Bootstrappers: Enjoy the ride
Founder Friday is a weekly guest post written by a founder who is based in or hails from the Silicon Prairie. Each month, a topic relevant to startups is presented and founders share lessons learned or best practices utilized on that topic. July's topic is bootstrapping.
I'm a huge fan of bootstrapped businesses. Those who bootstrap a business enjoy a unique satisfaction knowing they created value from nothing with very-little-to-no outside financial support.
I have started several businesses, successfully exiting two, and along the way I have found a few things to be consistent when starting a business, especially when bootstrapping.
The long road ahead
Get yourself mentally and financially ready to play the long game and understand that a bootstrapped business controls its own runway. Bad spending decisions are bad for any company, but they impact a bootstrapped business hardest. There are many articles about controlling costs and getting creative with marketing spends that can help you along the way.
For example, trade shows are great for meeting new people and building/sustaining relationships, but deals are rarely closed at the show. If your business is brand new and revenue is critical, skip the trade show until it makes sense. Instead focus on lower-budget marketing activities that can provide a quicker return.
When we started Catchwind in 2005, we had a "go big or go home" mentality – and our spending reflected that attitude. We darn near "went home" – and probably should have – but perseverance and a renewed view of the long game enabled me to re-build a better, stronger business.
As a bonus to playing the long game, hanging around long enough will present unexpected opportunities. Identifying when these opportunities are advantageous for your business (or not) is an important skill to acquire.
Keep your focus, but identify opportunities
One of my favorite parts of starting a new business is the discovery of opportunities that weren't part of the original plan. I find these opportunities typically rise from conversations with people outside the company. If you've started a company you've undoubtedly heard someone say, "You guys should totally be doing…"
These conversations can be a slippery slope – you'll want to build a good filter without deterring people from giving feedback in the future. Identify paths that take you too far from your vision and throw those ideas away. A disciplined entrepreneur can keep focus, but a wise entrepreneur can see addressable channels, models and markets which accelerate growth. Please note, adopting an alternative model shouldn't be confused with a pivot: a pivot is typically performed after hitting a dead end, adopting a new opportunity keeps you moving in a direction you were already heading.
One book that really opened my eyes to alternative business models is called Business Model Generation. Download the Canvas and see what it can teach you about your business.
Be prepared for setbacks
Every company has setbacks: delayed launches, bad hires, product failures, bad PR, competition beating you, lost customers, etc. Personally, I don't worry about things I can't control, but I do plan 2, 3 or even 4 steps beyond the problem so I have some idea of how to react.
What is your plan when it takes three times longer to make a salary than you expected? Are you prepared for your most profitable customer to leave? What is your communication plan when your service breaks or fails?
In 2006, I had a production server crash which had 80-plus client websites on it. Being a small, bootstrapped business, we couldn't afford the greatest backup technology, but we did craft an affordable home-made solution that served the same purpose. We executed our recovery plan, kept in touch with the customers and got everyone back online in a reasonable amount of time. Thanks to great planning and execution, we didn't lose a single client.
When something bad happens, you have to move forward. Be prepared to move forward quickly and spend less time dealing with the problem.
Enjoy the ride
Building a business is a struggle, but amazing stories will emerge throughout your journey.
About the author: Brian Hemesath is a native Iowan living in Des Moines. He built and sold two technology businesses, Diligent (local web development) and Catchwind (short code SMS provider) and is currently growing Tikly and VolunteerLocal. He has a degree in computer engineering from Iowa State University and loves working with his fellow startups at StartupCity Des Moines.
You can follow Brian on Twitter, @bheme
Left: Brian Hemesath with Brad Dwyer at Big Omaha.
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Thanks to our Founder Friday series sponsor, Heartland Technology Alliance, a nonprofit working as an advocate for innovation and competition in technology and communications across much of the Silicon Prairie and throughout the Upper Midwest.