I've been fortunate to be involved in several business start-up. Some have done well, others flopped. Some were well-funded, others were not. A natural inclination is to think that those companies that were well-funded did the best, but that's not always the case. Some of the most rewarding companies start off in a spare bedroom with a dream, and no cash.
There is something I find stimulating and satisfying when bootstrapping a company – at least while it's getting started.The peril of struggle builds character, will, determination, and a scrappy sense of perseverence. It allows you to trust yourself more, focus on what you can change, and build a team that will fight with you – even in the bad times.
Of course, cash is the blood of any business. Without it, you die. Guy Kawasaki has written a good post about bootstrapping at Always On. A couple of his key points:
- Forecast from the bottom up. Build conservative cash-flow models and focus on generating cash. NOTHING trumps cash. If you're still living on investors, do whatever you can to get to cash flow. Don't fool yourself into thinking that because you've done a round, you've made it. That's not your money. You haven't earned it yet.
- Ship then Test. Which is the equivalent of saying that your product or service doesn't have to be perfect. I always tell my team that this is the worst our service will ever be. Tomorrow, we will be a little better. And next week, month, year, we'll be incredible.
- Pick a few battles. This is absolutely key. I've heard so many presentations where the entrepreneur knows they are going to be able to tackle 18 different opportunities at once – all for a $1.5mm Series A. Hello? Lights on. It's not going to happen. Focus down and do one thing really, really well. Also, don't try to go head to head with a bigger, more funded Fortune 500 company. Find a niche for starters and exploit it.