In an earlier post, I wrote about how some businesses fail due to over–liquidity. Believe it or not, and even though getting all, you require to initiate a business idea is a welcomed yet oft rare occurrence, some business failures can actually be attributed to over–liquidity. One prime example may be a Pay-TV company that once won the airing rights to transmit some of the world’s most-watched soccer events and leagues within Nigeria. Not very long after winning these rights, the company was a-washed with investor funding.
Subscribers thronged to their gates, wooed by cheaper subscription rates and other associated lip-smacking add-ons. Unfortunately, the company began gleefully spending their income and profits as quickly as they could be generated. They signed on employees with mind-numbing remunerations, and the CEO was said to have even gone on a shopping and travelling spree, renting unnecessarily large office spaces at horrendous prices and remunerating himself with a salary that the accounts could barely keep pace with. Needless to say, it all came to a fantastical end when transmission rights were lost not very long after and the CEO had to account for an amazingly depleted account and some awkward debts.
It goes without saying, that whether you’re blessed to start a company with so much funding and financial backing you can write a cheque for whatever bill is thrown at you, or you barely have enough financial fuel to get off the runway, the attitude of bootstrapping, and its similitudes, go a long way in determining business success, and how much influence your business, and idea, will eventually have in the market space.
Bootstrapping as a terminology has been around since small businesses were a thing, however, its meaning and application, it seems, are usually lost on the average contemporary entrepreneur, some of whom come to me declaring outlandish amounts required to get an idea off the ground and how investor funding could just be the magical answer to their route to market challenges. In more cases than not, the simple question of, ‘And, how far have you been able to take this idea on your own?’ usually yields hem and haws, and in some cases, the conversation ends before it even begins.
So, let’s reacquaint ourselves with bootstrapping and its necessities for business longevity.
Bootstrapping has come to be considered a contemporary business art form since it requires loads of creativity to execute without coming across as stingy or unduly starving your business, and, sometimes, co-workers/partners, of basic necessities on the grounds of frugality. It thus refers to the process of starting, or running a company, mostly from personal savings and/or borrowed funding from family, friends or close associates. Bootstrapped businesses traditionally do not rely on outside financing methods, such as investor support, crowdfunding or bank loans at its inception. Rather, as the name suggests, entrepreneurs must “pull themselves up by their bootstraps”, using their own capital to launch and manage their business properly until such times as expansion becomes inevitable and external funding, indispensable.
Bootstrapping is therefore a grinding lesson in hardwork and business flexibility when it comes to achieving your start-up objectives. It is neither easy nor a glamorous way to begin your journey, as it requires a lot of self–motivation, diligence, and self–organization to succeed. Executed properly, these ultimately force you to become a more creative, and emotionally stronger entrepreneur. Consider it a compulsory indoctrination stage into the world of business as it tests your commitment and determination to really go the whole nine yards in seeing ideas through. This thus keeps the start-up, product-focused in its early years, allowing for concepts, or the concept, on which the start-up was essentially founded, to mature, at least, into a minimum viable product or service. By testing and correcting all the chinks before widescale market adoption, also allows the business to boast of certain milestone achievements before fundraising rounds begin. Something most, if not all potential investors, are oft times more easily wooed by.
As a bootstrapper and founder, you are your company’s original, and only shareholder. As a result, you will rarely be as cautious with other people’s money as you will tend to be with yours, allowing you take certain risks and make smarter and faster decisions with less outside influence, leading to a quicker learning curve and faster progress.
Some worthwhile strategies for successfully staying bootstrapped are:
- Free is good, but functional is better: One of the most vital ingredients to business start-up, is a functional but scalable website, or if you are targeting a multi-product business launch, an eCommerce platform. Unfortunately, designing one is either tasking or can be financially out of reach. Most businesses that offer some of these services either charge too much or offer so few initial add–ons, you are ultimately forced into expensive subscriptions. This is where creativity comes into play. You have to really know what you want and search accordingly. Some platforms like Shuppendi, a downloadable Enterprise Resource Planning (ERP) business app targeted at SMEs and which offers free, unlimited product upload-ability services, business budgeting and website/eCommerce front office management tools are usually your best business bet, particularly if your business idea will be heavily reliant on the internet to succeed. The app’s ease of circumnavigation for your intended shoppers or customers, plus, its ability to help your business receive payments in Crypto, Paypal and Pay on Delivery options, make it one of the best free, yet most functional mobile business tools available to any bootstrapper.
