Six important bootstrapper questions
As a companion to the aforementioned article in U.S. News & World Report on bootstrapping principles, senior writer James Pethokoukis did an e-mail interview with DaVinci Institute futurist and speaker Thomas Frey.
The results with quotes from Frey, revealed the answers to six important questions about bootstrap entrepreneurship shown with excerpts from Frey's responses below.
1. Why raising funds may be overrated. "When you launch a start-up business, there are essentially two things you can sell. You can either sell your product or service, or you can sell an investment-an investment in your business…Some people are extremely good at selling investments, but invariably the rest of the business suffers and the product or service that the business is being built around oftentimes never gets created."
2. Why starting with little outside investment is important. "Entrepreneurs often confuse investors with customers…A business operates off of the people who are making the "buy decision," and the sooner you can get to know the buyers, the better your decision making will be from there on out."
3. Why a bootstrapper might turn down $50,000 even if it's offered. "A business operates off of the people who are making the "buy decision," and the sooner you can get to know the buyers, the better your decision making will be from there on out."
4. Why running out of money is to be expected. "Usually I tell people to get used to it because as an entrepreneur, it will happen a lot… Business owners need to earn the right to be where they are, and working their way through a myriad of problems they face every day gives them the stripes to say they earned it. Money is just one of the many problems."
5. Why bootstrapping techniques center around problem solving. "Bootstrappers are looking for unusual arrangements-trading, barter, delayed payment, volunteer help, and tons of things for free-A bootstrapper will tackle a problem from a hundred different angles looking for ways to create a wedge into a problem and begin prying the problem apart."
6. Why failures are never really the end of the world. "A small business gets started, and they put everything they have into getting a contract with Wal-Mart. They create marketing material, spend countless hours on the phone and in conversations to land the big Wal-Mart deal. And when Wal-Mart says no, the business owner feels crushed… There are thousands of possible distribution channels, and Wal-Mart, in most cases, should be at the bottom of your priority list because they typically want you to be a well-established business before they order from you. And too large of an order, too soon, can kill a business."