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>, then it actually isn't very hard to bootstrap a business. Your "not very hard" advice also inadvertently distorts the reality of possible outcomes. Most bo

by jasode 8y ago

>, then it actually isn't very hard to bootstrap a business. Your "not very hard" advice also inadvertently distorts the reality of possible outcomes. Most bootstrapped businesses fail as well. Whether an entrepreneur gets some friends with a bootstrap mindset to start a consulting business, publish a new magazine, or open a restaurant, the odds are that all of those will most likely fail. Any business that can provide financial independence has long odds. (I'm not including solo businesses such as freelance web consultant, insurance agent, home inspector/appraiser, solo attorney, etc.) Whether it's a bootstrap-business or VC-business, founders will still proceed forward even if it disagrees with "rational" calculations of successes/failures. It's human nature.

onion2k 8y ago
Most bootstrapped businesses fail as well. While that's very true of startups I think there's more to it. A lot of businesses are founded in order to scale up to something that can give the founders a decent exit. If you start a business with the explicit intention of only growing to a point where it's going to give you a good lifestyle you're a lot less likely to fail. You don't need to take the risks necessary to grow. You can focus 100% on the business instead of distractions (for example, raising a round.) You're still more likely to fail than success, but not with the sort of failure rate that startups typically see.
jeffreyrogers 8y ago
> Most bootstrapped businesses fail as well. Depends how you define failure. The statistics I've seen suggest that around half are still in business 5 years after formation.
katzgrau 8y ago
Yeah, but the reasons for failure are different. A startup usually fails because the founders are convinced they can't do whatever they want to do without investors and they never raise any money. OR, they do raise money and eventually run out of it because they never made enough money to support the costs that were enabled by ... the investment. A bootstrapped business is alive as long as the founder is willing to continue trying to make it work. So a bootstrapped business doesn't fail per se — usually the founder fails to make money within the timeframe they'd hoped for and gives up. I didn't start making real money with my business until I was 4 years in. There wasn't some magical day where I got lucky and started making money. The first 4 years was me basically being an idiot and making every mistake possible. It gave me the education I needed to price my product appropriately, position it, and sell it. Some might say I'm a "survivor" but I don't think I am. I'm just determined as hell and didn't give up when I wasn't making any money. I worked freelance contracts and kept the thing going because I knew at the very least I was getting smarter even if I wasn't bringing in money, and eventually the education would probably prove useful or pay me back. Better and cheaper than grad school anyway, right? I sometimes think about the people who are "Masters of Business Administration" on paper and have never actually built or run a business. The people I know who have successfully done it aren't geniuses with a bunch of money and lots of connections. They all just had the same determination to stick with it, adapt, learn, and find their way to what they want. There is definitely some pain and self-doubt involved, but like I originally said, you come out stronger for it.
- englishrookie 8y ago
  Any lessons learned that you want to share? As the owner of a very small consultancy shop I know it's very hard to extract generalized advice from your own failures, but still...
  - katzgrau 8y ago
    Sure, although my experience is in the product business. some of these might be applicable: * Find a niche market where there is a need and the prospects aren't broke. Eg, they have money to spend for the potential of ROI with your product. * Break your revenue goal into concrete building blocks. If you need $x/year to make this a profitable venture, how many customers do you need? * If you need a lot of customers (IMO, > 25) you need to think about both marketing and making your product and making it possible for them to self-service. Eg, driving inbound so you don't have to rely so much on outbound. * Right down your goal and make a plan to achieve it. Does that mean emailing / calling prospects? How many per day? How many trials does it take to convert one customer? These are simple metrics which will eventually help make your revenue "predictable." Great books on that topic. * Sales is #1 priority. SV is hyperfocused on brilliant engineers. In bootstrapping, it's all about money. I'd spend more on a great salesperson than an engineer. * Make yourself uncomfortable. Don't like cold calling? Cold call anyway. You'll get good (or at the very least not half bad) at everything. * Take care of yourself. You are your own vehicle to success. Your mind and body are business partners. Your bad habits can hinder you severely. 9-5 employees can come to work hungover every day and probably get by fine - but an entrepreneur can't. * If something isn't working, change it. If something's working, do more of it. That includes pivoting product, market, etc. * Don't get too elated or depressed. There can be incredible highs and crushing lows. Failure is a teacher but success is a better teacher. * Be humble. Recognize that you're an idiot and that you don't know shit, even when you think you know shit. It's how you keep your mind open to learning new things. Your own ego can be a roadblock to success. * Learn to delegate. When you start out you'll do everything — but eventually you will find you have low-level tasks which, if offloaded, would make you far more productive. That's when it's time to hire. Resist the urge to just do it yourself. Your ultimate goal is that you become the brain of the company and you delegate the physical work to the staff you've built. There's a lot more but those are the ones I could rattle off.

