Wikipedia’s definition of “Bootstrapping.” Bootstrapping in business means starting a business without external help or capital. Such startups fund the development of their company through internal cash flow and are cautious with their expenses.
No matter what stage your business is in, if you don’t have venture capitalist throwing money at you, then you’re bootstrapping. Hek, we’re all bootstrapping! Whether it be finding new customers, launching new products or services or buying equipment, you’ll need resources to fund these activities. If you’re anything like us, we spend our money and our time wisely. As a matter of fact, we would prefer not to spend any money at all! Yet, we all know that’s not realistic. Spending a little bit wisely and strategically can make all the difference. If you don’t have more time, you won’t make more money. A Deloitte survey found businesses who outsource grow 26% faster than their peers who try to do everything themselves.
Here are some examples of how we helped some clients last year. Each one unique, yet all of them are bootstrapping! I want to note, it doesn’t have to be Workbea that helps you. Perhaps you know specialists in your industry that you can contract for a few hours here and there to help you reach your goals. The important message is that you spend your money and your time on things that generate ROI. Hiring a bookkeeper or a customer care person won’t generate revenue, but it will produce some extra time that must be used finding revenue to cover those costs.
Recently we helped a successful E-Commerce operation. As always, we’ll start with a deep analysis of where people’s time and company money is being spent. Almost always we find thousands of dollars being wasted. It’s fact, no business is perfectly lean, no process is perfect and no employee does their job perfectly efficient. There’s no one to blame, it happens naturally. Leaders and teams execute on objectives, goals, and plans but never think about HOW. It’s rare to see leadership take a step back and really understand the time cost or lost opportunity cost of any given activity.
In this case, we analyzed processes and found two in particular that were an expense not only in time but cost too. The team helped us map out the process and agreed to perform a few time studies. We were able to shave 3 minutes from a billing process that totaled about 5 hours a month. In the shipping area, we found something even bigger, an entire process that could be completely eliminated from the workflow of the shipping area, this saved about 9 hours a month. In just those two processes, we uncovered 14 hours a month. Conveniently, the billing and shipping areas were managed by the same supervisor (this was an E-Commerce business) so he was able to reorganize responsibilities and position someone to spend those hours every month on outreach to current customers up selling products. In the first quarter of the year, they are on track to generate about 7k in net profits.
Guess what? That 7k can be allocated to lead generation and marketing. Over the course of this year, if they continue on this path, they will generate over 20k for growth initiatives. What would you do with an extra 7k every quarter?
Here’s another example. Last year we worked with an electrical contractor. Very small business, just himself and one other employee. Typical scenario, wife at home taking care of the bookkeeping and the owner doing all the work in the field. He was working 10-12 hours a day, 6 days a week, there was no time to think about growing or developing his business. As a matter of fact, he was turning business down left and right because he just didn’t have the bandwidth to take it on. He had such a clear vision of where he wanted to take his company and a well thought out plan, but he just couldn’t execute. He outsourced his customer follow up and bookkeeping to us. Small 10 hour blocks a month. We helped him recruit 2 part time apprentices. While these apprentices weren’t journeymen, they knew enough to hit the ground running and be very valuable in the field. With the time his wife gained giving up the record keeping, she is able to answers those requests for work and put them on the calendar. Essentially, he is spending about $500 a month with us to capture about 4k a month in work. After all, is said and done, his margin on that 4k is about $1500.00. This year he and his wife are on track to grow sales 30%.
And the last example. The startup. Ah yes, the new business owner who has all kinds of enthusiasm, goals and dreams, but NO customers. She’s an artist, not a salesperson! We began with offering FREE consulting. Yes, free. Once a week, we’d spend 30 minutes with her outlining some of the activities she needed to do in order to find customers. We did this for 4 weeks. At the end of the month with a few customers under her belt and a few bucks in the bank, she hired us to optimize her Social Media, Website and begin a Facebook Ad campaign. The total cost was about 2k and she is capturing approximately 12 new leads a month through the email capture on the landing page. These are people asking for about her artwork or asking to be put on a mailing list so they can come to art shows she participates in. If she closes just 4 of those leads, she will make back what she spent on us. The rest is all hers.
Restated: The important message is that you spend your money and your time on things that generate ROI. Hiring a bookkeeper or a customer care person won’t generate revenue, but it will produce some extra time that must be used finding revenue to cover those costs.
So get growing!