How To Bootstrap a Start-up

Workshop

Presented by Paul Grant

In partnership with

Sponsored by

Take the Blue pill or the Red pill?

Photo credit: the matrixPhoto credit: the matrix

1% or less

Chance of success in raising equity capital if you took the BLUE pill

Bootstrapped companies Amazon Ben & Jerry’s Body Shop eBay Hewlett Packard Ikea Marks and Spencer Oracle

So what is ‘bootstrapping’?

Definition

“The term ‘bootstrapping’ comes from the book The Surprising Adventures of Baron Munchausen, in which the main character uses his bootstraps to pull himself out of a swamp.”

Why bother bootstrapping?

1. It creates massive value

2. It reduces the risk for investors

3. Mistakes come cheap

4. Inside knowledge of your business

5. There is not much choice

Eight pillars to bootstrapping1. Clarity of vision

2. Street-smart accounting

3. Travel light

4. Pick a battle you can win

5. Leverage credibility

6. Leverage other people’s resources

7. A clear business model

8. Everything is marketing

1. Clarity of vision

Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box

What makes a great USP?

“Fresh hot pizza delivered in 30 minutes or less. Guaranteed."

Crafting your USP

What does your business do?

Who is your customer?

What is the biggest benefit of doing business with you?

Can you prove your claim?

How will customers perceive this benefit compared with the competition?

2. Street smart accounting

Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box

The bootstrapping phase is all about...

Cashflow- creating and managing

Watch these figures like a hawk

1. Cost per sale

2. Average value of sale

3. Repeat orders

4. Gross profit

5. Overhead

6. VAT return

7. Projected forecast

8. Comparison against previous year

Alternative sources of capital

1. Vendor funding

2. Rental

3. Factoring / invoice discounting

4. HP / leasing

5. Overdrafts

6. Credit cards

3. Travel light

Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box

Travel Light

Keep to variable costs Avoid the payroll sweats Outsource all but what makes you great Become a kitchen table tycoon Avoid capital expenses.

IP Costs – patents & trademarks What does 3% represent

Still want to go for it?

Get one hour – free meeting

Do the search yourself

Research and get the product right

Then, hire a patent lawyer

Make sure you get a fixed rate

“Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats” - Howard Aitken ( built the first IBM “Harvard” computer

Low cost or no cost tools

www.fiver.com

www.elance.com

www.interns.com

Open Coffee “meetup group”

Mailchimp

Case Study

Researched the market in the US Launched from his bedroom with £300 Promoted on My space & Friends reunited Within a year achieving £1k in sales a day Flipped the business model for scale First big customer - Dell Launched in europe This year has a Turnover of £9m

Time for a breakRe-start in 15 minutes

4. Pick a battle you can win

Photo credit: Flickr tharrinPhoto credit: Flickr tharrin

Pick a battle you can win

Think niche, niche, niche Who are your early adopters Sell aspirins not vitamins Do not try to educate a marketplace

5. Building credibility

Photo credit: Morgue file Pedro J PerezPhoto credit: Morgue file Pedro J Perez

How Bill Nyugen of “Color” raised $41m from VC from one 45 minute meeting

Building Credibility

Find first class mentors/non-execs Pay them equity stakes up to 5% Or in lieu of consultancy contracts Associate yourself with established brands Get high profile customers at cost. Build list of testimonials

6. Leverage other people’s resources

Premises

Technology

Contacts

Databases

Distribution channels

Credibility

Photo credit: Flickr wZa HKPhoto credit: Flickr wZa HK

7. What is your business model?

How is your business going to create cash?

Low investment of time

Low acquisition cost

Get the cash quickly

Repeat customers are king

Prepare for the pivot

Photo credit: GettyimagesPhoto credit: Gettyimages

8. Your optimum sales strategy

Photo credit: moneyning.com

The fruit guy has a system

Battle you can win Out of town

Hungry crowd Drivers

Reach them cheaply Stall

Core marketing message Sweet cherries – picked today

Pricing and business model

50% more than average by the basket

Bootstrap marketing approach

1. Use the power of JVs

2. Only measurable marketing

3. Crystal clear USP

4. It’s a numbers game

5. Test, test and test again

6. Discover your optimum sales strategy (market, message and price)

Low cost or no cost marketing

PR – find an angle

Social Media

The free giveaway

Repeat customers

Piggy-backing high profile people and companies

Case Study

Researched market Proof of concept Then…searched for investor An e-mail and 9 months later £250K for 20% of company Sold Coca Cola 10-20% for £30M in 2009 Sales approx £100M last year.

When is it time to quit bootstrapping?

When you have proven the concept

When you have a predictable system

When you are making profits

When you can scale what you’re doing

Then look for an investor...

Eight pillars to bootstrapping1. Clarity of vision

2. Street-smart accounting

3. Travel light

4. Pick a battle you can win

5. Leverage credibility

6. Leverage other people’s resources

7. A clear business model

8. Everything is marketing

So what now?

All heavily discounted and subsidised for past attendees?

• One-to-one sessions at the British library on the 3rd and 10th May

2 hour breakthrough slots - £190

• Exclusive Coaching programmekeeping you on track with regular meetings and

support - £250 a month

• “Funding for fast growth” June 5th one day investment programme £119 or £79 with

discount

Your feedback is welcome

Please take 5 minutes to complete form

Thank you

Paul Grant

T - +44 (0)7990 528945E - pgrant@thefundinggame.co.uk

With thanks to our

sponsors/partners: