Bootstrapping, of course!

I hang out with a lot of lawyers, VC types, serial entrepreneurs, tech people, etc… When I go to networking events or roundtable discussions, I often hear people ask about getting funding. Sometimes they mean SBA loans, usually they mean venture capital- always they mean, “How can I build this business with other people’s money?” I think, implicitly, they are saying, “How can I build this business without putting my personal lifestyle at risk? And, oh yeah- I’m broke.”

Too often, the VC experts in the room indulge the asker by talking about what the capitalists are looking for, and discussing terms and so forth. The “entrepreneurs” take notes. They go to networking/educational events to learn about business plan writing, term sheets, all that stuff…

Not often enough does someone say, “IT AIN’T GONNA HAPPEN FOR YOU!”

• You can’t get an SBA loan unless you’re mostly established, which you aren’t.
• You’re not going to get VC funding unless there’s a clear, multi-million dollar exit strategy, which you don’t have.
• Even if you could get either one of those thing (which you can’t), you shouldn’t anyway.

An infusion of cash is more likely to ruin your business than it is to help it. Think about what happens when people win the lottery. Same deal.

Bootstrap it!

Spend very little, reinvest, don’t hire, retain control. Ignore the motivational gurus who tell you to spend money you don’t need to spend. They are usually suggesting you spend money on them.

I’m not saying don’t spend anything, but think real hard: An online startup needs a great website design, but probably could forgo the fancy letterhead and branded notepads. Spending 100 hours to learn PHP so you can build a little function is probably a waste- hire someone. Hiring someone to do basic data entry because you “value your time too much” is probably a waste- skip CSI:Miami and do it yourself.

And learn how to sell for goodness sake. Remember, the one, single reason for a business to exist is to sell something to someone. Large infusions of cash are likely to remove that understanding. Worse, hanging around VC startups and VC people can also skew your thinking on this matter. Complicated business plans obscure the point, too.

Bootstrapping forces you to realize that if you aren’t selling something you aren’t in business.

So, what now?

Stop reading blogs for the day and go work. By work, I mean, “Sell something.”
Use the money from that sale to buy/build the next thing you can sell.

That’s bootstrapping.

PS- I was inspired to write this post after reading this excellent post about Bootstrapping. You should read it too. It’s short, and has several great Bootstrapping tips.

Viable.

If you have kids:
Stop all TV watching.
Stop all time wasting.
Stop all email checking except twice a day.
Stop all pointless Social Media interaction.
Stop drinking Starbucks.
Stop other pointless spending.

Use extra money and time to grow business without quitting your day job.

Quit your day job when your independent income is equal to your (lowered) living expenses.

Oh- BTW- That’s good advice if you have kids, too.

If you can’t figure out what “viable” means.
If you can’t give up TV watching or Starbucks.
Then…
You have neither the intelligence nor the discipline to be an entrepreneur.

Don’t quit your day job.

This post is part of the Brogan 100.
Learn more here and here.

I love Revolve.

Revolve is “the largest community of entrepreneurs in Boston.” They are, at heart, a discussion and networking forum for entrepreneurs, business owners, venture capitalists, sales people, freelancers, service providers, and hopefuls.

The heart of the Revolve community is the bi-weekly discussion group, which draws an incredibly wide and deep group of people with an amazing range of talents, expertise, experience, passion, and ideas. They also have two industry specific discussion groups (Green and Entertainment), plus all sorts of additional events like film screenings, parties, educational seminars, panel discussions, award ceremonies…

Behind Revolve (the community) is Revolve (the company), part of the Exemplar Law family. It’s the coolest law firm in the country. No billable hours. No stodgy law firm crap. Tons of experience. Tons of expertise. Tons of love and passion.

My business wouldn’t exist without Revolve… and I’m not even a client of the law firm (yet). I started attending the weekly discussion groups back when I was in Financial Services, and just starting to figure out how to start my own firm. Revolve gave me inspiration, knowledge, and a friendly kick in the pants. After a few months of hanging around over there, I had launched Social Bootstrap. They gave me the push I needed.

