I moderated the latest San Francisco Bootstrappers Breakfast this past Friday. Entrepreneurs, first-timers and serials, gathered at Boudin Bakery, Embarcadero Four, to discuss common challenges facing those bold individuals seeking to start a business from scratch. The basic idea behind Bootstrappers Breakfast is that entrepreneurs and founders are ideally situated to help each other out because many of the problems facing entrepreneurs are industry agnostic. It doesn’t matter what your product or service is, you’re still going to have to find a way to finance your business, you’re still going to have to hire help, you’re still going to have to understand how to market and sell your product/service, etc. By spending time with other people going through the same process, you’re more likely to both better understand your business’s challenges and identify appropriate solutions because someone else at the breakfast has probably already been down the path you’re on.
Some challenges discussed at this meeting:
- How to develop a viable sales and marketing plan.
The founders had a product that was producing revenue. The founders also had a small group of customers who were wildly enthusiastic about the product and were willing to actively participate in sales calls with potential customers. The current sales process was to have one of the management team along with a current customer meet with the potential customers. The founders correctly identified this process as non-scalable. In order to be successful, this company would need to approach hundreds, maybe thousands, of potential customers across the country. The question presented was, how to make the sales process scalable across the country? The group discussed tactics on how to close a sale once a customer was identified, but this really didn’t address the problem of replicating the entire sales cycle across the country at the necessary volume. Ultimately, this is the age-old problem of how to develop a sales channel from scratch. Hard to do, especially when you’re bootstrapping. One suggestion I had was to identify companies with complementary products and services who already have a well developed sales channel. The company could then leverage an existing sales channel and avoid the cost of developing its own. While the group at the breakfast couldn’t solve the problem, I believe we did help the founders get a better understanding of what the problem actually was. It’s much easier to solve a problem once it’s properly defined.
- Founder was worried about the scalability of an application under development; can handle 1,000 user, not sure about 10,000+.
The founder has developed a cross-platform application that he will be deploying in major cities across the country. The app is currently stable at 1,000 users, but the founder is worried about stability once that number increases dramatically (and the founder is optimistic that it will). The group helped address this particular founder’s concern by pointing out that increasing hardware/network/database capacity is fairly cheap these days given the recent development of ‘cloud’ computing. When the app needs more horsepower, the major service providers should be able to respond immediately. From a financial standpoint, the founder expects revenue from the first set of users. This revenue should be used to fund the increase in hardware/network/database capacity as needed.This was a good example of a problem presented by one breakfast attendee which had already been solved by another attendee.
- Conventional and Non-conventional ways to raise capital
This is a very common topic at the breakfast. While the answer is the same, the execution of the answer is extremely difficult (hence its continual appearance at Bootstrappers Breakfast).Some common examples of how to raise capital:
- Angel investors
- Customers (Organic Growth)
- Other non-conventional entities like Compound Profit (asset based lending)
This part of the breakfast was devoted to how an entrepreneur gets an idea on which to build a business in the first place. During this particular breakfast, a serial entrepreneur talked about how he had taken some time off after a successful exit and contemplated what to do next. His approach was to ask, “What problem annoys me most?” His answer: he was most irritated at the complexity of creating an application. His point was there should be no ‘coding’ involved in this day and age.
Lots of questions around this last one. What does he mean by ‘no coding?’, and who exactly is his customer?, etc. But this is how it starts, find a problem, then try to solve it. The definition of your problem will/should change over time based on feedback. Exciting to see in action at Bootstrappers Breakfast.
I hope to see you at the next meeting! We meet on the first Wednesday and third Friday of every month at 9am.