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Bootstrapping Key Fixed Costs:

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by

travis harrell

on 2 October 2013

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Transcript of Bootstrapping Key Fixed Costs:

Bootstrapping Key Fixed Costs:
Overhead & Capital Purchases

Overview
Reaching breakeven is crucial to sustaining a new business. In this presentation, we will discuss ways to bootstrap administrative overhead and capital costs. Techniques to minimize costs of facility, equipment, communication, transportation, insurance, legal, and accounting will all be discussed.
Administrative Overhead
Furnishings, Equipment, & Other Start-Up Costs
Business Insurance Costs
Insurance premiums are generally not negotiable
In summation, don't spend it if you don't have it
Facility Costs
53% of small businesses operate from home
Retail and manufacturing firms cannot work from home or virtual offices
Negotiating Rent Deals
Postponement of Rental Payment
delay first rental payment to bootstrap startup phase
Up-Fit Costs
request to do renovations yourself
finance the cost of the up-fit with rental payments
Graduated Leases
lease payments increase over life of contract
Free Use of Space
Legal, Accounting, & Other Consulting Costs
Once Law & Accounting firm is established, bootsrap by managing interactions
Be Efficient
Manage Interactions
Establish Relationships
Make sure there is a good fit
Hiring Attorneys & CPAs
Accountant expenses can easily add up

It All Adds Up
Ripple Effect Costs
Administrative Expenses
Furnishings & equipment are expensive
Bootstrapping furnishings & equipment can help preserve cash for the start-up of the business & can help drive down the breakeven point
Almost every type of furnishings & equipment imaginable can be found second-hand.
Equipment can also be rented as needed
- Technology changes & improves at an ever increasing rate
- Make sure that your business will not quickly outgrow the technologies you choose
- Innovation is key!
Communications & Information Technology Costs
rent
utilities
office supplies
business insurance
accounting expenses
legal expenses
non-salary marketing expenses
These are generated by each new hire
Two categories of Ripple Effect Costs:
Expansion of employees
Work Space, furniture, tech, tools, etc.
Buy used vehicles
Leasing vehicles can help spread out cash flow if a new vehicle is necessary
Transportation Costs
Find less expensive flights and hotels
Southwest Airlines
Hampton Inn
Microtel
Keep premiums down or try to keep them from rising rapidly
Change Insurers
Increase deductibles
Change agents or brokers
Change business operations to reduce claims risk
Full transcript