You've Got Potential
While being smart about saving and spending is essential for bootstrappers, generating sales is even more so. "You can go through [money] quickly just trying to get your brand out there," Gianforte says. "Make sure you're spending advertising dollars that will get you immediate sales instead of [just] brand recognition."
James says pounding the pavement for sales should be job one of any startup. "Too many businesses spend before they've figured out how to monetize the product," she says. "I've tried to hire sales consultants--they want to spend thousands to set up a sales force. That's the opposite of what I do. I make a sale, then figure out how I'm going to deliver it."
Gianforte says bootstrappers should devote their limited resources to finding tactics that work and building strategies around them. He compares business to war, saying there are two jobs in war: making bullets and shooting bullets. In business, making bullets means building the product, and shooting bullets means selling it.
It's harder to bootstrap when you have to spend on inventory. The Kendalls, whose company will top $1 million in sales this year, order their runs conservatively and operate from home. Until now, most of their business has come through the website. But the retailers who have been contacting them about carrying their products have made them realize the market potential. They recently opted to work with a showroom, which sells to upscale clothing boutiques like Fred Segal. This, says Maureen, 33, will help them catapult their retail business without taking on the expense of full-time employees. "Until now, it's just been boutiques calling us," she says. "We've been talking to this company for over a year now, and they love the idea. The fact that they're excited about our product is really going to help them sell it." The Kendalls also plan to open up a brick-and-mortar store featuring their clothing lines by the end of 2008.
Cultivating your best customers and serving them well so they become repeat customers and referral sources is also an essential step that leads up to the million-dollar mark. Gianforte says you need to understand why your customers are willing to give you money over your competitors. Be clear about your advantage and work to protect and improve it, he says. That includes finding better ways to qualify your efforts so you're spending limited amounts of time with prospects who don't pan out.
In his experience, Gianforte says customers who request brochures are often not immediate sales prospects. When he founded his company, he deduced that requesting brochures was a polite way of saying, "I don't want to talk to you now." So he ditched the print materials in favor of offering a live demo of his software product. Sure, he lost more of the prospects who called in, but he ended up yielding a higher percentage of sales because the people who were willing to agree to the demo were people who were willing to buy.
While their businesses and strategies are very different, successful bootstrappers have one thing in common: a deep-rooted belief that no matter how big the challenge is, there's always a way to overcome it.
"I know so many people who stop themselves from succeeding in their companies because they don't believe they can do it, or they can't admit they need to do something differently," says Vechey. "They just give up. If you're really committed, you can always find a way."
Gwen Moran is Entrepreneur's "Retail Register," "Quick Pick" and "Sell Buzz" columnist.
Make Your Cash Count
While bootstrappers typically look for ways to save money on everything from office space to consulting services, there are some things that are worth the splurge. When you're getting ready to launch, don't skimp on these.
- Legal services: Ryan Allis, author of Zero to One Million: How to Build a Company to One Million Dollars in Sales, says it's usually not a good idea to pinch pennies when it comes to legal counsel. The legal advice you get early on, including the form of organization for your business, is critically important and hard to undo. "Make sure that [however much] money you have, you spend it well [on legal counsel]," he says.
- Good people: Greg Gianforte, author of Bootstrapping Your Business: Start and Grow a Successful Company With Almost No Money, advises you spend money on hiring good people and creating strong partnerships. "If you add one bad apple to [a company of] four people, it can ruin your company," he says. In addition, Gianforte advises spending time and money on your partner prenup, including what happens if one of you wants to walk away.
- Design: From your letterhead to your website, Allis says that investing in good design services is another smart way to spend some dough. Using a clip-art logo or a clunky website designed by your best friend's cousin can scream amateur. Make sure that from the start your business looks as successful as you want it to be.
Of course, that's not to say you should break the bank on these essential elements. Allis and Gianforte both advise using your contacts and negotiating power to get good deals. But when it comes to the legalities, people and look of your business, be sure to choose quality over price.