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The highs and lows of bootstrapping a business

Starting a new business can be tough a lot of the time. Bootstrapping a new business without the right preparation is tough almost all the time.

The sensible way to start working for yourself or to launch a business without any funding or loans would be to make a plan months before you make the leap. Start saving some cash to use as a buffer at the beginning and if you have any emergencies. If you can, perhaps trial it as a sideline while you’re still in your previous job – the best way to test demand from potential customers or clients, and also a great way to find out whether you’ve really got the drive and determination to make it work. Better to figure out you’re not bothered when you have a safety net, rather than when you have 0.01p in your bank account and it’s weeks until payday.

I wasn’t sensible.

When I started working for myself it was at short notice due to plans to restructure by my employer. I could have potentially stayed, but felt like it was time to do something different for personal, as well as professional, reasons. I’d learned to tolerate commuting, but didn’t enjoy the expense in time and money, particularly when it meant missing out on so much time with my young son.

So I didn’t have much of a buffer saved. And that quickly evaporated in the first couple of months as I started to realise that I wasn’t as motivated to find a new role for an employer as much as I was to work for myself.

And when things are going OK, or even well, that’s fine. Thanks to great friends, former employers and colleagues, lovely clients and new contacts I managed to survive and at times I even thrive. At the start of 2013, I reached the stage where I had enough income to bring in someone fulltime to help me run the business, in addition to the various people we’ve employed on a project basis.

Bootstrapping

But when things aren’t OK, the lack of preparation 3 years ago still comes back to haunt me. Bringing in a fellow director essentially meant my income from the business was halved – not a long-term problem as we were showing plenty of progress and growth with a lot more planned.

Then we were hit by an external financial issue which was outside our control, and which cost us thousands. That essentially wiped out our small safety net in one go, and took months of hard work to recover from. All the time we’ve been dealing with the day-to-day issues of delivering quality work, chasing late invoices, securing new clients, etc. By the end of the year things have been looking better, and we were planning some big steps forward in 2014 when another external factor hit us just before Christmas.

The big lesson, and advice I’d give to anyone, is to plan for everything to go horribly wrong most of the time. Make sure you have cash,contracts and a minimum viable level of income for surviving in place at all times. And ensure that you are constantly thinking about what happens if something goes wrong before it actually does. I remember reading that most successful entrepreneurs tend to resemble rabbits rather than lions, because they’re constantly slightly nervous, paranoid and scanning around for potential predators and threats. More than that, you need to know what action to take, and to get on with it, in the face of problems.

That may mean cancelling services and lowering your costs in advance of problems, or it may mean taking a gamble and actually increasing your spending on advertising or marketing before a competitor becomes an issue. The important thing is to not end up paralysed like a deer in headlights as the problem gets bigger and bigger.

As for me and my business? While the bad news is that we may not be able to invest in some of the plans we’d put together quite yet, the good news is that we still have a growing client base, we’re able to refocus some of our efforts, and it’s an incentive for us to innovate more quickly. And thankfully I also have someone I respect a lot working alongside me to share that journey with rather than doing it alone… By the end of 2014 I expect to be writing about the best aspects of building a business from nothing but a laptop, and how we’ve progressed so far in 12 months….

Comments

  1. Hey Dan – great post and I feel your pain! I have always been self employed and never had funding so not as much of a curve from broke chef to broke musician to broke multi-media/seo type. When you look back, that lifeline in the bank is essential – but not so much that you sit on your laurels and expect work to come to you (seen many colleagues struggle and realise that maintaining a business is much harder work than it might appear due to a number of things ‘they’ don’t tell you when you start)

    Doing it alone is pretty tough but transitioning to joining forces can be just as tough for all of the reasons you mention above.

    So be prepared to work real hard – harder than you’ve worked in your life. For it to be relentless, for return to come later (but know when to stop), and that absolute honesty about strengths and weaknesses is a MUST.

    Also, don’t put all your eggs in one basket with one client unless you are a contractor that can go from client to client via an agency. One loss and it’s game over!

    Everyone in my opinion should be self employed for a stint – it certainly makes you appreciate that bosses also need people to give a crap about working hard and making profit in order to maintain that lovely monthly paypacket without having to chase or deal with the tax man even if you down tools at 5pm – Ahhhhhhh :D

    Congratulations on getting this far and Good Luck with 2014 and remember kidz – you never know where your next lead is coming from so be nice to EVERYONE! :D

    • DanThornton says:

      Thanks Jackie, and great advice. And when you’re starting to expand it’s vital to pick people with skills in the areas you may have weaknesses – above and beyond whether you actually get on with them or not etc. Fortunately my fellow director and I get on well, but work has to come first otherwise any friendship etc will suffer anyway…

  2. Good luck in 2014 Dan. Know that feeling of having your cash reserve wiped out. Happened to me this year. Clients booking and then dropping booked work was my pain. Thankfully building a good client list helped me out.

    • DanThornton says:

      Cheers Darren, and good luck to you as well this year! We also survived thanks to some great clients and a steady influx of new work from some very appreciated recommendations from existing/previous clients and contacts…

  3. Dan, I wish you a lot of happiness in this year, to be for you and Sean much better than the previous one, you both deserve that! Keep up with the good work…

  4. Great post. Sounds familiar – been working on two new business the last three years – it really take hard work and a lot of strength to raise after each time you are set back. We produce furnitures and have been through problems with manufacturing and changing factory each setting us back and delay earning while cost are just raising :)

    • DanThornton says:

      Hi Martin,
      Thanks for the support, and sorry to hear about the manufacturing problems. From what I’ve seen of some of your products, they look great – shame I’m not a Mac user for the laptop stands etc!
      Dan

      • Our stands actually work on many computers but it’s just market as MacBook Stands :) Also very nice to get some background of your business as a Jigoshop user.

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