Entrepreneurship
Start small, end big
Bootstrapped businesses are the future big businesses
Bootstrappers should avoid big ambition, when starting a business. Unlike startups, bootstrappers can just focus on making a decent income. Founder of Sea Bags’ Hannah Kubiak started it to pay the bills. Its revenue is around $25mn ( INR 300cr approx.) per year.
In 1999 Hannah decided to skip college and started Sea Bags, to make extra money. Her father had built and sold a similar business. In 2006, one of the customers, Beth, joined Sea Bags as a partner. In 2013 Hannah sold her stakes to Beth and new business partners. Today Sea Bags sells more than 2,00,000 bags a pear. They operate more than 45 locations. In 2021, they grew by 60%. They may be earning a gross margin of 80%, with the net margin of 30% , after excluding 50% of sales goes into rent and overheads ( source: Michael Gridley’s Newsletter). What a journey from some extra money to a fast-growing multi-million dollar business.
Robert Brye founded Indie VC. It chose to invest in small and profitable businesses such as my favourite coffee brand Yes Plz. He wrote on his blog post, “Starting something in the hopes of making an extra $1,000 a month is every bit as worthy as trying to colonise Mars. Start small and give your ambitions room to grow.
You may be surprised with how little ambition it really takes to eventually change the world.”
Source: Link
Bootstrappers can learn three things:
- Luxury businesses are worth looking at. Customers buy due to emotional reasons. Customers buy Sea Bags for two reasons. One, they are helping the environment. Two, each bag is exclusive, as they make from limited quantities of sail sheets.
- Look for the right person, who implement the vision, and grow the business. Sea Bags’ second CEO Beth stepped down as the CEO and hired people to run the brand.
- KISS: keeping it simple studio. Complex plans are great to raise fundings, but may fail as big as well.
Worth your time: How a bootstrapper invented instant noodles Link
