Startups face a far more challenging environment in 2016 than they have in the past few years. Funding is becoming scarcer, IPOs are increasingly rare - not to mention the typical investor skittishness that comes with an election year.
As a result more founders are being forced to bootstrap their startups, and other founders are intentionally choosing to bootstrap their companies as a way to preserve equity and maintain control of their original vision.
The owner of the building I work in happens to be a wildly successful bootstrapper--out of choice.
In the early 90's Randy Schilling founded an IT services and consulting firm known as Quilogy, which at its peak employed more than 500 people and generated more than $40 million dollars in annual revenue.
Not bad for a company started with a few thousand dollars in the basement of a building he would later own.
I asked Schilling for tips that could help founders who, through either choice or necessity, have decided to bootstrap their startup.
Here is some of that advice:
1. Make sure you have family support.
Everyone knows, or has read, that starting your own company takes a tremendous leap of faith - a leap that you take over and over, in one form or another, throughout the lifecycle of your company.
You can read about that leap of faith in 1,000 different articles, and still not understand how scary it can really be until you actually do it.
Overcoming that fear would be impossible without the support of your family. In Schilling's case, early on his father-in law reassured him that in the event of a company implosion, there was always a spare room his young family could live in.
The image of the lone, courageous entrepreneur who succeeds against all odds, on his or her own, is usually inaccurate.
Far closer to the truth is the image of an entrepreneur who used the support and encouragement they received from their family to help overcome their own doubt.
2. Cheer each other on.
In the early days of a startup, particularly one that is being bootstrapped, the only encouragement you receive comes from inside the company.
- Is not receiving affirmation from the investment or venture capital community;
- Probably isn't the subject of glowing press pieces;
- Is likely on the receiving end of some "constructive criticism" regarding the early version of their product.
Support has to come from within the team. Be honest about your shortcomings, but make sure you celebrate your successes. That can come with a ringing of a bell after a new sale (as Schilling does at BoardPaq), or a team email recognizing an achievement.
However you choose to do it, be sure to celebrate your accomplishments. In the do-or-die environment of a bootstrapped startup that recognition can make a huge difference.
3. Don't let great be the enemy of good.
There is a quote attributed to Confucius that says, "Better a diamond with a flaw than a pebble without."
Probably better known is Guy Kawasaki's quote, "Don't worry, be crappy."
Both mean the same thing. Schilling firmly believes, based on experience, that succeeding as a startup requires getting a product on the market and in the hands of actual customers, then improving the product based on customer feedback.
Attempting to perfect your product before launch is, to some degree, futile. You won't know what you need to do better until your customers - after using the product - tell you.
With the support of your family, the encouragement of your team, and a flawed but viable diamond, you may bootstrap your way to success.