Bootstrapping a Start-Up?

[AnthonyH]

What is the name of your state? Arizona

Starting out Debt-Free?

Is it even possible to start a Welding & Fabrication job shop totally debt free?
I already have an attorney, accountant and financial advisor handling the details
of this start-up. Have some equipment. And a 2 car garage w/ fab table.

I do have access to our HELOC, which I have used a very small amount (2k) to pay
my advisors. I really DO NOT want to use the HELOC to get this rolling.

I have ran accross a few articles that recommend getting 50% deposit from customers
w/ balance due upon delivery. This will help cover some of the upfront costs.

Anyone have any other ideas?

 

[TomD1974]

What is the name of your state? Arizona



Is it even possible to start a Welding & Fabrication job shop totally debt free?

-Of course! People do it all the time. As your business grows, however, you will need to put in cash by the chunk, owing to the "step-wise" capacity (human and capital) requirements in a business like yours. Plus, you will have those pesky marketing and sales costs, as well as probably accounting. But maybe you'll be ahead of the game enough each time from sales that you don't have to go into alternative sources.

I do have access to our HELOC, which I have used a very small amount (2k) to pay
my advisors. I really DO NOT want to use the HELOC to get this rolling.

- Then try not to. But when (or if) you need to seek outside funding, such as a business loan or an investor, they want to see you have some skin in the game, and you may need to tap into it. But there are other ways - giving away equity, or financing against inventory or receiveables (neither of which is likely in your type if biz). Keep in mind, however, that bootstrapping ad infinitum will probably not result in the empire and riches you *may* have in mind, but rather simply a good living. At some point most businesses have to face the tough choice of whether they want to bring in investors. That changes the game quite a bit but is usually needed to put all these famous companies over the top.


I have ran accross a few articles that recommend getting 50% deposit from customers
w/ balance due upon delivery. This will help cover some of the upfront costs.

-Getting paid early and often is fundamental to almost every business. If the marketplace allows, definitely get deposits. Or even have them pay 100% up front. Remember - you can do whatever the market allows, no more, no less. There are strategic reasons for getting deposits as well, in that you'll get burned far less often. To this last point, make sure you have understandings in writing and hopefully accompanying drawings, before you invest in any meaningful work for a client. This would just be a part of any custom fab business.

Anyone have any other ideas?

- Best of luck.