Bootstrapping Techniques and tools that can help achieve the same outcomes while greatly reducing costs.
Why Bootstrap? Start-up: Often necessary for small businesses to get started Growth: Difficulty in raising money for growth due to cash flow strains Exit: Preserves the value and wealth of a business (EBITDA) –The Problem of Sharing Equity –The Problem of Using Debt
Ethics of Bootstrapping Don’t pass along your cash flow problems to someone else Don’t embellish financial position Don’t create false impressions (Take Chris Cornell’s advise!) Promises, promises, promises Ham and egging “Giving you my best price” Don’t pirate media space (e.g., SPAM to web sites)
Administrative Overhead Bootstrapping “A Rolex doesn’t really keep any better time than a Timex” “Luxury is waste” “We decided to skip the cell phones and hire another production worker” “Why buy new when used will do?”
Administrative Overhead Bootstrapping Space Bedrooms, basements, garages, dining rooms, kitchens & barns Virtual space (Kinko’s, Bongo Java, etc.) Mooch space Look for weak real estate markets
Administrative Overhead Bootstrapping Space: The Virtual Company Have face-to-face orientations Train on effective e-mail, voice mail, instant messaging Stamp out rumor wildfires Steady flow of information (even daily briefings via e-mail) ties virtual employees together Meet face-to-face once a week
Administrative Overhead Bootstrapping Furnishings and equipment Auctions Scrounge “Haul it and its yours” Opportunities Business Closings
Administrative Overhead Bootstrapping Computers, Phones & Equipment Virtual Equipment (Kinko’s) Know what you REALLY need Install yourself Carefully monitor # phone lines needed
Administrative Overhead Bootstrapping Administrative salaries (often includes part or all of you!) Every dollar spent on administration takes a dollar away from producing sales Don’t Over-hire (in terms of qualifications or numbers) Overhead or profits: Your Choice
Operations & Inventory Bootstrapping Outsourcing Effective cost accounting to assess operations and inventory effectiveness
Operations & Inventory Bootstrapping Just-in-time inventory techniques –Establish continuous inventory update –Set high standards for on-time shipping –Track time to fill back orders –Track customer complaints as a % of orders shipped Use KISS Principle for your Inventory (why stock 15 shades of blue when two will due)
Bootstrap Marketing Know your customer Impact of message more important than “volume” Remember your niche and the benefits you bring Spend your marketing dollars carefully Marketing is a process, not an event Integrate into Business Plan
Tools and Techniques: Mini-media The Power of the Business Card Never Cut Corners Design, paper, color, embossing Include all critical data, but none that’s useless Include description or slogan
Tools and Techniques: Mini-media The Power of the Business Card Remember, it has two sides –Pricing –Map –Useful trivia –Photo of Product –Quotes
Tools and Techniques: Mini-media The Power of the Business Card Exercise: In groups of two, interview each other about your businesses. Make a layout of a business card for the other person’s business.
Tools and Techniques: Mini-media Brochures Provides a visual presentation Increases credibility Decreases immediate pressure on customer Captures your pitch
Tools and Techniques: Mini-media Brochure Design: Tailor to your market’s expectations Include clear headline Make visually appealing (graphics, white space) Tell your story Testimonials Make it worth hanging on to Include useful contact info Ask for action (order form, more info form)
Tools and Techniques: Mini-media Brochures In groups of 2-3, evaluate the effectiveness of the sample brochure provided in class.
Tools and Techniques: Mini-media Video/DVD Brochures Production is key $1000-$5000 per minute Use your Belmont Network!
Tools and Techniques: Mini-media Video/DVD Brochures Evaluate the effectiveness of the sample video brochure. What would you change?
Tools and Techniques: Mini-media Banners & signs Proofread!!! Make it good, make it last Short message Use lights
Tools and Techniques: Mini-media Newsletters Make it interesting, informative, educational Proofread!!! Keep it tight Use design Highlight your customers when you can Keep consistent look, feel, theme, focus Once you start…. Print, electronic newsletterselectronicnewsletters
Tools and Techniques: Mini-media Newsletters In groups of 2-3, evaluate the effectiveness of the sample newsletter provided in class.
