Bootstrapping

Term Main definition
Bootstrapping

This term is related to an old saying about a laudable person who could pull himself up by his own bootstraps, which means to accomplish a great deal without any outside assistance.

Any start-up or other undercapitalized business actually is bootstrapping if it implements a plan designed to minimize expenses.  These plans usually involve efforts to maximize the utilization of existing fixed resources and sometimes will involve seeking free labor based on business or personal relationships.  Bootstrapping is essential for any undercapitalized company to attain and/or build positive cash flow.  By reducing, delaying, or eliminating the need for external capital funding, a start-up or other undercapitalized business hopes both to reduce the frequency and amount of offerings as wells as to hopefully receive better terms in those securities offerings they eventually need to conduct.