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 all money a company earns into growth of that company. The owner may not draw a salary for awhile. It's a process that can take 3 or 4 years. At end of that time, owner has a debt-free business and recovers his recovers their unpaid time from profits business now earns.
Over 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 at owner's home. She spent $25 and bought vaccines. She did housecall. She took 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 of largest veterinary hospitals in 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 them importance of wisely reinvesting profits into growth of a company. Without this lesson, public company officers believe they have a right to live off risk capital of their investors. Too many public companies lose money because management insists upon excessive salaries.