Bootstrapping is a business from scratch. Part 1
In this series of articles, I will talk about our experience of raising a business only on our own from a complete zero to a turnover of 350 thousand euros per year, or, as they also call this phenomenon, bootstrapping.
In an article for Oleg Tinkov’s site, I already talked about what we do and how we came to this. And in the same series of articles I will dwell on the technical and organizational aspects that concern every novice entrepreneur.
My husband and I started in 2010 together, when our first son was born. We wanted to:
- financial freedom;
- independence from the place of residence.
At that time, we did not have:
- of money.
Moreover, the situation was further complicated by the fact that we were developing a completely new product, which had no analogues on the market at all.
What we had to face during our work, what to learn:
- where to find the money;
- how to work with freelancers;
- hiring employees, dismissal;
- work with clients;
- work with objections;
- earning a reputation;
- crisis management;
- legal issues.
However, we still have not solved 3 problems:
- low site conversion;
- employee motivation.
What we have for 2016:
- European company with a turnover of about 350 thousand euros per year;
- the opportunity to invest and start new projects;
- team of 40 people;
- five sons;
- Housing issue resolved
- the opportunity to plan your life yourself.
I think these showed very good, therefore, I decided to share our experience in creating a business only on our own without attracting borrowed capital.
So, we went according to the bootstrapping scheme - when there is no money for a good start (team, advertising, technology, product, business tools, experience) and you need to come up with something that will be very beneficial to distinguish you from those who have it all .
Bootstrapping differs from a startup in that you initially rely only on your strengths and your money, and do not develop an idea for which you will then look for an investor.
The reasons to rely only on yourself, and not on a third-party uncle, each has his own. These are our reasons:
- lack of experience in writing a business plan;
- lack of experience in negotiations and sales;
- basic ignorance of the places where the "angels" are found;
- unwillingness to be under pressure from investors and the need to work out the money invested in you;
- desire to remain the sole business owners, etc.
In addition, neither my husband nor I had any entrepreneurial experience.
We were not going to chase investors, since our main focus is on family and children. It was important for us to maintain inner peace of mind and physical presence in the house.
It is clear that when millions of dollars flow into your startup, then the profit is expected in the same millions, moreover, as quickly as possible. When you pour a couple of dollars into your business and you are very limited in time, you need to understand that the return will not come right away.
During the preparation of this article, I picked up all our notes of those times and saw that nothing has changed over the 6 years of work: we still work in strict accordance with the principles and ideology that we laid down 6 years ago.
It took us about a year and a half to articulate them clearly. Indeed, until that moment everything was aimed only at making 100 Euros, 500 Euros, 1000 Euros. That is, we thought shallowly. And they saw nothing further than their nose.
And only after determining the mission, vision and strategy, we went confidently and clearly aware of our path. A breakthrough was our answers to the questions that I will give below.
These are the questions that we answered ourselves before we start:
- If I had a chest of gold, what would I do?
- Why do we need a business?
- What are we the best?
- What are our strengths? (personal).
- What are our past achievements and victories?
- What is your Passion? (I can’t correctly translate into Russian, so as not to lose the energy of the phrase).
- What is our competitive advantage?
- What is our mission, vision and strategy ?.
- Who are my top 10 competitors online and offline?
- What are the 10 advantages of each of my competitors?
- Who is my customer? (gender, age, geography, interests, problems, marital status)
- What problems can sink my business?
- Where do I see myself in 10 years?
- How much money per month do I need for an ideal life?
- What are you willing to sacrifice / what to do to create a business?
- How to set the right prices?
- What is the size of the market?
- Why is my product or service important to the customer?
- What is the first impression my company should have on my client?
- Five definitions with which a client associates my company and product?
- If my company was in the form of a person who is now entering the door, what should he look like? What should be dressed?
- What are (will be) key positions in my company, tasks, what qualities should a person have in each of the positions?
- What do we sell?
- What will we earn?
- What next after we are satisfied with the profits?
Of course, there were other questions that we constantly answered during the first years, but these were the most important at the beginning of our journey.
For example, when we studied at the company of Robert Kiyosaki, one of the first difficult tasks was to describe the mission to 120 words, then reduce this text to 80, and then again to 40 words. After rereading it after 6 years, I was pleasantly surprised that nothing had changed.
In this introductory article, I would like to highlight a list of some books that we read and the principles of which we apply in our work:
- Kjell A. Nordstrom, Jonas Ridderstrale. Funky business;
- Jim Camp First say NO;
- Michael A. Lecter. Protect your main asset;
- Eliya M. Goldrat Jeff Cox Target. The process of continuous improvement;
- Richard Branson To hell with all of it! Take it and do it !;
- Richard Branson Losing innocence;
- Oleg Tinkov. I am like everyone else;
- Oleg Tinkov. How to become a businessman;
- Robert Kiyosaki. Rich dad, poor dad;
- Robert Kiyosaki. Cash flow quadrant;
- Robert Kiyosaki. Before you start your business;
- Robert Kiyosaki. Depart from work Young and Rich;
- Ayn Rand Atlas Shrugged;
- Bodo Schaefer. Mani or the alphabet of money;
- Getting Real by 37signals;
- David Heinemeier, Hensson Jason Fraid. Rework: a business without prejudice;
- Henry Ford. My life and work;
- Andrew Grove. Only the paranoid survive;
- Jim Collins Good to great;
- Blanchard C., Johnson S. Manager in one minute;
- Og Mandino. The Greatest Salesman In The World;
- George C. Clayson. The richest man in Babylon;
- Howard Schulz, Dory Jones Yeng. Pour your heart into it. Starbucks was built like cup by cup;
- John Cahoe. The subconscious can do everything;
- Jeffrey Young. “ICon: Steve Jobs: The Greatest Second Act in the History of Business”;
- James Allen How a man thinks;
- Sergey Azimov. How to make money without start-up capital;
- Lee Iacocca. Manager career;
- Michael E. Gerber. P-myth;
- Brian Tracy. Leave squeamishness, eat the Frog;
- Benjamin Graham. The intelligent investor;
- Walter Isaacson. Steve Jobs;
- Brian Tracy. Reaching a maximum;
- Jim Rohn 7 strategies to achieve wealth and happiness;
- Gavin Kennedy. Everything is negotiable !;
- Randy Gage. Why are you stupid, sick and poor;
- Philip Kotler. Marketing Essentials;
- Stephen R. Covey. First things first;
- Leo Babauta. The power of less;
- M. Rafel N. Rafel. How to win a customer;
- Chet Holmes. Incredible sales car;
- Tony Schwartz Jim Loer. Life at full power. Energy management is the key to high efficiency, health and happiness;
- David Malden. Management and power of NLP;
- Sun Ji. Art of War;
- McNally M. Sun Tzu and the Art of Business. Six strategic management principles;
- Niccolo Machiavelli. Sovereign;
- Business coach Vladimir Tarasov - articles and audio recordings;
- Business coach Alexander Fridman - articles and audio recordings;
- Tao Toyota. 14 principles of management of a leading company in the world.
I plan to write articles in the form of answers to paragraphs of the block “What I had to face, what to learn” and how we solved it.
Your point-specific questions in the comments will help a lot so that I know what is interesting and what I can answer by including the answer in a new article.
The following article is about money. Where and how much was taken at the beginning, our expenses, turnover and net profit .