Bootstrapped to Profitability
Transcript of Bootstrapped to Profitability
Bootstrapped to Profitability
A repeatable system for founding a company (without VC or angel
investment)
John Rood
• Founded Next Step Test Preparation with $5,000 in personal savings
• In 3 years, to 50+ instructors, 5 marketers, and 15 markets
• Yes, profitable• Before that, 3 years of management
consulting• Teaching online marketing
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• Why bootstrap?• Identifying a Market• Creating a Product/Service
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JohnRood.net
The Wantrapreneur*
*Shamelessly stolen from Noah Kagan, appsumo.com
“I WANT to be an entrepreneur but…”• I don’t have any capital• I don’t have an in to any venture capital firms• I need to spend several years learning x skill first• I don’t have technical skills. I need a co-founder• I should work at a big company first to get experience [what?]
None of these are good excuses. An entrepreneur starts a company. A wantrapreneur has 100 excuses for waiting, for getting a corporate job, or for being in “stealth mode” for 5 years (but going to all the meetups)
All around you, your peers are starting businesses designed to be profitable today. They are using these businesses to:
• Avoid corporate work• Travel and work remotely• Support themselves while they work on a larger business or not-for-profit• Make gobs of money
You don’t hear about most of these businesses because they are not on TechCrunch, don’t make the Inc. 500, and aren’t backed by VC firms
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0.02% of new businesses receive venture capital funding.
Most new companies do not get featured on TechCrunch
They are not in sexy industries
You can’t rely on SBA loans, StartUp America, or any other source to reliably secure new business funding
Y Combinator accepts 2% of applications (harder than Harvard or Stanford)
The reality of the venture capital / Tech Crunch / startup accelerator industry:
TechCrunch/VC Un-Cool Small Biz
Sexiness High Low
Chance to change the world
Medium Low
Addresses a Customer Need
Varies High!
Chance of Success Low Medium/High
Chance of paying bills
Low Medium/High
Chance of you actually doing it, starting today
Low ????
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JohnRood.net
There’s nothing wrong with the VC / accelerator / TechCrunch Route!
They’ve led to GREAT companies.
If your goal is to do whatever it takes to have a famous company in a short time, that might be the right match.
You just need to understand that the vast majority of profitable companies don’t play that game.
1. Fitness and Recreational Sports Centers (71,394)2. Full-Service Restaurants (72,211)3. Homes for the Elderly (62,331)4. All Other Amusement and Recreation Industries (71,399)5. Used Merchandise Stores (45,331)6. Meat Processed from Carcasses (31,161)7. Landscape Architectural Services (54,132)8. Beauty Salons (81,211)9. Carpet and Upholstery Cleaning Services (56,174)10. Child Day Care Service (62,441)
The Unsexy List of Most Popular Small Businesses, 2011
Awesome
What do these businesses have in common?
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Think there are 56,172 entrepreneurs excited about Carpet and Upholstery
Cleaning Services?
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• The Mindset
• Identifying a Market
• Creating a Product/Service
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To test his theory, Mr. Zhardanovsky and his co-founder, Joe Speiser, set up a Web page in 2009 with a form that asked customers if they would be interested in signing up for regular deliveries. They then placed a few ads online and waited to see what happened. “We had an overwhelmingly positive response from our customers who wanted to sign up for the service,” said Mr. Zhardanovsky, who lives in New York City and who proceeded to introduce PetFlow in 2010.
http://www.nytimes.com/2012/03/08/business/smallbusiness/selling-online-products-by-subscription-is-all-the-rage.html?_r=2&adxnnl=1&adxnnlx=1331266759-RNaVXgkDRDD+eDZWcEnfjw
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What’s the #1 factor that will determine your level of success if you were to open a Chicago-style hot
dog stand?
Businesses that succeed QUICKLY and RELIABLY meet a demonstrated customer need.
If you have to sell the need, your chances of success go
down.JohnRood.net
Scalability
Value
Online video
Online class
Live Class
Tutoring
Development of the test prep industry
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• Professionalize Mom & Pop operations (1-800-GOT-JUNK)• Dominate a segment with demand that’s a lower priority for a
major company (Next Step Test Preparation)• Solve a pressing problem for a small niche (Paperless Pipeline)• Solve a small problem with a unique solution (Coffee Joulies)
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Blue ocean strategy for entrepreneurs
What else?
In 2012, where do people go to express their needs?
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In 2012, where do people go to express their needs?
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High-probability business owners define their market with quantitative research and testing – not through introducing a world-shattering invention or web app
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JohnRood.net
Or….find a problem in a high-value market
-- Unearth problems during interviews. What keeps them up at night?
-- Focus on groups willing and able to pay
-- Test before development
-- Ideally, get paid to develop your product
• The Mindset
• Identifying a Market
• Creating a Product/Service
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Your customers care about them. (Not you.)
Most businesses forget this the second they start product development.
Never forget the problem is more important than the technology.
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It’s critical that you create a minimally viable product (MVP).
This now has a trendy name….
But entrepreneurs have been using these principles for years
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Step 1: Minimal viable Product
Most businesses that can make $1,000 can make $100,000+*
Do this as cheaply as possible
You need to figure out if you can sell the product – this step is not about feasibility
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Step 2: Test market acceptance
*Within reason.
Direct response marketing vs. brand marketing
• Scientific Advertising, Claude Hopkins• Advertising Secrets of the Written Word, Joe
Sugerman• AppSumo (appsumo.com)• I Will Teach You To Be Rich
(iwillteachyoutoberich.com)•Mixergy, www.mixergy.com• Ultimate Guide to Google Adwords
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If you can sell it 5 times on Craigslist you can probably sell it 50,000 times
Put up a basic website with dedicated landing pages for this product.
If you don’t know how to put up a basic website, you need to either learn how or hire a contractor.
Learn the difference between a home page and a landing page
-- Unbounce
-- Wordpress
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Step 3: Web Presence
• Easy SEO• AdWords• Facebook Ads• Blog Outreach• Aggressive referral programs
Remember, you’re trying to reach your customers – not your peers. Most customers don’t read the same blogs you do or know what Tech Crunch is.
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Step 4: Scale (the easy way)
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Thank you!
Remember that you can start today
Your excuses do not make you a unique snowflake
[email protected]@johnrood