[This is a recap post from the webinar I did for the EntreLab community. You can download the slides and audio recording in the member’s area.]
Bootstrapped entrepreneurship is the process of taking LIMITED time, talent and treasure to start and build a business.
In other words, it’s about launching your business on your own time and dime. Thus, bootstrapping is about HUSTLE in order to make up for those limited resources. They are scrappy and shrewd and they don’t shrink from hard work.
The goal of the bootstrapped entrepreneur is to find a winning formula of business (products and services customers will pay enough to sustain the business) … with minimum risk and outlay of resources.
Bootstrapping is about …
- focusing only on what matters most
- inching forward, sometimes at a turtle pace
- taking small risks on potential opportunities
- doubling down on opportunities that work
- carving out a good niche and then camping out in it
- keeping all the equity and control by earning it
- giving you enough time to get it together
But most importantly, bootstrapping is a mindset. It doesn’t leave or go away after you find the winning formula. For us, it’s the way we approach business every day.
In reality, most of us have more TIME than MONEY … so here are some key ways to think about bootstrapping your business:
1. Start Part-Time
As a bootstrapping entrepreneur, you have two jobs typically … your day job and your new part-time job on nights and weekends. This minimizes the risk and exposure for you while keeping your income and benefits.
But it also means you’re using your vacations, lunch breaks and whatever non-clock time you have to work on your business.
The warning here is to make sure you’re not conflicting with your current job. Getting fired because you’re working on a competing product or business isn’t typically good for you or your family.
I had a full-time job the year before I started iThemes and my bosses were aware of my freelance business doing web design. In fact, it was a win for them because they knew I wouldn’t be in that position forever and the new skills I was learning benefited the organization (saving at least $5K on a new website that I did myself).
2. Ditch Financial Baggage
Your personal financial health is key for your bootstrapped business. If you have too much financial baggage in the form of suffocating debt, it’s going to bog you down and delay your ability to go full-time because the last thing you want is added pressure to make a debt payment when you’re a full-time entrepreneur just trying to get your fledgling business off the ground.
You need to be lean and mean financially. Get rid of the financial baggage that is suffocating you.
I highly recommend Dave Ramsey’s Financial Peace University (there are groups that meet all over the world) and Total Money Makeover for getting out of drowning debt. (I have personally been through it and it changed my life.)
I also put this part on money as the no. 2 key because as you’re starting your business part-time (no. 1) you can use any profits to pay off debts and to build a war chest (i.e. a savings account).
Ask yourself what it would take each month to go full-time? What is the minimum you need to earn (gross and net) to go full-time in your business. Figure out what that benchmark is and try to build your business momentum up to that level.
By the way, being frugal and wise financially is also a great way to run your business. It’s how we’ve run ours! And the way you run your personal finances is most likely going to be the same way you run your business.
3. Raise Social Capital
You might not be worrying about raising money (like venture capital), but you need to be raising your social capital in the form of building relationships with people. Namely customers and key influencers.
The goal of raising social capital is that I want people to like me … and want to help me and see me succeed. So do you.
Let’s talk about raising social capital with customers and clients.
As soon as you can you need to start serving and supporting customers. Learn who they are, what they need and how you can uniquely serve them in order to make them raving fans of your work.
One key in raising social capital with customers is also to start building an audience of them, with a blog or some other way, and to amass an email list of potential prospects. This can work even as a freelancer or service professional. You may not have 5,000 people on your list, but you can start accumulating that information in a CRM like Highrise. You just need to have a database somewhere that you can access prospective customers as soon as possible and to keep building that forever.
The other key group to raise social capital with are key influencers in your niche, industry or field. This can include traditional media, bloggers, industry experts and stars as well as potential partners (not just equity partners but collaborators) and potential team members. In other words, anyone who knows your potential customers base and has influence with them for the ultimate success of your business.
4. Build Your Name & Fame
Bootstrappers also start building their branding and marketing.
Branding is about getting your name out there. Marketing is getting your message out there of what you do and how you can help.
Since bootstrappers are typically strapped for cash, this means employing guerrilla marketing tactics, like blogging, word of mouth, content and educational marketing and anything you can do to get your name and message in front of your customers without costing an arm and a leg.
This is the time to also hone your message. And figure out what resonates with your customers, with the goal of getting them to know, like and trust you … so that they will ultimately buy from you.
It’s surveying the field and seeing how you can be different, unique, remarkable and better and making raving fans of what you do.
5. Pour Solid Foundations
While you’re bootstrapping your business part-time, this is an amazing opportuity for you to solidify some essential areas of your business, namely:
- Accounting — how you get paid, pay quarterly taxes, etc
- Legal — getting your biz official with an attorney
6. Dial in the Experiment
I’ve talked at length already about approaching your business like one big experiment to test and refine. This is your time to dial in your experiment and to test ideas without getting distracted. I tried a lot of things while focusing on the one thing that would make money and was reliable.
But beyond launching, testing and tweaking your business until you go full-time, you need to keep reinvesting in your business, meaning pouring the money you make into your business or into your war chest.
As you work on your experiment, be sure to set goals, deadlines and seek accountability. Find the gaps and fill them in, from skills you need to deliver on your services to making sure you have a steady flow of incoming work. Identify your best practices you discover and pivot when necessary.
7. Keep Pushing the Snowball
Businesses are like snowballs. Snowballs start somewhere — as a handful of packed snow — and they build momentum with time and energy.
As a bootstrapper, you want to make a giant rolling snowball … which means you gotta start somewhere, in step 1 — part-time. But eventually snowballs and businesses start gaining momentum. Looking back, I’ve seen all the hard work I put in in the first year of our business multiplied now in year five. And it goes back before that too as the name and fame I built within our industry (WordPress) multiplied in the first year, then second and third and so on.
The key is … keep pushing your snowball.
Keep doing good work serving and supporting your customers to make raving fans. Keep building your name and fame and raising your social capital.
Crystalize your business processes and systems so you have a well-oiled machine when you go full-time, while building your war chest by having your personal finances straight and healthy.
Do these things … and at some point, you’ll hit a tipping point or catalytic moment when something sparks big for you.
But mostly … just keep pushing the snowball. And when those moments happen, celebrate and renew your energy toward … pushing that snowball.
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[Download the slides and audio recording from the original webinar in the member’s area.]
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