In the age of recession, the bedroom entrepreneur has thrived. This is someone who has managed to grow their business from the ground up into something influential worldwide, usually utilizing the power of the web. Such huge growth is due in no small part to the proliferation of entrepreneurial ideas blasted across our Television screens; shows like Dragons Den and The Apprentice which offer investment to the lucky few. However, for every business seeking investment, there are hundreds more that have selected an alternative route; building a business on profits alone, also known as bootstrapping.
This is an area in which I have a lot of personal experience. Having started the SmartBuyGlasses Optical Group with no investment at all (except for a lot of time!), the company has now grown to be a leading designer eyewear e-retailer selling in over 35 countries and with over 150 employees globally. With this experience, I can really appreciate the importance in having control over key decisions, which is essential in a company that is just getting started. This is one of the major advantages of bootstrapping. Here I lay out 6 tips to help anyone wanting to go down the same path.
Have Passion in the Product
When starting any business it’s important to be devoted to what you are selling. How can you expect other people to buy when you don’t really care what you sell? This is especially important when bootstrapping as you will eat, sleep and breathe your product for a long time. It’s rare that a business will deliver huge amounts of profit within the first two years and as such you’ll be doing a lot of work for what looks like little reward. It’s this passion in the product that will differentiate between those who give up and those who continue on to success. One of the reasons I decided to found my company was my passion for the product. Having been a glasses wearer most of my life, I always found it difficult to find a pair of glasses that were exactly what I wanted. Physical retail stores tended to stock the same things, best-sellers dictated by the brands themselves and this really limited my choice.
Be Financially Thrifty
The things that look like necessities probably aren’t. Whilst receiving investment usually means that you can grow your team, your premises and your infrastructure fast, it tends to also create a lack of understanding of the financial importance of being savvy. Without investment, every financial decision and detail is scrutinized. This means that while you may believe that a fancy new office is essential; in reality that money could be put to better use. For a long time, our office was a bedroom as we knew that renting a space would eat into any profits we were making. It was only at the point where the space became too small that we expanded. After starting with that one office come bedroom, we now have operations in Italy, China, Hong Kong, Australia and the US.
Network Your Ass Off
Networking is an essential business skill that every entrepreneur needs to finesse. In bootstrapping a business, it’s unlikely that you’ll have huge expenditure for PR or advertising. This is where networking can really come into its own. You can use your contacts to connect you to people who could get you exposure, offer advice or even ask for a favor. At the very least, the more you network, the more you learn and the more you can increase awareness of your company.
A successful company is rarely a one man operation and as such you’ll need the right people to help steer your ship in the right direction. It’s all about employing smart. One of the initiatives at my company was to create our own global e-Marketing Institute, offering people from all over the world the chance to come and learn hands-on marketing skills in a real business environment. That way we were also able to native speakers to help the business expand into other markets.
Put Your Profits Back Into the Business
This one is simple. If you’re not receiving financial investment then the only way you’ll be able to grow is by investing profit back into the business. Look at your projections for the following year and see what you think you’ll need to invest to achieve these targets. It could mean taking a lower salary or even no salary at all (like we did for many years). Loans can seem like an attractive option for a quick capital injection but this will only put more pressure on the business which can be especially dangerous in an uncertain economic climate.
Accept Investment When the Time is Right
Bootstrapping ensures that you can make decisions easily and respond to the market fast. There will most-likely come a time however when investment becomes a viable option. It’s at this point that you need to be willing to let go a little and that by seeking such investment, the gains can be substantially higher. Raising capital once your company is successful and sustainable puts you in the drivers’ seat to select the best investors at the right terms.