The Bootstrappers´Bible

Following on my last post, I would like to give you some more hints on bootstrapping from The Bootstrappers´Bible written by Seth Godin.

If you try to steal the giant´s lunch, the giant is likely to eat you for lunch.

Without a business model, a company can get publicity, hire employees, and spend money – but it won´t make a profit.

Understanding the value chain of your business is a great first step in getting to the core of how you´re going to succeed.

The time to develop a multiple income source startegy is not when you run out of money. Then it will be too late.

Courting your big suppliers is a big part of being a successful bootstrapper. It gives you leverage.

Be up-front with your customers and learn how to deal with them in a professional way.

At the beginning … you might be tempted to be very choosy about which projects and which customers you take. Don´t do that!

You need a formal business reinvention process. Put it in your calendar.

You´ll discover that the time you spend managing people can have a huge impact on the way you run your business.

This book starts with a nice manifesto for all the bootstrappers and continues with real examples and a bunch of rules for all the areas of a business. What a great reading for upcoming Christmas! :P

Bootstrapping in practise

One of the few things I am taking from ESADE is the concept of bootstrapping. As I was working on two entrepreneurial ideas, I swept into this magic world of no external funding and low costs. A start up, that is bootstrapping, is basically sustaining itself on the basis of positive cash flow. To have a better idea of how this can work in the online world, you can have a look on video from David Heinemeier Hansson (37 Signals, Ruby on Rails, book Rework – recomendable). In his speech, everything seems really simple as he puts it that way. And I think his way makes a lot of sense.

Recently I´ve been shown the difference between a novice and an experienced entrepreneur. Between those two approaches, try to find five diferences:

Novice entrepreneurs primarily look for:

• how novel the idea is
• extent to which the idea is based on new technology
• potential to change the industry
• superiority of the offering
• intuition and gut feel

Experienced entrepreneurs are in the search of:

• solving customer´s problems
• speed of revenue generation
• ability to generate positive cash-flow
• manageable risk
• others in the network whom to develop the venture with

You´ve got them? And now guess what … surprise, surprise … David is just trying to show all the other entrepreneurs that starting a business doesn´t mean you need to be a genius! His simple three step start up is:

1. Having a nice application/solving customers´ problem a little bit better then all the other guys / treating clients nicely
2. Asking money for that
3. Being profitable / becoming a million dolar company

There´s basically no need for taking the big waves, developing the next Facebook. It is all about simple ideas! Solving problems! And a positive cash flow …