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It’s an interesting world we live in today! From an app that tells you when to have a glass of water to one that rents out your wedding tuxedo, great ideas are aplenty. However, do all of them make it to the venture capitalist roster? Not really!
In the case of most digital agencies, there is no unique offering, which has put venture capitalists on the fence for a while now. Nevertheless, there are times when an idea seems so right, you run with it irrespective of investors backing you up or you having to bootstrap yourself. However, bootstrapping your digital marketing startup isn’t as easy as it seems. I remember my bootstrapping days about 5 years ago when all we had was a great idea and a set of customers who had barely adopted the digital medium. Sounds like a recipe for disaster, but a few important considerations helped us sail through the storm and end up with a sizeable round of investments.
So what is it that really matters when it is time to bootstrap? In my opinion, here are the most important things you need to keep in mind while bootstrapping your digital marketing startup!
1) Selling correctly
For a bootstrapped startup, the right sales pitch is critical. I get it that new agencies are in the hunt for every deal they can win, but avoid being stuck in the rut of over committing and under delivering. For a bootstrapped agency, every resource is critical and over committing simply for the sake of winning business doesn’t end well usually. A better approach is to understand your capacity to deliver and set the right expectations with customers. This will help to win wherever you can deliver and build the right credentials for the future.
2) Being cash conscious
Whether it goes out or comes in, cash is critical to a bootstrapped digital agency and entrepreneurs need to be very conscious of this even. From the smaller choices in lifestyle to bigger bits like saving cash on office infrastructure and overheads, every penny saved matters to a bootstrapped agency.
While it is important to regulate cash outflow, what is even more important is to manage cash inflows. Sometimes sales teams wind up giving far too much of credit period to clients, simply to win the deal. A short-term benefit like this is suicidal for a bootstrapped agency, which simply cannot do with a long waiting period to pump the cash back into the system, especially considering that a new agency is less likely to get extended credit periods from partners and vendors.
3) Strengthening the partner/vendor ecosystem
In the digital world, agencies often act as an intermediary between vendors and clients; enabling their clients to use digital solutions for the right marketing results. Where many agencies go wrong is that they focus only on clients, without considering that their partner/vendor ecosystem is equally important. For a bootstrapped agency it is crucial that their vendor relations are strong so that when these partners need to go the extra mile for them, they are happy doing it. This often proves as a differentiator and one that a bootstrapped agency definitely needs to have.
4) Acquiring and retaining the right set of clients
We all know how important it is to retain our customers. More so, for a bootstrapped agency, because a steady stream of cash inflows certainly helps a self-funded business and it also instils confidence in new prospects. However, most agencies often miss understanding that the key to retaining more clients isn’t in acquiring more clients but in acquiring the right clients.
Taking our example here, the focus was always on clients in the education sector and we never wavered from it even though we could pitch to other clients and win some more accounts. Being a bootstrapped business, a focused approach helped us internalise specific skills needed for the domain and deliver the highest quality of service to our clients. As a result, we have managed to maintain a retention rate of over 90% and have grown over 100% each year since our inception.
5) Inculcating the All Hands on Deck attitude
Every bootstrapped digital agency faces an initial chicken and egg situation when it comes to managing costs on their initial hires. A great team is essential to deliver the right quality of services to clients and win more business, but hiring a team of specialists, in the beginning, doesn’t always go hand in hand with the available budgets. To move past this barrier bootstrapped agencies need to inculcate the ‘all hands on deck’ attitude, where every member of the team is able to fill in wherever the need is most dire. Not only does this help eliminate any gaps in service delivery, it helps in grooming a well-rounded management team that can take up more responsibility as the business scales up.
Besides the points above, many more considerations help bootstrapped digital agencies go a long way ahead on the road to success, but these key points will ensure you have all your vulnerabilities covered. Nevertheless, every entrepreneurial journey is unique in its own way and the conviction to face the odds is the true test of an entrepreneur’s spirit!