7 Rules for Boot-Strapping

YourTask: Build something people want, minimize your risk, and maximize your chances for survival. Here’s how. Inc magazine 26 Jan 12 [Enhanced by Peter/CXO Wiz4biz

You’re better off bootstrapping in the early days of your Startup. It’s no easy task. But if you follow the rules below, you can minimize your risk & maximize your chances for survival.

1. Validate your idea. Is your business idea a good one? How do you know? Don’t just ask your family & friends what they think. You won’t get an objective answer. Ask people who don’t have a stake in your potential success (or failure). Ask people who are experts in the field. Then listen to what they have to say. The best way to validate any idea is to ask “potential” Customers. But if you can’t do that, try someone who has been down this road before (ie, a Serial Entrepreneur).

2. Get a Mentor who’s not going to give you any BS. Don’t look for a “Yes Man” who’s going to affirm your ideas; look for a guy (or gal) who’s going to challenge you, to defend your reasoning and your decisions. If that person is in a related industry, even better. This doesn’t have to be a formal arrangement; you just need an occasional sounding board. You may not like what you hear, but keep listening. You’re going to learn how to make your Business better.

3. Become “obsessed” with your Customers. Find out: “Who are they? “Where are they? And “How will you get to them? Once you’ve found them, spend time on making sure your product or service meets or exceeds those Customers’ needs/ expectations. If your first Customers are happy, they will become your reference, your case study, and best of all, they will bring you more business by referring you to others.

4. Reinvest everything you can, back into the Business. It’s typical to spend more money in development than you expect. Your first Customers may have paid you, but it took even more $$ than you expected, to create a better product that they expected. You may have to take little or nothing for yourself. Can you survive? Did you prepare for this draught, before they rain $$ on you. If you focus on profitability too early, you may end up taking shortcuts with a mediocre product or service. And mediocrity won’t help you get much more business in the long run. There’s probably too much competition already. You’ll have to be better enough, so you get attention and Customers will buy you. Other wise, your business will have a short shelf life.

5. Be Cheap, but Smart.
Need new Customers? Get a Marketing expert. Have them plan & execute, a small, cheap Pilot program to get leads. You may spend a lot more of your own time qualifying the leads to find the good ones, but that’s better than trying a risky & expensive marketing approach that may get you poor results. Craigslist is a great example. It’s known to get you “cheap” customers, but you’ll find some good ones there too – with $$ to spend.
This approach also applies to Hiring. Don’t be too quick to hire full-time employees. Try offshore sources & PT Contractors – whose payment terms parallel how your customers pay you. It will take you time to find the good ones, and will likely take even more time to work with them to get the product you need. But, if you’re smart & effective, your cost-cutting will pay off in more profits.

6. Start Marketing before you think you’re ready. Too many Founders spend all their time and whatever little $$ they have, on building a product with too many features. By then, there’s no $$ left when it’s time to show it to people. Find good, cheap, effective ways to reach your potential customer in the early stages of your business. Try to automate your marketing, if you can. And whatever profits you do make, put as much back into marketing as you can.

7. Don’t do it Alone. Starting a business by yourself is hard. It’s even harder when you have no help. Find a good partner who shares your passion for the product—but is different than you. Hopefully, they’ll have a lot of the talent & experience you don’t – so together – you’ll be a fairly complete Team. If you still have gaps, bring in experts – as needed – to provide all the functions you need.

Comments: Anything you can add to this?