how to bootstrapa start up april12
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How To Bootstrap a Start-up
Workshop
Presented by Paul Grant
In partnership with
Sponsored by
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Take the Blue pill or the Red pill?
Photo credit: the matrixPhoto credit: the matrix
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1% or less
Chance of success in raising equity capital if you took the BLUE pill
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Bootstrapped companies Amazon Ben & Jerry’s Body Shop eBay Hewlett Packard Ikea Marks and Spencer Oracle
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So what is ‘bootstrapping’?
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Definition
“The term ‘bootstrapping’ comes from the book The Surprising Adventures of Baron Munchausen, in which the main character uses his bootstraps to pull himself out of a swamp.”
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Why bother bootstrapping?
1. It creates massive value
2. It reduces the risk for investors
3. Mistakes come cheap
4. Inside knowledge of your business
5. There is not much choice
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Eight pillars to bootstrapping1. Clarity of vision
2. Street-smart accounting
3. Travel light
4. Pick a battle you can win
5. Leverage credibility
6. Leverage other people’s resources
7. A clear business model
8. Everything is marketing
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1. Clarity of vision
Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box
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What makes a great USP?
“Fresh hot pizza delivered in 30 minutes or less. Guaranteed."
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Crafting your USP
What does your business do?
Who is your customer?
What is the biggest benefit of doing business with you?
Can you prove your claim?
How will customers perceive this benefit compared with the competition?
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2. Street smart accounting
Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box
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The bootstrapping phase is all about...
Cashflow- creating and managing
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Watch these figures like a hawk
1. Cost per sale
2. Average value of sale
3. Repeat orders
4. Gross profit
5. Overhead
6. VAT return
7. Projected forecast
8. Comparison against previous year
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Alternative sources of capital
1. Vendor funding
2. Rental
3. Factoring / invoice discounting
4. HP / leasing
5. Overdrafts
6. Credit cards
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3. Travel light
Photo credit: Flickr jek in the boxPhoto credit: Flickr jek in the box
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Travel Light
Keep to variable costs Avoid the payroll sweats Outsource all but what makes you great Become a kitchen table tycoon Avoid capital expenses.
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IP Costs – patents & trademarks What does 3% represent
Still want to go for it?
Get one hour – free meeting
Do the search yourself
Research and get the product right
Then, hire a patent lawyer
Make sure you get a fixed rate
“Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats” - Howard Aitken ( built the first IBM “Harvard” computer
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Low cost or no cost tools
www.fiver.com
www.elance.com
www.interns.com
Open Coffee “meetup group”
Mailchimp
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Case Study
Researched the market in the US Launched from his bedroom with £300 Promoted on My space & Friends reunited Within a year achieving £1k in sales a day Flipped the business model for scale First big customer - Dell Launched in europe This year has a Turnover of £9m
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Time for a breakRe-start in 15 minutes
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4. Pick a battle you can win
Photo credit: Flickr tharrinPhoto credit: Flickr tharrin
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Pick a battle you can win
Think niche, niche, niche Who are your early adopters Sell aspirins not vitamins Do not try to educate a marketplace
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5. Building credibility
Photo credit: Morgue file Pedro J PerezPhoto credit: Morgue file Pedro J Perez
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How Bill Nyugen of “Color” raised $41m from VC from one 45 minute meeting
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Building Credibility
Find first class mentors/non-execs Pay them equity stakes up to 5% Or in lieu of consultancy contracts Associate yourself with established brands Get high profile customers at cost. Build list of testimonials
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6. Leverage other people’s resources
Premises
Technology
Contacts
Databases
Distribution channels
Credibility
Photo credit: Flickr wZa HKPhoto credit: Flickr wZa HK
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7. What is your business model?
How is your business going to create cash?
Low investment of time
Low acquisition cost
Get the cash quickly
Repeat customers are king
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Prepare for the pivot
Photo credit: GettyimagesPhoto credit: Gettyimages
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8. Your optimum sales strategy
Photo credit: moneyning.com
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The fruit guy has a system
Battle you can win Out of town
Hungry crowd Drivers
Reach them cheaply Stall
Core marketing message Sweet cherries – picked today
Pricing and business model
50% more than average by the basket
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Bootstrap marketing approach
1. Use the power of JVs
2. Only measurable marketing
3. Crystal clear USP
4. It’s a numbers game
5. Test, test and test again
6. Discover your optimum sales strategy (market, message and price)
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Low cost or no cost marketing
PR – find an angle
Social Media
The free giveaway
Repeat customers
Piggy-backing high profile people and companies
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Case Study
Researched market Proof of concept Then…searched for investor An e-mail and 9 months later £250K for 20% of company Sold Coca Cola 10-20% for £30M in 2009 Sales approx £100M last year.
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When is it time to quit bootstrapping?
When you have proven the concept
When you have a predictable system
When you are making profits
When you can scale what you’re doing
Then look for an investor...
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Eight pillars to bootstrapping1. Clarity of vision
2. Street-smart accounting
3. Travel light
4. Pick a battle you can win
5. Leverage credibility
6. Leverage other people’s resources
7. A clear business model
8. Everything is marketing
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So what now?
All heavily discounted and subsidised for past attendees?
• One-to-one sessions at the British library on the 3rd and 10th May
2 hour breakthrough slots - £190
• Exclusive Coaching programmekeeping you on track with regular meetings and
support - £250 a month
• “Funding for fast growth” June 5th one day investment programme £119 or £79 with
discount
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Your feedback is welcome
Please take 5 minutes to complete form
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Thank you
Paul Grant
T - +44 (0)7990 528945E - [email protected]
With thanks to our
sponsors/partners: