Bootstrap entrepreneurs find ourselves constantly juggling multiple activities. Some of these directly generate revenue, others do not. How to prioritize and order them? Here is a simple model to understand and prioritize your activities.
Your activities generate one of three kinds of capital: social, working and bootstrap. All three kinds of capital are vital to the bootstrap entrepreneur and serve a particular purpose. It's also important to balance your activities amongst them. Creating only one or two does not provide motive power to the venture.
Social Capital is derived from any work you undertake that does not generate revenue. Activities range from giving time to others (coffees, lunches), sharing your expertise (in forums such as Bootstrap Austin), or being a Contributor in a community (such as leading a Bootstrap Subgroup). Social capital is the easiest to generate and also vital because it creates a network of resources that can, in turn, give the bootstrapper access to valuable resources. Social capital also generates collaborators of all kinds who are willing to work on your project. Since social capital is easy to generate - simply offer your time/knowledge/skills where needed - one can also fall into the trap of overdoing it. Pure social capital is not sufficient to make a successful bootstrap venture.
Working Capital is $ generated from a skill or knowledge. You bill out your time and make an hourly rate. Working capital pays for your basic expenses. As a bootstrapper, you have already reduced your personal burn rate and are living a simple and frugal existence. Generating ongoing working capital ensures you have an infinite runway. Another way to generate working capital is through a spouse who continues with their day job. However, as we will see later, there is another reason for the bootstrapper to continue to generate working capital, even when you have spousal support. Solely generating working capital does not make a successful either since you are still in a linear relationship between your time and revenue. It's also unlikely you are innovating anything if you purely generate working capital.
Bootstrap Capital is where the long-term potential lies. This is revenue generated from bootstrapping a unique product, service, experience, community, etc. Of the 3, this is the hardest capital to come by as you are creating something new and unknown in the marketplace. Often, you don't know what it as as you iteratively demo/sell/build and eagerly await what emerges.
An equation that helps describe the relationship between the 3 types of capital revels the importance and role of each:
social + working = bootstrap
When creating social capital, innovation naturally occurs, leading to a Demo. Think of Steve Wozniak sharing his computer designs at the Homebrew Computer Club. The feedback he received helped him advance his ideas to what would eventually become the Apple I. You might not be able to immediately capitalize on social capital, but you gain a deep understanding of a particular domain.. Working capital provides access to customer problems. While solving generic issues, the bootstrapper is given insight into non-generic problems that customers face and this also helps uncover unmet demand for solutions. Combining social and working capital leads to bootstrap capital, the gold that creates a long-term business.
Bootstrap entrepreneurs are well-served by all 3 kinds of capital, especially when organized in a systemic way.
Chris Greta from HeroBracelets.org came to speak about his experience of building a cause business to Bootstrap Cause Subgroup. We had about 10 people attend and had a great discussion afterwords. Chris's presentation gave a lot of great insight on what it takes to get your cause organization off the ground.
Chris lives here in Austin and runs The AdRanch. Five years ago Chris heard how little money families of soldiers killed in Iraq got and decided to step up and help them.
He approximately spent $1000 on putting a website together, creating a brand and decided to sell bracelets that people could buy to honor soldiers lost their lives to war. Part of that money went to the families.
Chris shared that he did a lot of media contacting in the beginning himself - he sent out many press releases to local and national newspapers and TV. Just a few weeks after the company got started, one of the TV stations picked up a story about them and from then on their business started to grow at a crazy pace. So far they were on CNN, ABC, NBC, FOX, Fox NEWS Channel etc, as well as all the major news papers.
Another thing that Chris believes helped them to get where they are today was having a blog. They have about 800 entrees so far and it helped them with their online presence.
HeroBracelets.org went from 0 orders five years ago to 80,000 orders. Their bracelets have been ordered from every continent on the planet and President Obama was spotted wearing one.
Chris is very passionate about his cause organization. He believes you can do well by doing good.
What lies behind us and what lies before us are tiny matters compared to what lies within us.
-- Ralph Waldo Emerson
With the announcement for each Inner Journey Subgroup meeting, you will discover a variety of essential tools to help you navigate the inner journey.
Discovering who you are is the beginning of the bootstrap journey, so the first tool presented for inclusion in your inner journey toolbox is a simple exercise in awareness: self-observation.
There are only three key steps: observe your body, your mind, and your mood.
First, scan your body from the tips of your toes to the top of your head. Notice how your body feels overall and how parts can feel differently. Some parts may be relaxed, while others feel tense. When you discover where you hold tension, consciously allow those areas to relax.
Next, observe your thoughts. Spend a moment or two observing your inner dialogue. What are you saying to your self? Be kind to your self and try to avoid judging or criticizing what you see.
Lastly, focus on your emotional state. Notice what you are feeling. Again, be kind. Emotions are fluid. They wax and wane like the tide. Observing them can be like watching a flowing river.
