Category Archives: Business Planning

Choose a Domain Name and Hosting Company for your Online Business

The second thing to do after planning your online business is to choose a domain name. After that, you need to decide who is going to host your website. Choosing a domain name for your website is critical for the success of your online business. Karol K. writing in Winning WP concurs: “Choosing a domain name is something every website owner needs to ensure they get right — ideally before they do anything else, and ESPECIALLY if the website will be serving a commercial purpose.”

Also important is to get a reliable company to host your website. “It’s crucial to select a hosting provider carefully since your business will depend on it” advised Syed Balkhi in the Huffington Post.

But let us first discuss how to choose a domain name for your business.

How to choose a domain name

It is mostly great fun to search for a domain name. I do it as follow:

  1. I go to a domain name search facility e.g.;
  2. Then I type my first choice domain name to see if it is available;
  3. If the name is already taken, then I try my second choice, and so on;
  4. Once I’ve it the ‘jackpot’ (a domain name that is available), I’ll quickly register and pay for it.

However, there are more structured ways to choose a domain name. Brainstorming is a good way to generate a list of potential domain names. Still, many of us battle to get a name to start with.

If you battle get a domain name to start with, have a look at your mission and vision statements that you’d designed in the planning stage of your online business. For example, if your vision statement is: “We want everybody to wear our garments”; then may be an appropriate domain name. Or if your business’s name is “The Coffee Shop” the is an easy choice.

However, since most of the generic .com domain names are already taken, you need to be more creative. Then it may be a good idea is to choose an unusual, but catchy domain name like

There are several things to consider when you want to choose a domain name for your business:

  1. The size of your domain name. A short domain name is better because users can remember it easier. They are unlikely to misspell your domain name while searching for your business online. The domain name for this website is “ebizplan” which I think is easy to remember and relatively easy to spell.
  2. Consider a domain name that resembles your business. Ideally, customers will be able to guess a domain name from the firm’s name. If this isn’t possible, then find a functional name; a unique name (Yahoo!); or one that expresses an emotion or attitude associated with the brand, person, or mission 1.
  3. Choose a unique name. If you choose a domain name that is too similar than existing domains, you’ll start your business on the back foot. First do a Google search of the domain name you’ve got in mind. You’ll quickly see how many domains have similar names and also if they do similar business than you planned to do.
  4. Choose “.com” first. Dot com (.com) websites are by far the most popular domain extension on the web. “If your number one name choice isn’t available, then try your second choice before accepting other top level domains. Remember that some browsers accept address-only entries in their address bar. If you type just the domain name (and who knows how many of your users will just do that?) they will return, by default, to the ‘.com’ site”, suggest Ogi Djuraskovic and FirstSiteGuide team.

Deciding which company will host your website is the next step after you’ve acquired your domain name.

Choosing a hosting company for your website

Your website needs to reside on a hosting computer somewhere.  Because when you buy website hosting you basically rent server space on a server where your web files will be placed. So whenever somebody will look up for your website by entering your domain, he or she will get directed to your website.

Therefore, it’s crucial to choose a reliable web hosting company to ensure that your website remains safe and accessible all year round. Also, a web hosting company makes it possible for your website to be accessed by everyone on the web.

Syed Balkhi writing for Huffington Post gives the following advice when choosing a web hosting company:

  • Understand the different hosting options available – there are various web hosting options available such as Shared, VPS (Virtual Private Server), Dedicated and Managed Web hosting;
  • Excellent customer support is a must – the internet never sleeps. So, look for a provider that offers excellent customer support;
  • Choose a host with an excellent uptime track record – the hosting provider you choose should take every precaution to ensure maximum uptime;
  • Cost should not be your only consideration – as the saying goes, “you get what you pay for.” As a business, you cannot afford to experience extended downtime;
  • Ability to scale – as your business grows, your website will tend to generate more traffic. For that reason will the ability to scale be increasingly important.
  • Good reputation is essential – once you have narrowed the list of important features you require, the next step is to find a host with a top-notch reputation.

