Ten Rules for Bootstrapping Your Business
When the going gets tough, the tough go bootstrapping
As a fledgling newbie trying to sprout wings in this environment, you must prepare yourself for the significant challenges ahead. The challenges are multidimensional, testing you emotionally in ways you never imagined. You will quickly learn that every facet of your new business is steeped in emotion. Unlike what many people say, starting a business is a very personal thing, and you feel every speed bump along the way. Each new day will become an emotional rollercoaster ride, and you’re strapped in, no place to hide.Experienced business people sometimes attain a sort of Zen-like ‘Art of War” ruthlessness where they emotionally detach from the carnage of driving a 40-ton semi through your living room, much like battle-worn military veterans. But this approach tends to desensitize your instincts and will create a trail of enemies that will come back to haunt you at some later date.At the DaVinci Institute we have immersed ourselves in the field of bootstrapping, attempting to separate the myths and the fantasies from the things that work. While there can never be one perfect way to launch a business, these are some of the practical rules which seem to hold the most truth.
Lead the Life – Cut Your Overhead
The first rule of bootstrapping is to cut your overhead costs to the bone. To achieve the bootstrapper’s mindset, the mental tai chi of becoming singular in your business focus, you must learn to lead the life. Payments for fancy houses and cars will slowly tear away at your personal resolve. Fancy meals at restaurants and lavish parties will compromise your attention. And high-end offices with luxury furnishings will put you at a negotiator’s disadvantage.Frugality is not a skill that can be turned on and off. It’s a concept you must become married to. Every needless penny you spend will jeopardize your ability to succeed.
Never Blame Others – Do It Yourself
As soon as you find yourself blaming other people for things not being done, just take a deep breath and do it yourself.It becomes so easy to let yourself off the hook by simply blaming someone else. But in doing so, you put your company at risk. You have to be the emotional leader driving your business forward, with an unusual level of loyalty for what you’re doing. Frustrating as it may seem, you can’t expect others to have your same level of drive and commitment. Ultimately, you are singularly accountable for your company’s success or failure.
Don’t Plan for Failure – Remove the Guardrails at the Cliff
Planning for easy bailout options has a way of undermining your resolve. Every startup goes through tumultuous tough times testing the mettle of the entrepreneur. And the tough times are what separate the survivors from the many strewn casualties lying alongside the startup highway.Planning for failure almost invariably leads to failure. Every step that the early stage entrepreneur takes on the startup tightrope will have them looking for an easier option, a soft landing so to speak. Removing the soft landings has a way of clearing your focus and strengthening your concentration.
Test Your Limits – Constantly
Expanding skill sets and relentless passion are two key ingredients. But blind passion without the skills can be a very destructive force. When is the last time you went outside and physically ran as fast as you possibly can? For most, this was a long time ago. But how will you know how fast you can run if you don’t test yourself. This is similar to the business world where knowing your limits is the best way to manage your options.
The Business Plan Fallacy – In Quest of Low Hanging Fruit
Contrary to what academicians teach, successful bootstrappers seldom write business plans. I’ve not met many that have. This is a luxury few can afford. But more importantly, bootstrappers have a constant need to keep their options open. Their relentless drive for revenues forces them to keep their peripheral vision intact as they view the opportunity landscape.In the early stages of a startup, bootstrappers have little accountability for their actions. Their primary need is to prove a viable concept in a viable market. And this means revenues come before anything else.
The Transitional Business Model – Search for Low Hanging Fruit
Potential revenue streams come in odd shapes and sizes, but you begin by selling yourself. For that matter, every transaction begins with you selling yourself as a competent, credible person with great integrity.Often times the first revenues for a fledgling startup come from individual consulting contracts. Selling your own expertise pays the bills and can set the stage for you to metamorphose into the business you wish to become. Many would-be entrepreneurs fail to think through the options of creating a transitional business model where you begin with an easy entry point and transition into the business you ultimately want to become. This approach will invariable take unexpected twists and turns along the way, so be flexible and know when to make the next turn.
Little Things Matter – Micromanage to Your Advantage
Sometimes the littlest details will throw your startup company into a tailspin. Blind trust is a luxury that startups can ill afford. Understanding your business inside and out will give you much better operational control. In nearly every case there is a direct correlation between the decisions you make and the revenue streams you have coming in. Understanding this cause-and-effect correlation is absolutely critical for you to succeed.
Bankers are not Your Friend – Line up Tons of Credit Before you Start
Few would-be entrepreneurs can imagine the difficulty of finding credit once they leave their steady income jobs. Credit scoring systems have a way of branding you as a terrible risk almost instantly as you enter the startup starting blocks. So plan ahead and line up credit in whatever forms you can find, and lots of it.Business never works the way you have it planned. Chaos theory is alive and well, and will be knocking at your door when you least expect it.
Find a Mentor – Surround Yourself with People Who Look Like What You Want to Become
Entrepreneurs need to surround themselves with other entrepreneurs. And it’s even better if you can surround yourself with people who are successful in the same type of business you are entering into.Successful people often can’t tell you what it is that makes them special, but if you hang around with them, they will teach you through their actions. Sitting in on a negotiating session, or being in the same room when they deal with a personnel issue, will give you unique pieces of information that has never been captured in books.
Reckless and Relentless – The Bootstrapping Difference
The bootstrapper business model is different than that of a “funded” company. Bootstrapping is more about drive and determination than it is about intelligence, and more about getting things done that doing things right. It’s better to get it done than to get it perfect. That’s not to say that you shouldn’t be bright and try to do things right, but successful bootstrappers tend to be more reckless and driven, and necessarily so, than their ‘funded’ entrepreneurial counterpart.
Funded companies demand accountability, and consequently this restricts the latitude with which they operate. People investing in a startup want to know that their money has been invested wisely, so recipients have more of an obligation to curb impulsive directional changes in the business.Bootstrap startups have that touch of raw freedom people crave. And this kind of freedom is intoxicating.By Thomas Frey