With practice, you will notice patterns. When you become aware of patterns you can consciously choose to accept or change them. For example, you can take steps to counteract the tension you may hold in your upper back by changing the ergonomic set-up of your computer. Or you may replace negative self-talk with a positive reframe.
Self-observation can be practiced any where and any time. The practice can provide valuable insight into your experience. The insight gained can change your life (and the life of your business).
Join the Bootstrap Inner Journey Subgroupon Wednesday, July 8th at 7p for a viewing of Mystic Cab, a tale of two Inner Journey bootstrappers. Explore the dance of duality and share a delicious potluck with your fellow travelers.
The Bootstrap Experience Subgroup enjoys exploring various Austin businesses known for creating lasting, favorable experiences for customers.We've investigated the world of improv theatre downtown at the Hideout, the epicenter of Austin's run/walk scene at RunTex with founder Paul Carrozza, and next will delve into one of Austins best-known experiences:The Alamo Drafthouse.
Join Bootstrap founder Bijoy Goswami, Experience Subgroup lead Heather McKissick and SPECIAL GUEST Alamo co-founder Karrie Leagueat the Alamo South Lamar as they explore the Bootstrap Experience model and talk about how the Drafthouse has earned its reputation as one of the best movie-going experiences in the nation.
Understanding how to apply the Bootstrap Experience Model is important for anyone who creates or wants to enhance the customer experience.The model is relevant for all types of organizations.
When: Thursday, July 23 from 4:00PM to 6:00PM Please arrive early for a 4pm sharp start. Informal happy hour to follow at Maudie's on South Lamar.
Please note:there will be a $10 minimum charge per person, to be applied toward any food or beverage on the Alamo menu. An additional contribution to help cover the costs of theater rental is optional.
HeroBracelets was founded in 2004 to raise money for the Intrepid Fallen Heroes Fund. At the time, military families only got a $12K death benefit. The Intrepid Fallen Heroes Fund DOUBLED that, all through private donations. They found a manufacturer that could make the bracelets and set up the site, giving $2 from each bracelet directly to the Fund.
With an initial investment of around $1500, they launched the site. Within a week, they'd been picked up in an AP story and sales went from 5 bracelets a day to 75, then 150, then 200. Then they were overwhelmed with stories in every major news outlet in the country including CNN, FOX, NBC, CBS, ABC etc.
HeroBracelets is still going strong 4 years later with donations to the Intrepid Fallen Heroes Fund of over $150,000.00. In addition, HeroBracelets have been presented to two Presidents and other world leaders. The bracelets are now an accepted part of military uniform wear and have been shipped worldwide.
Chris' presentation on HeroBracelets will cover:
Brand development
Technology used
Marketing
SEO
Utilizing the Press
Maintaining momentum
Chris Greta started The Ad Ranch in Austin, Texas in 1996. They are a full-service marketing, branding and advertising agency. They've built brands for many local and national companies as well our own businesses.
We look forward to having you there!
Olga and Martin
The Bootstrap Cause Subgroup is engaged in the QUESTion: how to create social good through bootstrapping?
I've seen companies succeed and I've seen companies fail. In fact, I've been part of companies that were able to sustain steady growth and still thrive today while others collided as soon as they took off. One company, in particular, that comes to mind never should have failed, but it did. It's also the reason I transitioned out of engineering and got into entrepreneurial coaching in the first place.
Their cause of failure was caused by relationship strive and power struggles (see my book at Ten Keys To Power Struggles if you or anyone you know is experiencing this problem). Yet, this post is entitled the biggest reason entrepreneurs fail and although I believed at one time that businesses failed because of problematic human interactions, I've now come to realize that there's an even lower common denominator than that - and it's something most business experts have missed.
Take a moment and think about what you've heard, read, or experienced as the leading cause of business failure.
Are you listing them?
Let's see if any of these are on the list:
Did you come up with inadequate or lack of planning?
How about marketing?
Did you say stupidity? (Well, surely you've had that sentiment from time to time.)
Okay, what about not having enough capital?
Or, as my previous experience revealed, how about relationship challenges (this can include battling with a partner, investor, staff, or just plain overlooking the customer's needs).
According to entrepreneurship author and Case Western University professor Scott Shane, there's even the possibility that failure is a measure of a good economy if your venture folded. He purports, "Having fewer entrepreneurs means that we are experiencing economic growth. The more developed a country is, the fewer people work for themselves."
This post isn't about telling you to go work for a high growth company. (Although it's cool if you do.) This is about providing support and insight so that you can make your entrepreneurial venture succeed - and maybe even turn it into one of those high growth companies that Shane says is good for our GDP. If that interests you, then please read on.
I listed some of the common reasons people say that businesses fail. There's a lot of research out there that provide reasons and many of the stats contradict other researchers' findings. There's also the discussion about teasing out superfluous data and accounting for confounding variables, etc. However, What I've found to be at the core of most of my client's issues is this one basic human flaw that undermines even our best intentions.
This flaw explains why smokers can't seem to quit even when the doctor says it's going to kill them and they desperately desire to quit.