Now that you’ve a registered domain, and hired a capable web hosting company, you may start thinking of choosing your eCommerce package.


Congratulations! You are now one of at least 330 million registered domains owners on the internet. I’m afraid so say, the easy part is over. From now on it will be guts before glory.

The third step to take when starting an online business is to choose your eCommerce package…

Further reading:

  1. 7 Steps to Start an Online Business
  2. Planning Your Online Business


1 Thomas, L. 2011. The McGraw-Hill 36-hour course: online marketing, McGraw-Hill Education.



Planning Your Online Business

Planning your online business is the first step you need to do in order to start making an income online. The internet and digital technology have revolutionized about everything we do and also the way that we conduct our business.

However, the planning of your online business needs to take place in a world that is changing faster than we can learn. Indeed, concurs Barry Ritholtz in Bloomberg:   “Creative destruction caused by technology is so rampant that it is practically a cliche. It is easy to ignore not only the speed at which disruption caused by technology is affecting society, but the acceleration in the pace of change. This acceleration and its effect on markets, companies and labor are astonishing.”

The offline retail sector took the brunt of the digital revolution. Hordes of retailers went out of business because they failed to adapt their business models to fit in the new online channel. They couldn’t better the value that online retailers offered to their clients. Online retailers had a cost advantage that enabled them to lower prices with the same if not better margins than offline retailers. Furthermore, they offered a wider selection of products; and increasingly better service because of personalization and interactive communication.

Although the pace of change around us seems to increase exponentially, you’ll still need to do the planning of your online business in a structured way.

Planning your online business in a structured way

Most of us want to be in business to win, to outperform our competitors, and most importantly to make money. However, before your register a domain and creating a website, you need to know where you want to be with your business and how you’re going to get there.

In other words, you need to have a vision, mission and goals.

A Vision for your online business

You have to be able to communicate a vision of what your online business is all about and where it wants to be in the future. A vision needs to describe the aspirations of your business.

Jeff Boss writing in list the following eight ways a Vision Statement adds value to your business:

  1. A Vision statement offers guidance. It articulates what the company aspires to be at some point in the future.
  2. Vision statements set decision-making boundaries. Every decision that employees make should be governed by the company’s overall vision.
  3. Vision statements serve as behavioural boundaries. They may include the values that companies holds dear which, in turn, outline ethical – and subsequently, unethical – behaviour.
  4. A Vision statement instils emotion. It reminds us why we chose our place of work and give us reason to perpetually pursue the purpose for which the company stands.
  5. Vision statements spur growth. A compelling vision acts as a call to action for individual and organizational growth.
  6. Vision statements keep curiosity spurning. It is one way to keep the mental hamster wheels spinning because achieving a vision isn’t necessary the intent, but learning along the way is.
  7. The Vision statements allow difficult conversations. You can easily refer to the vision and ask, “How does your behaviour support our vision?”
  8. Vision statements enable leadership. It reminds current and aspiring leaders to fulfil their leadership responsibilities by adhering to the strategies set in place to pursue that vision.

Here’s the Vision Statement of eBay (Smart Insights):

eBay pioneers communities built on commerce, sustained by trust, and inspired by opportunity. eBay brings together millions of people every day on a local, national and international basis through an array of websites that focus on commerce, payments and communications.

And now for your online business’s Mission Statement…

Your online business’s Mission Statement

The mission statement communicates the overriding purpose of your online business. It’s also about how your business is going to get there.

Your online business’s mission sets the stage for the entire life of the business, and it should convey the following 1:

  • It should clarify the reasons why that business exists;
  • Which are the target markets for your business?
  • What types of needs will your online business be addressing?
  • With whom and where will you do business?
  • Which are the products or services that will be provided to the markets?
  • What technologies are you going to utilize to do your business? and,
  • Which innovative and differentiated approach will you pursue in relation to the potential competitors?

The vision and mission statement of is the following: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (The Balance).

The vision/mission statement of communicates exactly what their business is about.

