Eyes of an Entrepreneur

OK, so it's day 2, and I'm sure you're all wondering what the heck "Bootstrapping" is. Well, hopefully I can give you some insight into this concept. Keep reading and find out some more.

So this all started on Monday when I went to see a guest Lecturer at Stevens Institute of Technology. His name was Greg Gianforte, an alumni of Stevens and founder of RightNow Technologies (among other companies he has started). He spoke about this concept of bootstrapping, and said that he funded all of his businesses this way. With that kind of track record, you have to pay attention, no? Anyway, he wrote a book called "Bootstrapping your Business" which you should probably check out if this is interesting to you.

Let's start with the basics, like what bootstrapping even is. It is basically using money from your customers to fund your business instead of finding VC or Angel Investors. Most business owners know that VC is very expensive. When I say expensive, I don't mean in terms of money either. Typical Venture Capital firms will want 30-40% of your companies equity for their investment. It's easy to lose control of your company, and fast this way.

In Gianforte's case, he started Right Now Technologies by using customer orders to pay for development of his software system. He developed a system to help companies save resources on customer service functions in their business.

The first tips he offered the audience were: sales is #1, and you need to build your business on a real-world value proposition. I know you're all thinking, "well, duh!", but it goes a little further than that. What he did was go out and conduct primary research (asking industry professionals what they would want from a software system). Once he was able to come up with the idea, and confirm orders from different companies, he began development of his system using the money from their orders as startup capital. Once the system was released, he was able to get feedback from his customers about what else needed to be included, and he would add in popular requests. This added additional value to the system, allowing him to charge more and more as he went.

To make a long story short, he was able to start his business with customers money, and create a product that he KNEW they would buy, because they told them what they wanted.

Benefits:

1. You build your business on a real-world value proposition
2. Initiate critical learning early
3. You don't waste money, you make it
4. Accelerate time to market
5. Less likely to make fatal (expensive) mistakes
6. Force unconventional thinking
7. More freedom and flexibility
8. You own your company (which in the end is the most important thing)

So how do you get started?

1. Get out there and immerse yourself in the market- start talking to industry professionals
2. Develop a one page description
3. Go ask for orders
4. Revise your description
5. Go back to step 3 (until you are able to take orders)
6. Begin development/manufacture of your product or service
7. Make Delivery
8. Start Selling Again!!

Ok, so now that you have a good foundation for bootstrapping, get out there and see how you can apply it to your business. If this sounds familiar, comment and let us know about your experience with bootstrapping and how it worked for your business. While it may not seem like it, bootstrapping is a solution for any business, it just requires some extra thought in some cases.

As always, check back soon for more information.

Thanks for reading!