It also accounts for the billions of dollars that are spent on gym memberships, self-help programs, and other health and wellness miracles that end up unused and untried as soon as the commitment was made.
I believe this flaw translates into business start-ups and reveals why most business fail (8 out of 10) within the first year (64% by the fifth year).
This flaw, while seemingly simple, is the disease responsible for ruining your best intentions. It's why you can't focus - and, unfortunately, it's worsened with the advent of video games, microwave ovens, and microblogging sites like Twitter.
It's not ADD or ADHD, but it is this distracter gene's ancestor and it resides in ALL of us.
It's our primal reptilian brain that causes us to be so immediate focused that it takes us right off track from our original agenda. It's the source of procrastination. It's the source of emotional hijacking. It's why the best-laid plans go awry.
The primal reptilian brain feeds off of distraction, drama, and holds tight to emotional traumatic triggers that transform wisdom and grace into momentary flights of rage and despair.
The good news is that the primal reptilian brain can be your best ally. You just need to learn how to harness your inner power and make your primal brain work for you rather than against you.
For instance, let's say you want to make X number of marketing calls a week, but you never seem to get it done. Basically you keep finding yourself procrastinating. You might loathe the task. Maybe you have some fear of failure or rejection. You could even have fear of success. Or you get distracted with all of your other responsibilities. Whatever the reason may be, your primal brain is working against you if you're not making the calls - and it's feeding off the energy from the fear, loathing and/or distractions.
The trick to making your primal brain assist you in making those marketing calls can be two-fold. You can employ that good old-fashioned work ethic that says you have to make X number of calls a day before you can relax or have some type of reward. Secondly, you can also up the ante by offering a penalty payment to your assistant, colleague, mentor, or a family member each time you don't make the required calls that week. However, in order for this last part of the trick to work, it needs to be realistic but painful enough to make you miss the money that was doled out as your penalty payment.
This last tricks works because it makes your primal brain want to protect you from the pain of the money loss. Before that, your primal brain sensed the pain from the fear and loathing and worked hard to keep you off your task no matter how much you tried to motivate or convince yourself.
Did you get that? Your primal brain is motivated to protect you and any sign of fear of loathing activates your primal brain, causing it to rescue you from the source of your pain.
Now think about what happens when you start a business. That's right - fear of failure. Fear of those looming statistics that say you're probably going to fail. Fears from your family, friends and colleagues who shake their head at your decision. Fear from the loss of security, benefits and support staff that makes you feel safe when you're working for a stable company. Fear of your own decision-making skills. Need I go on? The inherent and pervasive fear from kicking off an entrepreneurial venture can activate your primal brain to protect you and make you abandon your venture (either through procrastination of a needed but dreaded task, overwhelmed helplessness, poor relational functioning, etc.).
However, your primal brain can be your most powerful ally and loyal protector. The key is learning how to make it work for you so that you can accomplish the goals your frontal lobe creates (e.g. business plans, entrepreneurial ventures, networking, writing a book, losing weight, going on dates, listening, eating healthy, etc., etc.).
If you would like to learn specific methods for harnessing your inner ally and making your primal brain work for you rather than against you, please join me for a special-request seminar focused on entrepreneurial coaching methods that will help you harness your inner power and achieve greater success in accomplishing goals based on your passion and purpose. This is an intimate gathering of pre-screened committed entrepreneurs only with limited spots available. If you're interested in attending, please contact me at 512.617.6356 to discuss where you're at in your business and how this seminar can help you.
Harness Your Inner Power Seminar
Jun 26-27
Fri. Jun 26 3 PM - 5 PM with optional happy hour to follow at The Grove
Cost: Normally $950; Save 75% with Club E Network & Bootstrap Austin Discount Only $317
What to Expect: Presentation with interaction among group members sharing their experiences with the common pitfalls of entrepreneurship, life management and ineffective habits. Bring a list of the challenges you want to overcome in your business, life and even your family, and learn customized approaches to harnessing your inner power and making your primal brain work for you rather than against you. You'll leave with renewed energy, motivation AND real applicable strategies that will make you overcome the procrastination and devastating habits that cause 8 out of 10 businesses to fail within the first year (64% by the fifth year).
Kimberly Key is founder of Encompass Work & Family, an Austin-based entrepreneur coaching and counseling firm. She has worked with Fortune 500 companies and numerous start-ups and their families, helping them unlock their passions and achieve their purpose.
Bootstrap members provided their answers to the QUESTion: what is bootstrap? at the May 11, 2009 meeting. This 20 minute BootRap Podcast provides highlights of the discussion. Two key points emerge: first, bootstrap members have some of the most incredible insights and wisdom to share with each other! Second, there is no ONE definition of bootstrap - we all come to it in our own way and in our own time. Bootstrap members featured in the conversation: Kim Brushaber, Jason Howell, Marcy Hoen, Kevin Koym.
Follow the conversation on twitter @bootstrapaustin and tweet your answers!