by jasode 8y ago

onion2k 8y ago

Most bootstrapped businesses fail as well. While that's very true of startups I think there's more to it. A lot of businesses are founded in order to scale up to something that can give the founders a decent exit. If you start a business with the explicit intention of only growing to a point where it's going to give you a good lifestyle you're a lot less likely to fail. You don't need to take the risks necessary to grow. You can focus 100% on the business instead of distractions (for example, raising a round.) You're still more likely to fail than success, but not with the sort of failure rate that startups typically see.

jeffreyrogers 8y ago

> Most bootstrapped businesses fail as well. Depends how you define failure. The statistics I've seen suggest that around half are still in business 5 years after formation.

katzgrau 8y ago

Yeah, but the reasons for failure are different. A startup usually fails because the founders are convinced they can't do whatever they want to do without investors and they never raise any money. OR, they do raise money and eventually run out of it because they never made enough money to support the costs that were enabled by ... the investment. A bootstrapped business is alive as long as the founder is willing to continue trying to make it work. So a bootstrapped business doesn't fail per se — usually the founder fails to make money within the timeframe they'd hoped for and gives up. I didn't start making real money with my business until I was 4 years in. There wasn't some magical day where I got lucky and started making money. The first 4 years was me basically being an idiot and making every mistake possible. It gave me the education I needed to price my product appropriately, position it, and sell it. Some might say I'm a "survivor" but I don't think I am. I'm just determined as hell and didn't give up when I wasn't making any money. I worked freelance contracts and kept the thing going because I knew at the very least I was getting smarter even if I wasn't bringing in money, and eventually the education would probably prove useful or pay me back. Better and cheaper than grad school anyway, right? I sometimes think about the people who are "Masters of Business Administration" on paper and have never actually built or run a business. The people I know who have successfully done it aren't geniuses with a bunch of money and lots of connections. They all just had the same determination to stick with it, adapt, learn, and find their way to what they want. There is definitely some pain and self-doubt involved, but like I originally said, you come out stronger for it.

englishrookie 8y ago
Any lessons learned that you want to share? As the owner of a very small consultancy shop I know it's very hard to extract generalized advice from your own failures, but still...
- katzgrau 8y ago
  Sure, although my experience is in the product business. some of these might be applicable: * Find a niche market where there is a need and the prospects aren't broke. Eg, they have money to spend for the potential of ROI with your product. * Break your revenue goal into concrete building blocks. If you need $x/year to make this a profitable venture, how many customers do you need? * If you need a lot of customers (IMO, > 25) you need to think about both marketing and making your product and making it possible for them to self-service. Eg, driving inbound so you don't have to rely so much on outbound. * Right down your goal and make a plan to achieve it. Does that mean emailing / calling prospects? How many per day? How many trials does it take to convert one customer? These are simple metrics which will eventually help make your revenue "predictable." Great books on that topic. * Sales is #1 priority. SV is hyperfocused on brilliant engineers. In bootstrapping, it's all about money. I'd spend more on a great salesperson than an engineer. * Make yourself uncomfortable. Don't like cold calling? Cold call anyway. You'll get good (or at the very least not half bad) at everything. * Take care of yourself. You are your own vehicle to success. Your mind and body are business partners. Your bad habits can hinder you severely. 9-5 employees can come to work hungover every day and probably get by fine - but an entrepreneur can't. * If something isn't working, change it. If something's working, do more of it. That includes pivoting product, market, etc. * Don't get too elated or depressed. There can be incredible highs and crushing lows. Failure is a teacher but success is a better teacher. * Be humble. Recognize that you're an idiot and that you don't know shit, even when you think you know shit. It's how you keep your mind open to learning new things. Your own ego can be a roadblock to success. * Learn to delegate. When you start out you'll do everything — but eventually you will find you have low-level tasks which, if offloaded, would make you far more productive. That's when it's time to hire. Resist the urge to just do it yourself. Your ultimate goal is that you become the brain of the company and you delegate the physical work to the staff you've built. There's a lot more but those are the ones I could rattle off.