The Secrets of Bootstrapping

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12. Fake It Till You Make It. Being new and tiny, how do bootstrappers assure suppliers and customers of their ability to pay or deliver? By convincing them they're not new and tiny. "One thing I realized very quickly is that people want to see fancy offices, fancy letterhead, fancy everything," says founder Michael Kempner of MWW/Strategic Communications Inc., in River Edge, N.J. He didn't have fancy anything, but he had a friend in advertising who did. Kempner moved into the friend's office at no expense, on the quid pro quo understanding that his public-relations firm would steer advertising in the friend's direction. He even moved in on the ad company's name: "I put a slash on it, added 'Strategic Communications,' and looked like I was part of a big company. It was all a mirage at the beginning. As far as my clients knew, here I was with a fancy name in a fancy office. Those were important, or people wouldn't hire me. This way, they came upstairs and saw 40 employees and thought they were working for me. I never told clients those people didn't work for me, and they never asked." Since then, the company's adjunct, MWW, has gone under. Kempner's major problem: "Now that the company's not fake anymore, I'd like to change the name; I hate it, but it's too late."

Dennis Brozak founded Design Basics Inc., a direct mailer of home-construction plans, in his Omaha home. After six family-burdening months, he signed a 30-day lease on an executive suite type of office downtown. Because of the office's formal parking lot and receptionist, "being there created a certain impression. I appeared to be the biggest there was, because others at my level were still operating out of their houses. When you add the other things that don't seem important but actually are -- letterhead, business cards, titles, someone else answering your phone, things like that -- you take on the look of size."

Top Five Techniques for Seeming Larger than You Are

1. Rent a unit in an executive suite; clients assume the common receptionist is exclusively yours.

2. Rent a small space in someone else's big space; clients assume it's all yours.

3. Issue business cards with various titles; be your own vice-president of sales, director of R&D.

4. Deliver your product speedily. Imply it's your manufacturing that's deep, not your need to collect.

5. Never answer the phone "Hullo."

13. Get Several Bank Loans. If borrowing from a bank seems improbable to a bootstrapper, think how borrowing from four institutions must seem. Says Barry Mower of American Playworld: "We needed about $16,000. I applied for four different loans at once -- short-term loans such as those from credit unions -- on the basis of my personal credit. I had to apply for them simultaneously in order to do it; otherwise, the applications would have counted against one another. The interest was four times what it should have been, but this was desperation financing."

Top Loan a Bank Is Likely to Make

Second mortgage against your house, car, and worldly possessions

Top Dozen Loans a Bank Is Not Likely to Make

One through 12; any, if you really need the money

14. A Little Begging Goes a Long Way. Here is how Michael Zeiders of health-care provider Zeiders Enterprises Inc., in Woodbridge, Va., viewed leaning on clients to pay promptly: "If I had any receivables that looked as if they were going to be anything but right on time, pride didn't keep me from picking up the phone and telling someone I absolutely needed the money. I never encountered anybody who thought that to be degrading or considered it to be less than a professional response. They recognized that a small, new firm needs cash in a prompt fashion." A related tactic: when certain clients (mostly government agencies) were habitually late, Zeiders would "try to find the key person there who could change the code in the computer to make the payment come out on time."

15. Perform Cheap Market Research. Jon Jordan founded truck-stereo-equipment maker Southern Audio Services Inc., in Baton Rouge, La., with $400, a sum that went into parts to construct a woofer-in-a-tube loudspeaker and install it as a traveling demo in the back of his pickup truck. How did he know there was a market for it? "Basically, my target market was me, and I was confident that if I really liked it, I could damn sure convince every other 20-year-old out there, too." Even if the new speaker was a great idea, there was no money to pursue it -- the bootstrapper's predicament. As Jordan, joined by his equally broke brother, saw it: "We had to justify the product by selling enough of them, then figure out a way to get them built. What was the worst-case scenario? We'd drive around and call on a bunch of dealers, come back, and not be able to fill the orders. So they'd scratch their heads awhile, wondering, What ever happened to those guys who came by here with that pickup truck?"

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