted to know about, but wouldn't dare ask. They openly share their disappointments, failures, successes, and everything in-between as they grew sales ranging from 6 to 9 figures. Knowing where your business stands financially helps you make critical decisions with confidence. It's simply the best way to be sure you grow a business that fuels the life you want to live.

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episode 127: Her CFO Tips: How To Use Bootstrapping as a Financing Strategy During Your Business’s Growth Stage [transcript]


Most people believe that bootstrapping is only applicable to early startups. However, bootstrapping can also be a valuable financial strategy for businesses in the growth stage. In this solo episode, we learn the definition of bootstrapping and how it’s different from getting outside investment. Then, we discuss the three instances when it makes sense for founders to bootstrap. Finally, we find out seven practical and actionable tips to bootstrap for business growth. 

With this knowledge, you’ll be able to make the best financial decisions based on what aligns with your purpose. So tune in to this information-packed episode to learn more!

3 reasons why you should listen to the full episode:

  1. Learn the definition of bootstrapping.
  2. Understand when it is appropriate to use bootstrapping for funding business growth.
  3. Find out concrete tips on how you can bootstrap your business growth to success.

Episode Highlights

  • [01:58] What is Bootstrapping?
  • [02:47] Bootstrapping for Growth Purposes
  • [03:40] Reason #1: Your Social Impact Mission is Front and Center
  • [04:02] Reason #2: You Choose Profitability Over Hypergrowth
  • [04:30] Reason #3: You Want to Attract Better Deals in the Future
  • [04:58] How to Implement Bootstrapping During the Growth Stage
  • [05:11] Tip #1: Be Creative
  • [05:52] Tip #2: Take Advantage of Project-by-Project Financing
  • [07:15] Tip #3: Finance Your Social Impact Goal Through Partnerships
  • [08:12] Tip #4: Reduce Costs by Continuously Improving Your Internal Processes
  • [09:14] Tip #5: Develop Financial Discipline
  • [09:29] Tip #6: Review Financial Statements on a Monthly Basis
  • [10:00] Tip #7: Obsessively Track Profitability
  • [10:33] Bootstrapping and Business Planning

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Connect With Me

Ready to transform your purpose into an impactful business financial story, profit, and joy? Schedule a chat with me at any time.

Resources

  • Visit Christina Sjahli'’s website for more insights on business finance on the Her CEO Journey™ podcast.
    • Episode 124: The Circular Approach: Decreasing Plastic Waste with a Sustainable Business — The Journey of Plaine Products
    • Episode 125: Getting Lean: Reduce Waste and Production Costs through Lean Manufacturing — The Journey of Meliora Cleaning Products
    • Episode 126: Changing the Future of Business: Slow Growth and Sound Financial Planning are the Secrets — The Journey of Badger
  • Chat with Christina and set up a time here!
  • Are you getting ready to raise capital? Identify the financial gaps that can stop you from building a profitable and sustainable business first. Download this quiz!