Business Goals – realizing your vision and achieving your mission

The mission statement sets a clear direction for organizational activities and establishes a focus that facilitates joint efforts toward predetermined long-term goals. However before you can pursue the long-term goals and objectives of your online business, you need to develop strategies to determine the course of action to take and the allocation of resources necessary for carrying out these actions 3.

Therefore, whether a firm is an incumbent or new entrant, it must formulate and execute an online strategy if it is going to have a sustainable competitive advantage. This entails answering four important questions 2:

  1. Where is the firm now?-that is, how well is it doing? What is the basis of its performance? What are its strengths and weaknesses? Are there any threats and opportunities that it faces?
  2. Where does the firm go next? Given the firm’s performance, its positioning relative to its rivals and competitive and macro environments, it may want to pursue different goals.
  3. How does the firm get there? Pursuing new goals usually means finding different ways to achieve them.
  4. How does the firm implement the decisions to get there?

The business plan – putting your planning together

After you have analysed your market research, set your goals and identified what you need to start your online business, you may write it all up in a business plan. A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.

The structure of a business plan typically looks like this:

  • Executive Summary.
  • Business Description.
  • Market Analysis.
  • Organization Management.
  • Sales Strategies.
  • Funding Requirements.
  • Financial Projections.

Visit eBizplan’s Business Plans page for more info and a quote…


If planning your online business is not done, or not done properly, you’ll be left with a bad website. According to Digital Impact (UK), over 70 percent of people claim they wouldn’t buy from or use a poorly designed website. A bad website isn’t just not helping, it’s a dead weight tied around your business, alienating your users and holding your business back.

And a poorly designed website is in most cases the result of an online business without a business model and business strategy.

Next read: Choose a Domain Name and Hosting Company for your Online Business 


1 Gandellini, G. and Venanzi, D. 2013. Strategy for action–II: Strategy formulation, development, and control, Springer Science & Business Media.

2 Afuah, A. and Tucci, C.L. 2001. Internet business models and strategies, New York: McGraw-Hill.

3 Andersen, T.J. 2013. Short introduction to strategic management, Cambridge University Press.



Making Difficult Decisions are Necessary to Keep a Business on Track

Managers making difficult decisions are mostly taken for granted. Someone has to make a decision, and that’s a manager’s job, say most of us. “When you consider why some leaders are successful and some are not, the difference between a successful and unsuccessful leader is often directly linked to the choices and decisions they make”, says Peter Barron Stark, President of Peter Barron Stark Companies.

However, decision making becomes difficult when uncertainty is high, as it is now in the digital era. Indeed, technical and market uncertainty make decision-making difficult and, because information is often complex, understanding a problem is a challenge and often impossible before the problem is solved 1.

Making difficult decisions in times of uncertainty

Uncertainty is the difference between the amount of knowledge necessary to perform a task and the amount of knowledge already available within the company 2. Therefore, uncertainty refers to a lack of information regarding potential outcomes. So, it seems that knowledge is a critical element that is needed to make sound decisions.

Not so, says Malcolm Gladwell, (Blink: The Power of Thinking Without Thinking):  “The key to good decision making is not knowledge. It is understanding. We are swimming in the former. We are desperately lacking in the latter.” Decisions that seem to be the most difficult are those that require a deeper level of thought.

Kescia D. Gray suggests in the Corporate Wellness Magazine the following five steps that will help you to make better decisions in times of uncertainty:

Step 1: Identify your goal. Identify the purpose of your decision by asking yourself what exactly is the problem that needs to be solved? And why does this problem need to be solved?

Step 2: Gather information for weighing your options. It will help you to better understand what needs to be done in solving the problem, and will also help to generate ideas for a possible solution.

Step 3: Consider the consequences. In this step, you will be asking yourself what is likely to be the results of your decision.   How will it affect you now?  And how will it affect your future?

Step 4: Make your decision. Now that you have identified your goal, gathered all necessary information, and weighed the consequences, it is time to make a choice and actually execute your final decision.

Step 5: Evaluate your decision. Once you have made your final decision and put it into action, it is necessary to evaluate the decision and the steps you have taken to ensure that it works.


