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Bootstrapping - PowerPoint

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					Bootstrapping
ETP 3700

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

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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

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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 newsletters

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

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: Advertising

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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-todate takes time and money Develop a plan to drive people to the site

Tools and Techniques: Web pages

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 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”

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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

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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 selfserving – 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


				
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