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 2021-08-05  12m
 
 
00:00  Christina Sjahli
Many founders
00:00
think bootstrapping is a
00:02
strategy only for the early
00:02
startup. In reality,
00:07
bootstrapping can also be a
00:07
financing strategy for the
00:11
growth stage. The growth stage,
00:11
for example, means when a
00:15
business is targeting a new
00:15
market segment, creating
00:18
additional products, or maybe
00:18
expanding to a new geographic
00:22
location. Some experts said
00:22
about 75 to 85% of businesses
00:28
did some form of bootstrapping
00:28
to finance their growth.
00:34
You're listening to Her CEO
00:34
Journey, the business finance
00:37
podcast for mission-driven women
00:37
entrepreneurs. I'm your host,
00:41
Christina Sjahli. If you are new
00:41
here, a big warm welcome. If we
00:47
are not connected on LinkedIn,
00:47
please reach out and say hi
00:50
because that's where I hang out
00:50
and share my business finance
00:54
tips. If you have been listening
00:54
to this podcast for a while, and
00:58
you are a regular listener, I
00:58
want you to know I appreciate
01:02
you. My podcast won't be around
01:02
without your support. This is a
01:07
free weekly show where my guests
01:07
and I want to inspires you to
01:11
balance between mission and
01:11
profit, to create an impact in
01:15
this world, and to achieve
01:15
financial equality through your
01:20
business.
01:21
We are not here to telling you
01:21
that bootstrapping is the best
01:25
way, and getting outside
01:25
investment is wrong. Instead, we
01:29
are here to share knowledge and
01:29
strategy so you have the
01:32
confidence to decide on your own
01:32
based on what aligns with your
01:37
purpose. But first, let's start
01:37
by the definition of
01:41
bootstrapping, specifically for
01:41
growth stage business.
01:45
Furthermore, in this solo
01:45
episode, I'm sharing when it
01:49
makes sense for you to bootstrap
01:49
your way during the growth stage
01:52
and seven tips to successfully
01:52
bootstrap your business growth.
01:58
Bootstrapping is actually one
01:58
form of financing strategy. It
02:02
is a financing strategy when
02:02
you, as the founder, don't want
02:06
to have outside investment, or
02:06
when you are unable to access
02:11
outside capital. However,
02:11
depending on the stages of your
02:14
business, bootstrapping can mean
02:14
different things. When your
02:19
business is still in the
02:19
pre-revenue level, or trying to
02:23
figure out the minimum viable
02:23
product, those are considered
02:26
the initial stage. One
02:26
definition of bootstrapping
02:30
means no outside money,
02:30
including no capital from
02:33
friends and family. On the other
02:33
hand, some founders believe
02:38
taking money from people who are
02:38
close plus some of the personal
02:43
fund, that can be considered as
02:43
bootstrapping as well.
02:47
Now, bootstrapping as a
02:47
financing strategy for growth
02:51
purposes means using the cash
02:51
flow produced from a viable
02:55
business model and not having
02:55
outside investors with a share
03:00
of ownership in the business. In
03:00
the Business For Good Podcast
03:04
series, which is Episode 124 to
03:04
126, all of these female
03:09
founders bootstrapped their way
03:09
during the growth stage. I
03:13
invite you to head on over to
03:13
christinasjahli.com/herceojourney,
03:20
and have a listen. So you
03:20
understand how bootstrapping
03:24
look like for growth stage
03:24
businesses.
03:31
Let's discuss when it makes
03:31
sense for a founder to use
03:36
bootstrapping as a financing
03:36
strategy during the growth
03:39  stage. So reason number one
when your social impact mission
03:43
is front and center, you want to
03:43
use bootstrapping as a financing
03:47
strategy. This is common reason
03:47
among mission-driven female
03:51
founders I spoke to. They don't
03:51
want their social impact mission
03:55
to be secondary. They don't want
03:55
to sacrifice fast growth over
04:00
their mission and profitability.
04:02  Now, reason number two
when you
04:02
choose profitability over hyper
04:07
growth, you prefer to grow
04:07
slowly with healthy profit
04:11
instead of focusing on growth,
04:11
but no profit. You may think if
04:16
you focus on sales and revenue
04:16
growth, then automatically you
04:20
have a profitable business. But
04:20
that's not always the case
04:25
because sales and revenue are
04:25
only one piece of the puzzle.
04:29  Number three
when you want to
04:29
attract better deals in the
04:33
future. Because when you have a
04:33
track record of profitable
04:38
growth and healthy business,
04:38
likely you attract more
04:42
qualified investors. These are
04:42
the three reasons when it makes
04:47
sense for you as a founder to
04:47
consider bootstrapping as a
04:51
financing strategy to finance
04:51
your growth stage.
04:58
If you decide to bootstrap and
04:58
this is the right strategy to
05:02
finance your business growth,
05:02
then next we are sharing seven
05:06
tips you can implement and be
05:06
successful to bootstrap your
05:10  business growth. Number one
be
05:10
creative so you can minimize
05:14
overall expenses without
05:14
sacrificing your social impact
05:18
mission. Thinking outside the
05:18
box and being creative will
05:22
always present opportunities to
05:22
save money. In Episode 124, the
05:28
founders of Plaine Products
05:28
share how they plan to minimize
05:31
the renovation costs of their
05:31
newly purchased warehouse by
05:36
utilizing their spouses'
05:36
construction skills. Now, that's
05:40
one way of being creative. I'm
05:40
sure there are so many other
05:44
ways that you can do this within
05:44
your business. Sometimes, you
05:48
just need to listen to other
05:48
founders and learn from them.