All right, according to Psychology Today, in the real world, most of our choices only need to be good enough, not perfect. Nevertheless, to understand the decision that you must make, you need recent, reliable and relevant information. Also, try not to make the decision on your own. By involving your team, the decision that you make may be accepted and understood more. As result of this, making difficult decisions may become easier.

Read also: The Humanity of Decision-Making: A Business Perspective…


1 Sweere, R.A. 2009. Improve Understanding and Decision-making in Standardization and Technology Licensing Projects by Applying Soft Systems Methodology and Scenario Thinking to Wicked Problems, Dissertation: Master of Science in Innovation Management, Technology University of Eindhoven.

2Liu, R. and Hart, S. 2011. Does experience matter? — A study of knowledge processes and uncertainty reduction in solution innovation, Industrial Marketing Management, 40:691-698.




The Humanity of Decision-Making: A Business Perspective…

Even with Big Data, Artificial Intelligence and Decision Support Systems, humans mostly need to make the final decisions regarding which business strategies they will pursue. As result of this, we can’t escape the humanity of decision-making in business environments.

Nevertheless, because decisions are made by humans, they are influenced by human-like behaviour such as emotions (think about the primary emotions 1: love, joy, surprise, anger, sadness and fear). Since emotions affect our decision-making, without emotion decision-making becomes ineffective says Erik Larson in Forbes.

Indeed, every decision that we make has an outcome. The outcome can be good, bad or nothing…

The humanity of decision-making – success

We all strive to be successful in our businesses. Therefore, if we make the right decisions the financial rewards are great! Even better are accolades that go with decisions that had worked out well – promotion, invites to join the top management strategy workshops, overseas visits… Is that true? Hardly…

Mark Suster made the following remark in ‘Both Sides’: “Have you ever noticed how many leaders are afraid of offering promotions to individual superstars because they’re worried about the impact on the rest of her teammates?” So, if you made a decision to earn or save your company millions of dollars, don’t hold your breath to be rewarded or recognized – you may die suffocating

But what happens when your decision went wrong and is costing your company money?

The humanity of decision-making – failure

Decision-making is about things that will happen in the future. Because nobody can accurately predicts what will happen in the future, many decisions that we make go wrong. Also, there may be dire consequences for decision makers when the decisions they made go south. Somebody needs to be blamed…

One of the reasons that contribute to a series of decision failures is the perceived invincibility of the decision-makers. Praise from others and routinized “success patterns” contribute to managers’ beliefs that their decisions are unlikely to fail. As a result, they make decisions and then move on to the next initiative without considering the outcomes of the earlier decisions 2. A disaster waiting to happen…

And what if no decisions are taken? That’s even worse.

The humanity of not making decisions

“Inability to make decisions is one of the principal reasons executives fail. Deficiency in decision-making ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure.” John C Maxwell quoted in

So if you not able or if you’re afraid to make decisions in your business, you’re in anyway screwed. Good luck for you and your business should you stick around…


Decision-making is done by everyone in an organisation. The higher the position of the decision-maker, the bigger the consequences of his/her decisions. That’s way people sometimes behave differently when confronted with making a decision. This piece is an introduction on a series of post about decision-making to follow.

Further reading:    The Reasons Why Start-up Businesses Fail


1 Shaver, P., Schwartz, J., Kirson, D. and O’Connor, C. 2001. Emotional Knowledge: Further Exploration of a Prototype Approach, In G. Parrott (Eds.), Emotions in Social Psychology: Essential Readings, 26-56. Philadelphia, PA: Psychology Press.

2 Shimizu, K. and Hitt, M.A. 2004. Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions, The Academy of Management Executive, 18(4):44-59.




Home-based business – Important Startup Strategies

There are millions of entrepreneurs that do their business from their homes. In fact, according to, home-based business was done by at least 38 million Americans during 2017.

Although the idea of doing business from your home sounds informal and casual, entrepreneurs should do the following suggests Casey Kelly-Barton in the HostGator Blog.

