Nate Nead
Risk Mitigation Tips for Bootstrapping Entrepreneurs
Nothing is more difficult than bootstrapping a startup. It can prove to be the ultimate test of endurance for many a wannabe. And, until you’ve weathered the storm yourself, it can be difficult to fully understand just how gut-wrenching starting a business can really be, especially if you already work at a steady job, have a nice paycheck, and are used to having others tell you what to do.
Sure, the upsides of entrepreneurship are practically limitless, but tell that to anyone who has failed horribly as an entrepreneurial venture and you’ll get a different perspective. If they failed their first time, it may have completely dashed their hopes and caused them to wash-out. If they failed multiple attempts, then they’re probably not going to be the best person to go to for a “pick-me-up.” It is in that spirit that I hope to showcase some of the ways to mitigate startup risk. It is important to understand how to do this regardless of whether you use your own or other people’s resources in your startup.
Funding Small Business Growth with Individual Retirement Funds
There comes an inflection point in nearly every stage of small business development where growth stagnation is inevitable except for the infusion of some form of capital, human or otherwise. Unfortunately, such inflection points can also be extremely time-sensitive as in, “we need for growth and we need it now!” The recent credit squeeze has also been detrimental as small businesses have been hurt the most by dried-up liquidity in financial markets. Luckily, there are a number of ways to tap existing funds, including using retirement funds as a method for funding small and medium businesses.
Self-Directing Retirement Accounts
While the more complex structure of self-directed IRAs and solo 401(k)s have existed for many years, the rapid mainstream acceptance and affordability of such accounts has only materialized in recent vintage. Unlike a traditional IRA, a self-directed IRA takes administrative control out of the hands of the IRA custodian and gives it back to the account holder. This means investors are free to invest in products other than stocks, bonds, mutual funds and money market accounts.
