Bootstrapping Your Company to Success

Written by William Cate


Bootstrapping Your Company to Success By: William Cate Published August 1998 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

Often, service-oriented businesses can bootstrap themselves to success. Bootstrapping is a policy of reinvesting allrepparttar money a company earns intorepparttar 112464 growth of that company. The owner may not draw a salary for awhile. It's a process that can take 3 or 4 years. Atrepparttar 112465 end of that time,repparttar 112466 owner has a debt-free business and recovers his recovers their unpaid time fromrepparttar 112467 profitsrepparttar 112468 business now earns.

Overrepparttar 112469 years, I've developed about a dozen businesses using a bootstapping strategy. Here's an example. My wife is a veterinarian. In 1980, she was asked to vaccinate several dogs atrepparttar 112470 owner's home. She spent $25 and boughtrepparttar 112471 vaccines. She didrepparttar 112472 housecall. She tookrepparttar 112473 money she made and invested it into more supplies. She did more housecalls. In 1985, she had enough housecall clients to buy a building and convert it into a veterinary hospital. The practice continued to grow. Today, she co-owns one ofrepparttar 112474 largest veterinary hospitals inrepparttar 112475 San Francisco Bay Area. From 1980-1983, she didn't draw a salary.

I think anyone who intends to build a multinational corporation needs to bootstrap a business to success. It teaches themrepparttar 112476 importance of wisely reinvesting profits intorepparttar 112477 growth of a company. Without this lesson, public company officers believe they have a right to live offrepparttar 112478 risk capital of their investors. Too many public companies lose money because management insists upon excessive salaries.

Your Stock Support Budget

Written by William Cate


Your Stock Support Budget By William Cate Published November 1999 [http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

It costs money to create share buying. Every public company must findrepparttar buyers for their shareholders' stock. You must haverepparttar 112463 buyer when your shareholder sells. If your company fails to findrepparttar 112464 buyers, your share price will collapse.

To maintain your present share price, your float will trade four times annually. Your float isrepparttar 112465 stock held by your public shareholders. If your company's float is one million shares, you must expect to find four million shares of buying inrepparttar 112466 next year. If you keep your present shareholders, you'll cut your stock support costs by 100%. If your insiders can't sell and thus add torepparttar 112467 company's float, you'll reduce your future stock support costs by fourfold for every unsold insider share.

The annual supply and demand for your company's stock isn't constant inrepparttar 112468 Market. You get a favorable write-up. Demand for your stock temporarily jumps up. A major shareholder liquidates their position. The supply of your stock temporarily increases inrepparttar 112469 Market. You need to levelrepparttar 112470 supply/demand curve. You can often do it by working with your shareholders. Your goal should be to maintain a sustainable share price. Your share price should trade within a narrow range.

There's a silver-lining about bad news. If your shareholders hear it from you, you'll gain credibility. If they hear it from you, it won't sound as bad as hearing it from their broker, a newspaper article, or inrepparttar 112471 Shareholders' Annual Report. Budget money to spread bad news. It's a sound long term strategy.

A Stock Support Rule of Thumb for OTCBB companies is that it costs a dime to create a share of buying, when your share price is below one dollar. For a share price above one dollar add five cents for every dollar ofrepparttar 112472 share price above one dollar. This means that it costs a quarter to support a four-dollar share price. Multiply this share cost by your float and then by four and you have an annual budget for stock support.

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