Tools and Techniques: Targeted Media Customer Contact Data Bases Send discount coupon to get ‘em in the door Send greeting cards Send “gifts” (trinkets) Send articles Send e-mail blasts Send thank you notes Newsletter Secret sale or special celebration postcard Special contest postcard Special announcement (new hire, new product)
Tools and Techniques: Targeted Media Creating a Customer Contact Data Base Track everyone that deals with your business and put them in your database – easiest if done from the start Fishbowl Contests Suggestions box Offer free newsletter or catalogue for anyone who gives you their address Create an offer that requires people to fill out form Phone books or other free lists
Tools and Techniques: Targeted Media Direct Mail Buying lists Keep it focused Invite an action Be creative and be visual Test your effectiveness
Tools and Techniques: Advertising Rules of bootstrap advertising: One-shot ads (almost) never work Quality counts: production is surprisingly cheap Ethics matter –Be honest –Disparagement is unacceptable –Be clear on your intent –Be clear on who you are –Do not use “invoices” for solicitation –Call it free, only if it really is
Tools and Techniques: Advertising Tips for effective newspaper ads Strong headline Use pictures Include testimonials Make an offer to get them to act Include a border Use color Test, test, test Placement matters Copy is good – it’s a newspaper after all Include easy contact info
Tools and Techniques: Advertising Tips for Magazine Ads Bigger ads get more attention Color ads get more attention Position does not matter, except if on cover Rerunning ad is OK Photos are more effective than drawings Showing product in use is better than showing static product Ads with people in them get more attention than ads without
Tools and Techniques: Advertising Yellow Pages Jam in copy As big as budget allows (compare to competition) Color Stress your reliability, integrity and trustworthiness Stress your scope Illustrations/logos are effective Give easy directions to your location Know the timing for ad purchases
Tools and Techniques: Advertising Radio Advertising Highly targeted Reinforces other media used Humor works, but be sincere Shorter is better – you have 5 seconds to grab them Live spots are effective Creates urgency Stations will barter Mention your name 5 times per 30 second ad Use a single voice Use only one or two stations
Tools and Techniques: Advertising Television Advertising – its even for bootstrappers Cable ads run for as little as $100 per spot Keep it clear Keep it visual Make it memorable Quality matters Call them to act Content sells products
Tools and Techniques: Web pages Understand its usefulness for potential and/or existing customers – make sure you think like your customers! Plan for its use: promotion, communication, order processing Budget for maintenance - Keeping it up-to- date takes time and money Develop a plan to drive people to the site
Tools and Techniques: Web pages Pathfinder Therapeutics, Inc Sova Catering Station West Just Kidding Productions Nashville Creative River Rock Media
Tools and Techniques: Person-to-Person Personal selling Trade shows Phone and e-mail sales Social-network sites (e.g., MySpace)
Tools and Techniques: Publicity Free Advertising Press Releases: Consistent, focused targets Do your homework Include cover letter or relevant article Build relationships Create your own angle
Tools and Techniques: Publicity Newspapers, magazines, radio, television Follow-up with phone call Be persistent Don’t be afraid to break the rules Quality counts Example: Snappy AuctionSnappy Auction
Tools and Techniques: Publicity Exercise: In groups of 2-3, develop a press release for the opening of one of the businesses from your group members. Exchange with another group and critique their press release.
Tools and Techniques: Word of Mouth Must motivate customers to talk about you – excellence in customer service Incentives to spread the word (referral “thank you” program) Ask your customer to “sell” for you Creating a “buzz campaign”
Emerging Tools and Techniques: Blogs As of 2005, 10% of small businesses were using or were planning to use blogs for their businesses Allows for very targeted contact Like a newsletter, a forum to share useful information and expertise A personal feel Can be a good public relations tool
Emerging Tools and Techniques: Blogs Cautions for Blogging as a Marketing Tool –Need to be consistent – takes time to do it well –Need to be cautious about what you say –Avoid crossing the line and becoming too self- serving – blog readers will not come back –Remember that the WHOLE world can read what you say, including your employees, your competition, your banker, etc.
Other Emerging Tools and Techniques Street teams e-mail teams Podcasting Video podcasting
Human Resources Bootstrapping Employee “stretching” Independent contractors Employee leasing and temporary employees Student interns Equity compensation Accurate forecasting of employment needs
Human Resources Bootstrapping Non-monetary benefits –Offer flexibility –Work environment –Growth potential –Participating in start-up Outsource payroll Part-time executives Grow your own talent