Thank you.

This post is part of the Brogan 100.
Learn more here and here.

To wit:
Adam Purcell of Hungry Dog Media has just posted this video, showing how to create an ecommerce site with a product for sale up and running in five minutes!
Ridiculous! Awesome! Fantastic! Scary as all get-out!

Few thoughts:

• Anyone out there thinking that it is too hard to start a business just got pwned.
• Anyone out there thinking that there won’t be any competetion for whatever goofy thing they’ve decided to sell (this includes me, you, and everyone you know)… we just got pwned, too.

More interesting, though (because it’s what I care about) is how easy to use the WP e-commerce plug-in is for selling downloads (ebooks, people; info-products). You don’t have to mess with payloads or anything else.

Now… Trying to actually make a living selling digital products and ebooks is tough, BUT… for all you consultants, service providers, professional experts, and (hooray) Social Bootstrappers… Ebooks, and other digital info-products, are KEY to your success as a thought leader.
Thought Leaders do a few key things:

• Innovate their industry. That is, have a unique point of view or way of doing things.
• Give away a lot of information, so that people start to use them as the “go-to” reference.
• Charge for additional (or simply repackaged) information, so that people see the value of their expertise. (The extra money is nice, but that usually isn’t the point.)

Number one is hard… very hard, and no one can do that for you. But WP has made it easier and easier to distribute your information, both for free and at a premium.

If you can learn how to harness Word Press for thought leadership, you can make a fortune! You have two options:

• If you are a service provider, a consultant, or a business owner who is INNOVATIVE and a has UNIQUE point of view, you can become a thought leader.
• If can find people who want to become thought leaders (they are everywhere), you can become a Social Bootstrapper, and help them reach their goals (and they will pay you… oh, how they will pay you).

Happy Bootstrapping!

This is not remarkably new information, but it bears repeating (over and over and over)…

MONEY should not be the primary deciding point in starting a business.
PASSION should.

If you are truly passionate about money, maybe a money-focused business might work. But even Donald Trump doesn’t care as much money as he does about “The Deal.” (And inflating his ego).

If you are looking to start a business (or get involved with a business opportunity, or buy a franchise, or start selling a product, or whatever) it is essential that you care about the business for reasons other than “if this goes well, it will make me rich,” or even some variation on that.

“I won’t have to work anymore.”
“I’ll be able to automate it and retire!”
“I’ll have multiple streams of income!”

Those are all great things to achieve, and I wish everyone who is seeking them luck and blessings… but you probably won’t ever achieve them unless you are passionate about the work.

It’s hard to get passionate about retirement, or about sleeping in. I think it’s even hard to get passionate about money. Even Tim Ferriss, the champion of automated income, encourages his disciples to think bigger than money or leisure.

If you have found some magic formula for creating money with something you don’t care about, while not working very hard at it, let me know (or better yet, sell it… oh wait- that would be the way). But back in the land of reality and (moderately) ethical behavior, making a lot of money takes some kind of effort. Even making a little bit of money takes some amount of effort. And if you are going to spend your energy, why aren’t you spending it on something you are interested in, fascinated by, and passionate about?

And finally, two points which may actually be new ideas in this massive conversation:

• If you cannot find a way to turn one of your fascinations or passions into a business, you suffer from a lack of imagination. Imagination is essential to entrpeneurship, so maybe you aren’t cut out for starting your own business.
• If you are not passionate, or at least fascinated, by anything at all, you lack the drive and spirit required to be an entrepreneur.

• Strength Finder by Tom Rath; Discover Your Strengths by Buckinham and Clifton
  These two books will help you discover what you are good at, passionate about, and fascinated by. I’ve met more than a few people who have started successful businesses because of the advice of these books.
• Flow and Finding Flow, by Mihaly Csikszentmihalyi
  These books, and all the work of Csikszentmihalyi will convince you that the highest and best use of your time is to engage in activities you are good at, fascinated by, and passionate about.
• 48 Days to the Work You Love, by Dan Miller
  This book is a wake-up call to all those who think they can toil away at work they only tolerate.