- An equity–expertise swap saves money while giving you access to field-specific experts: Old as this idea may be, it is the next evolution in the work–for–equity space. Like other global companies already putting this into practice, i.e. Coca-Cola, Google and Facebook, It allows you offer equity in your company to subject matter experts whose services may traditionally be too expensive for you to afford. One of the beauties of this arrangement is that you can always purchase these holdings back, of course at a higher price, or allow the equity holder sell their shares when they deem it profitable to exist the company or hold on to some cash. It greatly reduces expensive outsourcing, and these employees cum partners have been usually found to be better dedicated to company growth, as it is beneficial to the common good than most salary earners.
- Don’t outsource jobs you can do yourself: This goes back to the above-made point. If the service you need is too technical to learn within a reasonable timeframe, then perhaps it is best to source a partner who is ready to work as a member of your team to deliver said services until such time as their services can be sourced cheaper or you have learnt enough of the ropes to go it yourself. DIYs (Do It Yourself) is a great way to save cost while learning how each facet of your business intercorrelates with the other, thus making you an eventual, well-rounded CEO.
- Be discerning when chasing perceived revenue: As much as your goal is to get as much traction as possible in the early stages of your start-up, you will randomly encounter tricky situations that may, at first glance, seem like opportunities that achieve a significant bump in growth. If these however come at the expense of modifying your operational model or product offering, it is best to look the other way. At an early stage, what might appear to be a revenue touchdown may distract you from building a real replicable business in the future. Stay focused.
- Keep your website simple and grow it organically: As earlier stated, being able to scale easily is an indispensable trait any new business idea must-have. As brick and mortar have now been almost totally replaced by the website, partly thanks to rising fear of spreading pandemics and the need to stay safe, having a website that can broaden, or retract, easily as your business surfs the wave of any economy, is key. A simple yet efficiently managed and surfable website or eCommerce platform saves you loads of money in the long run, particularly when it comes with functional freebies, like the earlier mentioned Shuppendi application, which is mobile and also web-accessible.
- Social Media, social media, social media: As a marketing tool, the benefits of social media can never be overstated. Engaging your target audience while sourcing creative ways to sell yourself, your product or service, and gain followers is still one of the cheapest resources available to any bootstrapper. Having a weekly marketing and engagement plan is good, keeping track of your KPIs to ensure it achieves its goals is better and having a ready link to your Shuppendi mobile business account, ensures continuous sales that any potential investor will be happy to eventually back.
- Advertising is good, PR is better: Of course, advertising will keep the sales machine chiming as you try to reach more people. However, it is eventually better, and cheaper to have people reach you instead. No tool does this better than PR. Credibility from other sources, be it from an influencer or a news coverage, keeps talk value and awareness fresh, whereas advertising has to be refreshed ever so often. A combination of both strategies is of course the ultimate strategy, however, if pressed for cash, then go with PR, as its long-term benefits always outweigh the short-term goal. And always handle it by yourself, no one knows your company better than you do. Have you downloaded the Shuppendi App yet?
- Continually expand your circle of influence: Everybody could do with some help, even a growing business. Attending a social club, engaging the services or help of a mentor, and attending a myriad of events, all targeted at awareness for your business is a cost-saving strategy no bootstrapper should ignore. But watch your expenses like a hawk. Some social gatherings or mentors will rob you of more cash than you can spare all in the name of staying associated to them, and this is a no-no. Word of mouth, however, is the ultimate goal, so oculous–in bravium (Stay focused).
And finally,
- Do not take ‘No’ for an answer: When you’re so small, vendors and suppliers rarely wish to work with you. It takes creativity and a personal touch to get what your business needs for growth, and within a budget. With the above social brinksmanship point in mind, learn to build personal connections with partners that may help your business in the long run. These will help obtain the resources your startup needs to get moving, at a price that won’t break the bank. Don’t be afraid to share your story and appeal to people’s human side, but always keep some cash handy, just in case (these people have bills to pay too…)
Ultimately, bootstrapping a startup is a fun and eye-opening experience, but you have to persevere as it can be difficult in the beginning, though by no means impossible. With the right amount of hard work, collaboration, and passion for your idea, it is almost easy to give up a chunk of your personal life today for the sake of a better future. So, by all means, fall, but never give up…
Brain Essien is a business consultant, with expertise in digital marketing, crowd funding and business plan/proposal formulation and design.
mcbrainandcompany@gmail.com. +234703-444-6041.
For SMEs looking to give the Shuppendi App a test run: https://bit.ly/3riGlPB