Important strategies to consider when starting your home-based business

  1. Interview yourself. Not only will you be your own boss, you’ll be your own employee, so hire with care.
  2. Study the logistics of self-employment. Do you have space to work and to store any inventory, equipment, and raw materials?
  3. Make a simple and clear business plan. What do you plan to sell? Who will buy it? How will you reach them? How often will they buy from you, and how much will they spend?
  4. Put your legal and financial ducks in a row. Decide on your business type and get your city or county business permit in place. Then open a business banking account.
  5. Set up your website. Look for a web hosting service that offers mobile-optimized site templates and fast page-load times.
  6. Set up a professional email address. Not all web hosts offer email hosting. Streamline things for yourselves by choosing a web host (like HostGator) that offers free emails with your website.
  7. Listen to your prospective customers. The most successful home-based businesses go out of their way to meet the needs of their customers, and it’s especially important to listen well as you plan your first product or service.
  8. Develop your value proposition. What can you offer your audience that will provide value for them and require a not-ridiculous amount of risk (in terms of effort and expense) from you?
  9. Ramp up your marketing. Once you have a product to offer and a customer base, you can market to prospects like the customers you already have.
  10. Develop new products or services. Expand or iterate on your product line based on customer feedback.
  11. Review regularly. Ask yourself a few questions about your business in general.


And if still wondering what home-based business to do, here are some guidelines 1:

  • Turn what you most enjoy into a home-based venture, such as a favorite hobby or interest.
  • Utilize existing skills from your salaried job.
  • Solve a problem that people are willing to pay someone else to do for them.
  • Use technology and resources you already have around the house, from your van to your computer.

Read also:  Every business needs a business plan


1 BizMove Management Training Institute, How to Start a Small Home Business A Step By Step Guide to Starting a Successful Home Based Business,



Borrowing Money from a Bank to Start your Business

Borrowing money from a bank to start your business is not an obvious option for prospective business owners. Unless you are well known, with a track record of starting and running successful businesses, no formal sources of capital are likely to invest in you in the early stages of your business 1.  Banks usually require an operating history to reduce their risk.

“Banks love collateral. They swoon over profits. And they get positively dizzy over long-term performance records. Because of this, it’s difficult to get a loan from a bank to start a new business, which doesn’t have any collateral, profits or long-term success to back up your loan application” according to Master R Stell writing in NFIB.

What do you need to know when borrowing money from a bank to start your business

Banks demand a lot of info from prospective business owners before they will consider approving a loan.

  1. Collateral – your business has to have hard assets it can pledge to back up a business loan. Banks look very carefully at these assets to make sure they reduce the risk.
  2. Business plan – must show the banks how and where you’re going to make your money.
  3. All your personal financial detail – details on assets and liabilities such as your home, vehicles, investment accounts, credit card accounts, auto loans and mortgages.
  4. Insurance – banks may insist that applicants take out insurance against the deaths of one or more of the founders. And the fine print can direct the payout on death to go to the bank first, to pay off the loan.


Although there may be a lot of “red tape” evident when prospective business owners apply with a bank for start-up money, banks are at least making an effort to get involved. For example, some banks specialize in lending to small or new businesses. To decide whether a bank loan is right for your business, research both traditional loans and alternative funding sources. It’s also important to know your business inside and out.

Read also:

  1. Getting Money for Your Business – Other Individual Investors
  2. Start your Business: Borrow Money from Friends and Relatives
  3. Using Personal Savings to Start Your Business


1  Vinturella, J.B. and Erickson, S.M., 2003. Raising entrepreneurial capital, Academic Press.




Getting Money for Your Business – Other Individual Investors

Prospective business owners may approach other individual investors to get money for starting their businesses. A large number of private individuals invest in others’ entrepreneurial ventures. They are primarily people with moderate to significant business experience but may also be affluent professionals, such as lawyers and physicians 1.

These other individual investors are collectively known as venture capitalists. A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion (Susan Ward, The Balance). Venture capitalists are sometimes flooded with business ideas and business opportunities from entrepreneurs that need investment in their ventures.

Let’s have a closer look at venture capitalists.

