Get the order first

Filed in archive Bootstrapper Resources on July 25, 2007

How did Barbara Carey launch the Hairagami Company now generating more than $80 million in sales worldwide with just $800 of her own money?

Bootstrapping, that's how.

In this case, according to another installment from the Kauffman Foundation's bootstrapping resources page, Carey used a big order from CVS to launch her company negotiating with manufacturers to fill the order and get paid when she did.

She explains:

It is the perfect example of applying my golden rule: Get the order first.

Get a big enough order and manufacturers will be willing to talk to you and eager to get your repeat business.

Carey also recommends some other important considerations when picking your product.

The little plastic hair styling accessory was a good choice because of its:
• Low unit cost
• High sales margin
• Virtually nonexistent tooling requirements for the manufacturer
• High perceived value (as opposed to, say, a hair clip)

Software companies like RightNow Technologies were started similarly sometimes not even having the product available when making the first calls to feel out the market and, of course, on demand products from companies like CafePress.com and Lulu.com by definition manufacture nothing until someone orders it.

The tradeoff is that, as a rule, unit costs are higher for such items and thus profit margins are lower. Still, one bootstrapper tenet is that getting the sale remains the most important thing. It generates cash flow, after all.

So, when you're taking that first big order, try not to let it worry you that you don't even have a product yet. Get the order first, and everything else will take care of itself.