7 tips from Austin CEOs before taking the plunge
Bootstrapping is no easy task. It takes dedication, it takes frugality, it takes being an engineer, marketer and sales rep all at once. As many entrepreneurs come to learn, bootstrapping might mean you’re constantly looking for outside money.
Two Austin-area bootstrapping extraordinaires spoke with us and shared 7 important pieces of advice for those who are bootstrapped for the long haul and those surveying the land for investors.
Be comfortable with risk
Dan Graham, CEO and owner of BuildASign.Com, bootstrapped the company for 10 years after co-founding it in 2005. The Austin-based company, which provides customers an interactive sign design web portal and correlated e-commerce platform, totaled $71 million in revenue last year. Unsurprisingly, bootstrapping wasn’t easy.
“Learning to sleep on the hard floor of the warehouse was helpful,” Graham said, adding that in order to bootstrap, entrepreneurs need to be comfortable with risk.
“If you’re bootstrapping, you can’t have someone on your team who is ready to delegate everything,” Graham said. “You need people who are going to roll up their sleeves.”
In essence: Bootstrapping is a team game. Surround yourself with scrappy personalities. Though Graham (pictured right) said the first couple years were rough, BuildASign.com’s business model helped lessen the burden of bootstrapping. The company receives cash up front through credit card transactions made via its e-commerce platform, and its expenses are all net 30s. Essentially, Graham said BuildASign.com didn’t need outside money during the last 10 years. The company announced its first investor about two weeks ago.
Of course, some startups do resort to bootstrapping out of necessity and spend much time trying to get funded. If that’s your scenario, Ross Clurman knows where you’re at.
Develop your pitch
Clurman, an Austin-based entrepreneur who is bootstrapping his third startup, learned early that entrepreneurs must give a great pitch.
That’s easier said than done, as Clurman notes that entrepreneurs know their business inside and out. Explaining it so that the value comes across to someone hearing the pitch for the first time is tricky.
“People aren’t going to be interested in funding something if they don’t know what it is or what it’s going to do,” said Clurman, co-founder of Comnio, a startup that helps customers receive quality customer service.
Clurman, who founded Zoom Interactive, which provided admissions marketing for small private colleges and was bought out by TWG Plus, advises bootstrappers to define the problem they solve and how their business is better than competitors.
Know how much money you need and explain to potential investors how their money would be spent.
Automate as much as you can
Entrepreneurs who are bootstrapping need to focus only on the things that significantly impact their end goal, Clurman said.
“If you’re trying to get funding, the best thing you can do is develop your business plan,” he said. “Don’t worry about what your logo looks like or what your tagline is. It’s going to change maybe 5–10 times before your minimum viable product launches.”
As Comnio gets its feet wet, Clurman (pictured left) said he remains a product manager at Some Script, a startup he founded that helps small businesses with web design, web development and marketing.
Speaking from experience in focusing on niche markets and small problems, Clurman said thinking big isn’t necessarily thinking best — at first.
“It’s ok to start small and attack a very specific problem,” Clurman said. “Your solution doesn’t need to be all encompassing, and a small solution can actually be funded a lot easier than a larger solution.”
Set goals and work backwards
Be specific about your goals. If you want to sell a certain number by a certain date, write that down. Then, think backwards. When do you need the prototype ready? Do you know what manufacturer you will use?
Clurman said working backwards clarifies your overarching milestone and the goals and objectives underneath, the accomplishments of which are necessary to get the desired end result.
Be 100 percent invested
By definition, bootstrappers are invested in their startup. However, Clurman stresses that entrepreneurs must show potential investors they aren’t just toying with a hobby. They need to show, essentially, that they mean business.
Work late. Pass on social outings in favor of work. It’s not fun, but Clurman said it’s necessary.
“If you’re not fully invested in it yourself,” Clurman said, “the people that you’re asking money from aren’t going to believe that you’re going to make it happen.”
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Originally published at www.builtinaustin.com on February 26, 2015.