Other individual investors – venture capitalists

The majority of venture capital (VC) comes from professionally-managed public or private firms who seek a high rate of return. Therefore they (typically) invest in promising start-up or young businesses that have a high potential for growth but are also high risk (The Balance).

Venture Capitalists usually are heavily involved with the businesses that they have funded. Although money is important to VCs, they must also protect their investments. Therefore they engage in activities that help give each company its best chance to succeed 2. However, the over involvement of VCs may result in entrepreneurs losing their autonomy…

What make a ‘good’ venture capitalist?

As VCs usually chooses the most promising business ventures to finance, so should prospective business owners identify the best of them. listed the following characteristics that good venture capitalists have:

  1. Being a great net-worker. Having the right people to talk to during the diligence process and making the right introductions (to potential employees, customers and acquirers) is a major way that VCs can add value.
  2. Being a great listener/being able to read people. These are the key characteristics to becoming a great VC. The ability to truly understand where an entrepreneur is coming from helps in evaluating entrepreneurs.
  3. Ability to predict the future. Everyone has access to the same basic market research data but taking that data and interpreting it and turning it into actionable investment ideas is a good skill to have.
  4. Sales/persuasion ability. Being able to convince entrepreneurs to work with your firm versus another. Also, convincing a key employee to join a portfolio company and convincing a potential customer to work with a portfolio company. These are all examples when sales and persuasion skills come into play.
  5. Negotiation skills. To help negotiate a top-dollar acquisition for a start-up in your portfolio and being able to negotiate the lowest possible price when it comes to making an investment.
  6. Experience – there is definitely a learning curve and many lessons that can be gained with time.
  7. Luck – venture is an extremely hits based business. One great investment can make a whole fund successful. It is impossible to know if making an investment was luck or skill but there is definitely an element of both.


Other individual investors will fund your business only if the potential rewards outnumber the risks by far. They want a return on their investment and, if they are shareholders, they will involve heavily with your business. Failure to receive funding from a venture capitalist, however, does not indicate that the business plan is not a good one. More often, the venture is simply not a good fit for the investor.

Read also:

  1. Start your Business: Borrow Money from Friends and Relatives;
  2. Using Personal Savings to Start Your Business


1 Longenecker, J.G., Moore, C.W., Petty, W. and Palich, L.E. 2005. Small business management: An entrepreneurial emphasis, South-Western College Publishing, A Division of International Thomson Publishing Inc.

2 Kressel, H., 2007. Competing for the future: How digital innovations are changing the world, Cambridge University Press.


Start your Business: Borrow Money from Friends and Relatives

If you don’t have enough funds for your start-up business, you may ask friends or relatives to borrow you the money. Interesting, however, although the majority of informal investors, family and friends, is often willing to supply funds at negative returns, most prospective business owners will only as a last resort consider borrowing money from them 1.

Nevertheless, to borrow money from friends and relatives is after bank loans the biggest source of small business financing in the UK 2. There is however a certain way to approach friends and relatives to borrow money from them.

How to borrow money from friends and relatives

Tony Armstrong suggests in Nerd Wallet the following do’s and don’ts when you want to borrow money from friends and relatives to start your business:

  1. Know what you’re asking for – Do you simply want a loan, or are you offering your family member a stake in your business for their investment?
  2. Provide a business plan – That means you should provide your family and friends with a thorough overview of your company in the form of a well-crafted business plan.
  3. Don’t hide the risks – When pitching your business idea, be open and honest about your venture. There’ll be risks involved for anyone extending you money, and it’s up to you to explain that to them without bias.
  4. Put it on paper – Even if you’ve come to an agreement with your parents, and regardless of the sum of money involved, be sure to put everything in writing.
  5. Don’t let relationships suffer – It’s up to you to make sure that your business partnerships don’t hurt your relationships with family and friends.


Involving friends and relatives with your business can be of huge advantage for you as prospective business owner. Not only may they be a source of start-up capital, but they may have business skills and knowledge or other entrepreneurial characteristics that you haven’t been aware of. For that reason it is important choose your friends and relatives wisely…

Read also: Using Personal Savings to Start Your Business


1 Lee, S. and Persson, P. 2016. Financing from family and friends, The Review of Financial Studies, 29(9):2341-2386.

2 Basu, A. and Parker, S.C. 2001. Family finance and new business start‐ups, Oxford Bulletin of economics and Statistics, 63(3):333-358.