05:52  Number two
take advantage of
05:52
project-by-project financing.
05:57
Project-by-project financing
05:57
means borrowing money for a
06:00
specific purpose from a
06:00
traditional lender or
06:04
non-traditional lender. Example
06:04
of a project is purchasing a
06:09
warehouse, or purchasing
06:09
equipments to manufacture new
06:13
products, or upgrading current
06:13
equipment to increase capacity.
06:17
The idea of project-by-project
06:17
financing is to use cash flow
06:22
from the current operation to
06:22
finance the day-to-day
06:25
operation. And then using debt
06:25
to finance a new project.
06:30
Normally, this type of financing
06:30
leverages the asset from the
06:34
project as guarantees.
06:37
As an example, in Episode 124,
06:37
the founders of Plaine Products
06:42
shared they purchase a new
06:42
warehouse using a combination of
06:48
a commercial loan and a
06:48
government grant. Then they take
06:52
it a step further. Once fully
06:52
renovated, the warehouse
06:56
building also has extra spaces,
06:56
which they can rent out and
07:01
generate rental income to pay
07:01
for the commercial loan. So the
07:05
bootstrapping strategy they are
07:05
using is a combination of
07:09
creativity to minimize expenses
07:09
and project-by-project
07:14
financing.
07:15  Number three
finance your
07:15
social impact goal through
07:19
partnership. In Episode 126,
07:19
Rebecca Hamilton, the co-CEO of
07:24
Badger share one bootstrapping
07:24
way they did to finance their
07:30
journey to net zero. They
07:30
financed the construction of
07:33
their solar panel through a
07:33
partnership with another B Corp
07:37
certified business. The
07:37
financing deal is structured
07:41
through a power purchase
07:41
agreement whereby they pay their
07:45
energy partner each month as if
07:45
they are paying for their
07:49
regular electricity bill, but a
07:49
portion goes to owning the solar
07:54
panel. This is another example
07:54
of project-by-project financing
07:59
using a non-traditional lender.
07:59
So look at your business
08:03
partners or even your suppliers
08:03
and see if you can enter into an
08:08
agreement that is win-win for
08:08
all stakeholders.
08:12  Number four
reduce waste and
08:12
production costs by continuous
08:16
improvement in your internal
08:16
processes. In Episode 125, Kate
08:22
Jakubas, the co-founder of
08:22
Meliora Cleaning Products
08:25
credits the success in their
08:25
bootstrapping strategy by
08:29
continuously improving their
08:29
internal processes. In this
08:34
case, Meliora implements a lean
08:34
manufacturing process, which
08:39
leads to the just-in-time
08:39
inventory process. If you want
08:43
to learn more about the lean
08:43
manufacturing process and the
08:47
just-in-time inventory process,
08:47
you can head on over to
08:54
christinasjahli.com/herceojourney
08:54
and find Episode 125. The key
08:59
point here is about looking at
08:59
your internal processes daily
09:05
and make them more efficient on
09:05
a daily basis. That's when you
09:09
can lower your costs without
09:09
hurting your social impact
09:12
mission.
09:13  Number five
develop financial
09:13
discipline. You live and die by
09:19
your cash flow when you are
09:19
bootstrapping. So make sure you
09:23
have a good financial discipline
09:23
to deal with both emergency and
09:27
sudden opportunities.
09:29  Number six
review financial
09:29
statements on a monthly basis.
09:34
You want to keep a close eye on
09:34
your financial results. So we
09:39
recommend conducting a financial
09:39
review at the end of each month.
09:44
This way, you gain a better
09:44
understanding of your revenue,
09:48
what expenses should be reduced,
09:48
and the type of investment you
09:51
need for future growth. The goal
09:51
is about making timely
09:56
adjustment before you are
09:56
running out of capital.
10:00  Number seven
obsessively track
10:00
profitability. When you are not
10:06
interested or not ready to have
10:06
any type of investor, angel or
10:10
venture capitalists, know that
10:10
all your capital depends on how
10:15
profitable your business is.
10:15
That means you need to keep very
10:20
close track of your overall
10:20
profitability, especially when
10:24
you are adding products, new
10:24
geographic location, or new
10:28
customer segments.
10:33
Bootstrapping your business
10:33
requires you to create a plan.
10:37
And it's not just any plan. You
10:37
need to create a business plan
10:42
and then take and translate the
10:42
business plan into financial
10:47
numbers. And this is an area
10:47
where many founders can drop the
10:51
ball either because of capacity
10:51
issue, or maybe it's not
10:55
something they enjoy doing.
10:57
When you are ready to have a
10:57
trusted partner to take care of
11:01
your business finances and
11:01
allows you to focus on what you
11:05
love building, connect with us
11:05
at
11:07
christinasjahli.com/let-s-chat.
11:07
In the meantime, we have created
11:13
a quiz to identify any financial
11:13
gaps you may have, which can
11:18
stop you from building a
11:18
sustainable and profitable
11:21
purpose-driven business. You can
11:21
find a link to the quiz in the
11:25
show notes. And take action to
11:25
fill in the financial gap you
11:30
may have in your business.
11:33
And that's bring us to the end
11:33
of another show. Thank you so
11:36
much for listening to another
11:36
episode of Her CEO Journey, the
11:41
business finance podcast for
11:41
women entrepreneurs. If you want
11:45
to create a proactive financial
11:45
plan and process for your
11:49
business so you are ready to
11:49
weather the financial storm over
11:53
the next few months, let's chat
11:53
and see what's possible for you.
11:57
Book in a time to speak with me
11:57
at
11:59
christinasjahli.com/let-s-chat.