This particular paper defines bootstrap financing as a set of methods used to meet a venture's resource needs while avoiding financial transactions. Methods and their implications discussed in the study include personal resources, personal short-term borrowing, funding from friends and relatives, barter, quasi-equity arrangements, cooperatively used assets, client based funds, asset or cash management, leases, outsourcing, subsidies, or incentives, and foundation grants.

Bootstrap Finance next explores four interconnected groups of implications for scholars. These include: teaching a variety of students, services to business communities and industries, research that has been well reasoned, and the promotion and tenure process in post-secondary academic institutions.

Bootstrap finance methods emerged from traditional corporate finance activities. As scholars began to examine the distinct differences in finance activities among small businesses compared to large businesses, their research began to uncover an "entrepreneurial" look among the smaller businesses. Many elements of bootstrap finance were found to be modified from the traditional large, corporate perspective to fit a more entrepreneurial setting. As scholars subsequently began to evaluate these differences in financing methods, their explanations began to appear in scholarly literature as entrepreneurial finance.

As the scholarly literature relating to "small firm" or "small business" continued to emerge, the publications began to depend upon generally accepted language to specify issues that the businesses' owners dealt with. This language painted clear pictures for those trained in traditional corporate finance, while some of the terms were strange to the entrepreneur. While the entrepreneur acted upon the issues, the language of institutional finance may have been foreign to them. Issues and needs common between all businesses have been: working capital management, capital budgeting, capital structure, leverage, and dividend policy. As the initial scholarly work examined standard capital management practices, differences in cash management emerged. Small firms chose methods such as delayed payments to vendors, accelerated receipts from customers, and short-term investments of cash and cash equivalents, and securities.

In general, the studies reported that entrepreneurs had not realized the full benefits from financial assets that they controlled, and, furthermore, that capital shortages were a chronic problem. The studies determined that small business owners controlled cash, short-term, more often than they controlled cash budgeting. These entrepreneurs simply wore too many hats in the business or simply did not have knowledge of the methods that might have been available to solve the problems of capital management.

By their very nature, entrepreneurial ventures have consistently been more debt-oriented and have had a higher proportion of long-term debt than equity in their capital structure. Entrepreneurs have seen equity as a "window" of opportunity rather than as a strategic part of a far-reaching plan to obtain a specific financial structure.

Entrepreneurial financial practices exist in a rich, complex decision space quite different from that of larger, more mature organizations. As a rule, entrepreneurs act as both manager and owner of the business. The owner's likes and dislikes are evident in financial decisions regarding the business. Personal risk preferences loom large in the entrepreneur's decision making, especially regarding financial decisions. Entrepreneurs have consistently expressed preferences for internal funding rather than external equity or debt. The decision-making process is further complicated due to complex issues arising from the fact that, frequently, personal and business accounts have been integrated and personal liability controls many commitments made for the business. Often, quick decisions have been necessary to avoid missing opportunities and there is no time for thoughtful, cautious decisions.

Sound theory and research may provide ways for the formalization of an "entrepreneurial" education related to financing activities. It is important to understand that many institutional financing methods may not be appropriate for the entrepreneur and may not fit their needs. A better understanding of the small business owner's thought processes as well as the environment in which the entrepreneur operates may be more appropriate.

This paper illustrates an excellent opportunity to develop appropriate educational tools not only related to bootstrap financing, but also in helping the entrepreneur understand the importance of the planning process in general. As small businesses grow and mature, financial needs change as well. Proper planning and educational programs specifically tailored to address the needs of entrepreneurs could help them better understand the financial evolution that is inherent in any business regardless of size.

This type of research illustrates many ramifications for business development service delivery. It is important to identify the needs and resources of the small business complete and separate from those of the larger firms. The entrepreneur allocates time to financial matters as the immediate need dictates. Wearing many hats, the entrepreneur takes advantages of specific windows of opportunity to solve a specific financial issue. Rarely is there a financial plan with enough detail to accurately provide a plan of action for the entrepreneur.

Most entrepreneurs' goal is to own a growing business. Rarely do small business owners understand that the growth of a business takes cash. To many struggling start-up entrepreneurs, the concept of controlling growth is foreign to them. The cash crunch that is inherent in these small businesses causes the business owners to use scarce financial resources in a less than optimum manner. As explained earlier, they look at a window of opportunity to address a problem and many times resources are expended inefficiently to take advantage of this window.

Educational programs developed specifically for the entrepreneur could possibly solve many of the problems of the entrepreneur while leading to the prevention of many small business failures. By providing a more specialized curriculum based specifically upon the financial needs of the entrepreneur instead of the typical institutional finance education, business development programs would not only assist small businesses, but create an excellent marketing tool for the programs as well. Business development programs would appeal more directly to their niche: Entrepreneurs. Formalizing the curriculum would also possibly provide a bit more credibility and prestige among faculty, thereby attracting more interest and specialization at the educational institutions.

The benefits of all of these efforts could, quite possibly, create a more understanding environment for the entrepreneur and provide for a lower failure rate for startup ventures. Higher-performing small businesses increases the standard of living for the owners and their employees as well as a more vibrant and resilient economy.