By far, the biggest problem I see befalling those who ecide to start their own business is… the thing they are looking at doing is not really a business. There are thousands upon thousands of legitimate business opportunities and franchises, along with an infinite number of great business ideas.
Unfortunately, there are even more schemes, scams, pyramids, systems, and just plain stupid ideas.
Here’s a few ways to tell the difference…

What’s the Product?
Business works likes this: you give someone something of value (a tangble object or a service), and they give you money (or, perhaps, something else of value).
Every legitimate business has that same model; it is the foundation of our economic system. The object could be sodas or supercomputers, the service could be massages or marketing. Doesn’t matter, really- but someone, somwhere has to be willing to pay for the good or service.
This is the primary problem with most MLMs… Helping someone set up their own business could be a great service, but that business has to do something else. You can not build an endless downline of businesses that never actually sell a product to an end user.
MLMs are not the only ones guilty of this, though… The real estate bubble, the dot-com crash, and the mortgage melt-down were fueled by the notion that there is a way to make money without ever selling something to someone.
So- if you’re looking at a franchise opportunity, make sure you understand what the product is, and what it takes to sell it. If you’ve come up with your own idea for a business, ask yourself-
Is there an actual product or service here?
What is being sold? What is being bought?
Who will be doing the selling? Who will be doing the buying?
“I’ll write a blog” is not a business idea. Neither is, “CEO income from home.”

Is there work involved?
There is no such thing as a free lunch. If you are looking into a franchise, or have come up with a brilliant idea on your own, be aware of any “no work” ideas.
Yes, it may be possible to leverage the work of others (work still being done), or to automate processes (work being done to set up those processes), or to build up a residual “automatic income” (work being done in the initial stages to build up the base), but work will always be done somewhere, by someone, at some point.
The best you can shoot for (and this is really what you should shoot for) is that the work will be fun and meaningful.
Second best is easy and over with quickly.

Could Anyone Do It?
If anyone could do it, then there isn’t much value in it. Remember, society attaches more value to the things fewer people are able to do.

Does it feel right?
Almost everyone I know who has gotten involved with something that turned out to be a bad idea knew pretty early on that it was a bad idea. Why don’t we follow those instincts?
Bonus on this one…
Your gut feeling here doesn’t have to be absolutely, objectively right. (Meaning, you don’t have to be right about it being a bad or good idea, a legit business or a scam), because-
If it feels wrong for you, it doesn’t matter how good an idea it actually is, you won’t be successful.

If you keep those points in mind, you’ll be able to sniff out the real opportunities from the Trojan Horses, which will put you ahead of 90% of so-called “entrepreneurs.”

Another friend of mine has been itching to start a restaurant for as long as I’ve known him. He says that when he was a kid, they played make-believe businesses- his was always a pancake store.

My wife was laid off of work back in January and is slowly, but surely, moving toward becoming a freelance graphic designer. She just can’t figure out a way to do the kind of work she wants to do under the employ of someone else.

I was at a networking event about two weeks ago and I met another dozen people who are in various stages of starting up a company.

At the bookstore I find that the motivation/management/business/investing section is overflowing with books about starting businesses. Meanwhile, meetup.com is flooded with groups devoted to startups, entrepreneurs, and business opportunities.

So… what’s going on? There seems to be a “perfect storm” (ugh, buzzword) of factors that all add up to this phenomenon. From what I can see, all of the following are contributors, and you can’t blame it on one in particular:

It is a crazy exciting time to be alive, to start a business, to dream big (or small) dreams about life and possibilities. But it’s also a time frought with dangers. This brave new world of ultra-light startups and independent consultants is a magnet for con-artists, pyramid schemers, fools, and plain old bad luck.

This week in the blog, I’m going to highlight some of the inherent dangers, and how to avoid them.
First up tomorrow: Is it really a business?