Sean Broihier adds new meaning to the term "bootstrapping."
Operating on sweat equity alone, in 2007, Broihier launched Fine Art America, an ecommerce marketplace for works of art. Artists upload digital images of their artwork to fineartamerica.com and offer them for sale as frame prints, canvas prints, greeting cards and more. Once a purchase is made, Fine Art America outsources the printing, framing, matting, stretching, packaging, shipping and insuring. Then, the company processes the buyer's payment and sends the profit to the artist. That leaves the artists time to do what they do best -- create art.
Broihier's Santa Monica-based company competes with such funded giants as art.com, allposters.com and cafepress.com -- and he's outperforming them all. Last year, Fine Art America earned $1.5 million and the site offers more than 2 million items for sale -- all the while competing for market share against enterprises with hundreds of employees.
So how does Broihier do it? Here are his five tips on how to bootstrap a business:
- Be lean. He started out by keeping the overhead low -- working alone on nights and weekends. He generated a $500 profit his first month in business. In 2010, he hired his first employee, and in 2011 he added another -- both of whom work remotely.
- Generate buzz. Fine Art America didn’t advertise until late 2010. Instead, it took advantage of word-of-mouth through its artists via email, Facebook, Twitter and more. Customers, it turns out, are your best lead generators.
- Outsource. Fine Art America builds great online software and outsources everything else. ADP handles payroll. Amazon manages its web servers. WebmasterChecks.com pays the artists. A company out of North Carolina handles its printing, framing, matting, packaging and shipping.
- Don't follow the leaders. Small firms often compete against well-funded corporations with millions of investment capital that can afford to throw money at bad ideas. Don't copycat all of their decisions.
- Resist taking on investors. Once you accept investment capital, you’re no longer the boss and you’re on a path to sell your business or go public. Unless you’re struggling with cash flow or preparing for an exit, accepting outside money makes no sense.
What are some other ways to startup and run a business on the cheap? Leave your suggestions in the comments section below.
Mikal E. Belicove is a market positioning, social media, and management consultant specializing in website usability and business blogging. His latest book, The Complete Idiot’s Guide to Facebook, is now available at bookstores. For more information, visit MikalBelicove.com.