Soraya Afzali, CEU iLab
September 8, 2020
Have you caught yourself discussing your startup ideas in countless hours?
Have you gotten tired working for others and the idea of being your own boss is triggering more than often?
If so, it is about time to put thoughts into practicality. In a world of funding proposals and constant search for investors, bootstrapping is always an option available. Bootstrapping your startup means growing your business with no or little venture capital or outside investment. To start organically is to keep the essence of a startup in house and genuine - which is exactly what bootstrapping is about.
This article will provide you with four pieces of valuable advice for bootstrapping a business. Along the way we will provide some real-life examples from the king of bootstrapping at CEU iLab, BrokerChooser.
BrokerChooser chose to bootstrap and not involve external funding, now they are a company of thirty people. BrokerChooser helps clients compare brokers and banks online and match clients with the best, custom-fit and credible investment solution providers. They were chosen as the best fintech startup of the year at the 2019 CESA awards and approximately 400 thousand monthly clients find their online brokers via them.
Before anything, there needs to be a good market to spare a lot of money by omitting guessing. Do a market analysis by talking to your potential customers, trying to understand their needs. It is great if you have an idea which motivates you to start a business, but if you would like to earn money you need to validate if this idea resonates with the audience. Do an analysis of the existing market and see what you can offer more. Often an analysis of your competitors and what they offer can be a starting point to kick off your product development.
All this might seem very self-evident, still in our experience the majority of entrepreneurs miss out on a market analysis before starting their venture. The market analysis is very dependable on the idea. Considering a market based on needs and demands is the basis of your idea of succeeding or not.
Innovation is the core of adding to what is there already in the market and what makes your idea stand out among the many competitors.
When you first test your products with customers, do everything in your power to get a very detailed feedback about how they see your product. You can also release free products for your customers. People love free offers and they are likely to give you some positive feedback (such as a Facebook recommendation or testimonial) in return.
But remember that you constantly have to improve your product, not just in the beginning. Use every opportunity to gain feedback about your product whether it is during a dinner conversation or seeing someone in a bar.
When it comes to BrokerChooser, one of their earliest realizations was about their customers and the market. First they just thought that they would prepare an online Excel table comparing brokers, which would provide more credible and up-to-date info in a single place than any other such comparison site. Some weeks later they realized that even if they do build the best possible comparison tool, people won't know about it. So how do they get global online traction for their fantastic content? With SEO! They consulted with a Search Engine Optimization expert and later they built their entire growth strategy around SEO. This way they were able to create visibility for their fintech product. They created content which broke down the walls of investing and provided articulate information which made it easier for a wide audience to make reasoned decisions about their investments.
Like many other businesses out there, a strategy is needed as the action plan. A strategy should definitely include the goals and ways to reach them, together with the timing and financial means. This seems very evident, still, based on our experience at CEU iLab the majority of startup failures is a result of not having a clear picture in mind of the founders about what the company offers, how it delivers and what are the goals they want the company achieve and how. Keep in mind that the strategy can always change because there are plenty of unknown factors in any startup journeys, still you need to have a roadmap that might be later adjusted.
There are many ways in which you can create a strategy, but here are some key elements that you should not miss:
In case of BrokerChooser the founders chose to follow the strategy of reverse engineering. It seemed easier to create an online platform which only required technical skills and test it out based on its revenue generation and customer feedback. When it comes to finances, BrokerChooser was able to have a stable revenue after two years while bootstrapping from scratch. Until then they needed to cover their operation cost from other sources. The reason they could survive as a company during this period is that they had a strategy for growth.
In early stages, you should start by identifying what kind of skills are needed most for your venture. Moving forward you can decide to learn the missing skills or find someone with the required skills.
Whether you are a one-person company, or you are with different co-founders who are invested in the idea, allocation of skills is based on trusting each other to deliver tasks. If you are good at marketing and your partner is good at management, it is best to allocate tasks accordingly If you are one person as the founder, setting time limits based on skills is a solution. Dedication of two hours on research and three hours on the marketing plan is a way of dividing your skills and workload- remember that consistency is key and time is a tool for goal setting and deliverables in your strategy. However, always remember, that you can’t do it all alone and involving more people in your venture might make things more complicated yet it also adds new ideas, knowledge and network to the team and the possibility to scale up your business.
It is also important to decide on what level you will involve newcomers into your company. As founders or employees?
You can also outsource some of the company activities based on necessity. There is a poll of freelancers which should not be unnoticed. Freelancers are individuals working on their own as professionals.
BrokerChooser was very skillful balancing between team growth and business growth. Their strategy was to always be one step forward in terms of team growth than business growth. By pro-actively upstaffing the company they were always prepared for the tempo the growth of their business dictated.
Find a mentor who already has experience in setting up a venture to ask about strategic advice along the startup journey, as you will have to make plenty of decisions. Sometimes doubts can also push us backwards instead of forward, that is why mentorship is crucial.
At times, when life is hard, we find it crucial to talk about our problems to others. Communication is a way of hearing ourselves out loud. It is beneficial to navigate these conversations in a framework of mentorship. Listen to those who inspire you, encourage you, and have experience in startups.
There is a famous saying which goes like, “talk to those who have walked the talk”. As often everyone has great ideas, yet few implement them. Listen to those who walked the talk.
The BrokerChooser relied on mentorship through CEU iLab for evaluation and advice while maturing the idea. CEU iLab has a three-layer mentoring system. The lead mentor accompanies the teams through the one-year incubation process. They meet once in a month and talk about the strategic directions of the company. Teams can also consult with skill mentors on demand. Skills mentors provide them specific expertise, in field related to their progress, like sales, marketing, business planning, IP, domain expertise etc. The third layer of mentoring at iLab is the team gurus. They are the ones who are more involved in the operational activities in the team and they are there for the teams to help them on a daily basis and activate the entire iLab network for them.
We covered four points in this article. Market, strategy, skills and mentorship- together these points can build up to what you need to focus on in order to bootstrap your venture idea.
Are you ready?
The CEU iLab incubation program makes entrepreneurship more accessible by providing mentoring, know-how, network and a community for high-impact teams. All of this in a world-class environment, at a world-class university.Apply