Using Personal Savings to Start Your Business

You, the aspiring entrepreneur, frequently have three sources of getting money to start your business: (1) personal savings, (2) friends and relatives, and (3) other individual investors. Personal savings to start your business will now be discussed.

Personal savings to start your business

Using personal savings to start your business is most frequently used by prospective business owners. However, most of us probably don’t have enough savings to start our business properly. For that reason you need to do a thorough inventory of your assets. You are likely to uncover resources you didn’t even know you had.

Assets you may have can be savings accounts, equity in real estate, retirement accounts, vehicles, recreational equipment and collections. You may decide to sell some assets for cash or to use them as collateral for a loan.

There are a number of ways that you can consider to generate start-up cash to open your business (Entrepreneur Press):

  • Investments – low-interest-margin loans against stocks and securities can be arranged through your brokerage accounts;
  • Your home – consider getting a home equity loan on the part of the mortgage that you have already paid off. Depending on the value of your home, a home-equity loan could become a substantial line of credit;
  • Life insurance policies – you can use the value built up in a cash-value life insurance policy as a ready source of cash;
  • Your retirement plan – some retirement plans allow members to borrow up to 50% of your vested account balance. However, the loan has to be repaid in a short period of time;
  • Moonlighting (if you’re employed) – ensures you’ll have some steady funds rolling in until your business starts to soar.


Lastly, before investing all your savings and collateral in a new business, you need to know that the business has the potential to survive and grow. Therefore you need a business- and marketing plan to give you direction and to get customers to your business.

Read also: Why do you want to start your own business?


Bootstrapping – Starting a New Business with Your Own Money

One of the first and most important questions that most of us ask when considering to start our own business is where the money would come from? The answer for more than 80% of start-up businesses is bootstrapping. Indeed, according to Lahm Jr and Little Jr (2005), the overwhelming majority of entrepreneurial companies are financed through this highly creative process.

Bootstrapping typically involves the use personal savings, credit-card debt, loans from friends and family and other non-traditional forms of capital.

The risks and advantages of bootstrapping

The biggest advantage of bootstrapping is that you are the boss. For this reason, self-funding your business means you only answer to yourself. You are free to do as you wish with the direction of your start-up.

Some advantages of bootstrapping that are mentioned by Schinck and Sarkar, (2012):

  1. Easy way to obtain financing – you have full use of your money;
  2. It’s convenient – you can start your business whenever you are ready;
  3. Bootstrapping is associated with minimum requirements – no need to report quarterly financial results to investors or financiers;
  4. It doesn’t require the preparation and presentation of a business plan or collateral.

Disadvantages of bootstrapping:

  1. Bootstrapping may constrain revenues – because as the business starts to grow, more capital is needed;
  2. Personal risk – the financial risks to bootstrapping are huge, so owners must have a plan for moving forward advises Lloyd Martin (Escalon);
  3. Lack of networking – you may miss out on valuable networking connections;
  4. You will likely not be earning any money for quite a while.


Lastly, the advent of the internet and e-commerce has given thousands of people the opportunity to start an online business from home with little capital or financing needed. However, since about anyone can start an online business, the competition for visits and clicks are immense. Therefore you need a well written business- and digital marketing plan to get your business on the way…

Read also: Every Business Needs a Business Plan


Lahm Jr, R.J. and Little Jr, H.T. 2005. Bootstrapping business start-ups: Entrepreneurship literature, textbooks, and teaching practices versus current business practices? In: Allied Academies International Conference. Academy of Entrepreneurship, Proceedings 11(2): 15. Jordan Whitney Enterprises, Inc.

Schinck, A. and Sarkar, S. 2012. Financial Bootstrapping: a critical entrepreneurship skill, Centro de Estudos e Formação Avançada em Gestão e Economia da Universidade de Aveiro, 20:1-24.