Bootstrapping Doesn’t Mean Saving On Everything
Financial bootstrapping is a term used to cover different methods for avoiding using the financial resources of external investors. Bootstrapping can be defined as “a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors” (Ebben and Johnsen, 2006:853)
According to Wikipedia, financial or business bootstrapping is all about building companies without seeking outside funding. From day one we decided to build Cerebra into a stable business with this strategy. Seth Godin’s popular book (now a free manifesto) The Bootstrapper’s Bible provided us with some fantastic insight and guidelines in this regard.
I want to share with you a boostrapping lesson that didn’t come out of the book, but rather out of our own experience. One of the most glaringly obvious ways to prevent having to source outside funding for your business is by keeping your overheads as low as possible from day one. One might advise you as a bootstrapper to ‘save on everything’. I’d like to suggest that this could be a grave mistake though – saving on everything just leaves you looking cheap. As a bootstrapper, you need to seek to save in as many places using as many methods as possible, but there are certain things you need to spend money on.
Perception is a powerful thing. So are first impressions. I’ve looked at our business and discovered there are two very regular, very early points of contact with clients, potential partners or even future employees that require investment in order to ‘get you on to a good wicket’ with the recipient – especially if they are easily swayed by such things. Let me explain using two simple examples from my experience:
1. Business Cards. Many of us digital entrepreneurs have ditched the archaic business card in favour of bluetooth exchanges or VCards or whatever else, but I’m telling you now there’s no substitute for the initial impact of a high quality, well-designed and unique business card. It’s not cheap – an excellent business card can cost you as much as 5 times a ‘good enough’ one – but I want to suggest that this is one investment well worth your while. Think of the business card you receive and your reaction to them. Which do you hold on to? Which get discarded? Which send a message that is contrary to the personality of the business? Check out some cool business card designs here…
2. Quality Coffee. Sounds ridiculous, has a huge impact. I learned this lesson from the guys at Missing Link (who are masters of the art of making a significant and memorable first impression). I also know this of the companies I visit – especially big rich corporations. There’s nothing that puts me off in a meeting more than a reputably huge wealthy brand that serves up weak Ricoffy (sorry Nestle) as it’s best offering to a visitor. Bleuuch. Invest in a good coffee machine or an automated dispenser type. Give customers and employees great coffee. They’ll remember it.
What other examples can you share from your experience?