Intro to Bootstrapping
Bootstrapping, defined in the literature as “starting a business and building it using mostly self-supplied resources”, has become a leading trend, as a counter-response to the increased difficulty of obtaining seed investment, and as a route to ‘management peace of mind’.
Those who seek funding, face increased investors’ caution and demand for feasibility proof, especially for a software product, prior to any investment. A working, sufficiently popular service has become almost a prerequisite.
Is it really possible to establish a viable business activity using your private resources? Here are some tools and guidelines that will help you survive this phase and build a solid ground for the next stage.
Marketing Without a Marketing Budget
During the self-bootstrap phase, the key principle is to focus on media publications (professional press, related sites, newsletters) and to persuade writers/editors to publish the company’s story. Pay-for-exposure should be avoided, once you develop a credible, truly relevant story.
The emphasis should be on developing personal relationships and not on traditional PR. The result can be as effective as paid-for publication and is directly related to creative talent and content development skills. If this is an obstacle, such resources are available today affordably on a sub-contracted basis, in many freelancing sites.
Customers are Key to Success
Many start-ups spend most of their time in endless discussions about product features and the expected technological advantage. But experience shows that the ability to reach customers early-on has a greater impact on success than any other factor. Direct contact with potential customers also improves the process of product development as crucial feedback is gathered.
Customers can be found in a variety of inexpensive ways, such as researching competitors’ websites, tracking the Google search phrases used to reach these sites, and building landing pages targeting the same audience. Other methods – such as bought or developed via LinkedIn mailing lists are highly effective and should be considered early on.
Important: Hiring a sales team too early is a costly mistake. You should until early adopters approve the product, clarify its unique selling point and provide a solid base for massive sales activity. In all cases, the entrepreneur must be in the front line of sales, taking care of the initial sales process and communicating thereafter with customers. This is crucial to the decision-making process and eventually will help to correct many growth-related mistakes.
Choosing a catchy company name and deciding on the targeted positioning are two key factors toward successful penetration, especially in today’s noisy and crowded market.
Two recommended rules for choosing a name:
- Make sure it is easy to pronounce (as short as possible)
- Make sure that a matching domain name can be registered (.com ending is a plus, bt as critical as it was, as the market adopted a variety of options)
A common approach is to conduct a team discussion and select the best ideas. This might be too limited and can even lead to mistakes. Use the following two methods to improve the process:
- Use external tools to expand the possibilities (such as http://wordoid.com)
- Review comments from friends and colleagues, as part of the process – this avoids embarrassing mistakes and may bring additional ideas
Delay Office Rental and Full-timers Hiring
We live in a global market era, and remote work has become a standard. In addition, today almost any capability can be hired through one of the projects specializing in the mediated workforce (Freelancing). Full-time and even part-time employees can be delayed, especially if you do not need a highly confidential R&D team core. Even established companies and many well-funded startups opt for a remote workforce, gaining flexibility and access to hard-to-find expertise.
Consider Sub-Contracted Business Planning & Marketing
Proper management of all the tools/resources available today requires a lot of know-how. If the entrepreneurial specialization is in a unique technology while less familiar with business management and marketing, external consulting / assistance can be recruited to improve these sides of the activity and avoid expensive management recruits. This also applies to business and financial plan development, a common ‘headache’ for a techie entrepreneur.
Self-bootstrap offers many benefits to both entrepreneurs and to future investors. Implementation requires an imaginative approach combined with a careful selection of subcontractors.