What It Means to Bootstrap

It’s been a rough week. I should’ve posted this a few days ago but I’ve been scrambling. I want to quickly go through what happened this week because I have a lot to do and I don’t want to fail at keeping up with this blog.

My plan for my new company Laundry Loop was to cash out my 401k to fund it. With the money I planned to find commercial property, equip it, and hire an employee or two to begin washing clothes. My 401k had $38,000. I had a loan out for $18,659, but that still left nearly $20k to get started.

Along the way I have found that getting commercial property for the first time is not easy. In addition to finding a good strip mall without a dry-cleaner in it (non-compete clauses in the lease), there’s a process of convincing brokers that I am a reliable tenant and this is a worthy business. Some have asked me for financial statements. “No problem!” I thought, I’m waiting for a large check and I can show them I have the money.

Guess how much the check was for?

They withheld 20% for income tax. I knew about the tax, but did not know it would be withheld. Now I have to adjust my plans to fit my new budget.

My internal discussion goes something like this: one of the reasons I chose this business was how easy it would be to bootstrap. I could start out being the delivery boy and outsourcing the washing of the clothes until I could drum up enough business to be able to afford property and begin doing the washing in-house.

But there are huge advantages to starting out with a physical location with employees such as:

• Visibility in a commercial district.
• Ability for customers to drop off or pick up on their own schedule.
• Quality control over the washing, drying, folding, and sealing.
• Employees whose paychecks depend on my ability to market and sell.
• Being searchable on maps.
• Having credibility and earning the trust of the customer.

Of course I have no doubt that a commercial retail drop-off and pick-up location is needed, but right now I don’t believe my budget allows for it.

Here are my choices going forward:

1 — Bootstrap. Forgo the commercial space. Set up the infrastructure to collect payments and start marketing and getting delivery customers. Then I can outsource the cleaning of the clothes until I have enough customers and/or revenue to give my business credibility in the eyes of prospective real estate brokers, owners, and landlords. The startup capital can be used to get the business operational and get to Ramen profitable as quickly as possible.

2 — Get a loan. I’m fairly confident I can find someone to loan me up to $20k if and when I need it. My credit is fair enough, but taking out a loan is foolish. A loan should only be taken out as a last resort to extend the runway just long enough to reach the profitability apex.

3 — Get an investment. I’m very weary of getting any investments. Taking on investors is similar to taking a job and having a boss. The reason I’m starting my own business is to not have a boss. There may come a time when we will need investors to scale, but now is not that time, and I don’t have enough leverage to make good deals yet.

As you can see, the 1st option is by far the best, even though it will be without the advantages I laid out above. But choosing the first option means revising the plans I had, and formulating a new business model and budget. My goal will be to find the fastest way to profitability and pursue it.

Here are my next steps:

• Create a specific budget for operations and marketing, including 3 months of runway.
• Create an infrastructure whereby I can accept payments.
• Create the customer acquisition funnel.

My initial reaction to the income tax deduction on my disbursement check was bad. But then I remembered that I expected major hurdles and road blocks. I have to find my way around them. Besides, there’s no going back to my old life now. I quit my job and moved a thousand miles to do this. Failure is not an option. There’s a lot on the line.

You can see more of my story on Snapchat.

This story is part of a series documenting the journey of a 2016 Dallas startup called Feather. If you would like to read more, here is the Table of Contents for the series.

Previous story: How I’m Starting Over

Next story: Bringing Structure to this Series

Thanks for reading!