In business school, you’re taught to write a plan, raise capital and then execute on your vision. This process isn’t really the way things work out in the real world, though. start-ups can quickly find that angel investors or venture capital firms aren’t willing to invest in a company that hasn’t bootstrapped themselves for a substantial portion of the time. This situation isn’t always the case, but it is something entrepreneurs should consider.
As an entrepreneur, I believe there are lots of valuable lessons to be learned from bootstrapping a company. At Infusionsoft we self-funded for years. We eventually secured $127 million over four rounds of venture capital funding, but the early years made us push ourselves and get creative.
I believe the lessons learned back then are still relevant today, and arguably even more important. That’s why I believe not immediately seeking outside funding is something entrepreneurs should think about – it may be a difficult path but the lessons learned from it can be integral to long-term success.
If you decide to go the bootstrapping route, here are four survival tips I learned from our early Infusionsoft years:
1. Customers are your lifeblood
You quickly learn when you don’t have a large war chest backing you that your customers are what keep you afloat – they pay the bills. You should cherish each and every one of your customers. Because of this, we have a culture built on a foundation of a service-first philosophy.
If you work at Infusionsoft, it is engrained from day one that serving and delighting customers are the top priority.
2. Master the art of the sale
Without heaps of cash on reserve, you need to be able to make sales. Above all else, sales are the key driver for a business’ performance. Needing to master sales to stay alive ultimately led me to understand better not only what I was capable of but just how much sales strategies are integral to business.
3. Control your expenses
When your company is running solely off the sales you’re bringing in, you need to keep your costs in check to keep the business alive. Necessities can often feel like luxuries, and you have to develop a keen eye for distinguishing the two.
There are so many ups and downs during the early years of a business and being loose with expenses can quickly bring your company to a grinding halt.
4. Track your metrics
Without a safety net, you have to understand your key business drivers on a granular level. Measure your key metrics to the life of your business – leads, conversion, retention, etc. – under a magnifying glass at all times. Doing this will help you dial into what it takes for your business to be in a healthy place.
Bootstrapping makes you tough. It forces your company to prove itself day in and day out. It gives you clarity into your company’s real purpose. When the time comes to talk to investors, having those years of experience under your belt will be evidence of your viability and give you a great advantage in negotiating terms.