Robert J. Lahm, Jr. Assistant Professor of Entrepreneurship Jones College of Business Middle Tennessee State University BOOTSTRAP MARKETING: AN ANALYSIS OF CONSTRUCTS AND IMPLICATIONS What is Bootstrap Marketing? Related to entrepreneurial bootstrapping Start a business with little or not capital (or reliance on traditional sources of capital) employ creative means to achieve goals Why Bootstrap Marketing? Advantages “… the best start-ups are chronically undercapitalized. It may not feel like it, but less capital actually makes you better than the competition – necessity is the mother of invention.” (Firestone, 2000) Why Bootstrap Marketing cont. May be a conscious choice Avoid the “strings attached” when accepting money from investors, lenders, or even friends and family members. Greater independence, self-sufficiency, and individualism Traditional Marketing Traditional Sources of Capital Entrepreneurial Idea Business owner Revenue Successful marketing with heavy debt load Bootstrap Marketing Creative Financing Entrepreneurial Idea Business owner Revenue The numbers The Federal Reserve Board reported in 2002 that approximately 46% of small businesses use credit cards (one method of bootstrap financing) as a source for start-up capital and ongoing operations. The numbers cont. “Probably less than 1% of all startups ever get any funding from VCs; that means that 990 out of 1,000 new enterprises are forced to use bootstrapping as their only means to success.” (Firestone, 2004) Existing Literature “bootstrap marketing” little to no attention by scholars to date The Google duplication Topics included marketers, PR firms, consultants, brochures, press releases, criticisms of coverage Why the Delay? Inc. magazine 1992 “There’s no course book of bootstrapping techniques, but there ought to be…the approach has much to teach-and even companies that have progressed beyond their bootstrap days would do well to relearn some of the proven tactics.” (Mamis, 1992) Alternative Terms Guerilla Marketing Bootstrapping Creative marketing Bootstrap Marketing Objectives Use ingenuity and brains as a substitute for capital, like guerilla marketing, but sans the military metaphor; entrepreneurial bootstrappers may therefore be oriented toward a different mindset. Guerilla vs. Bootstrap Weapons vs. negotiation Fighting vs. strategic partnerships Protect vs. leverage Brand name vs. approach to marketing Antithesis of Bootstrapping Chevrolet Silverado 5 directors 100 edited versions Famous celebrity background music Bootstrappers are deprived of resources Find inventive ways to “make-do or do without.” It’s a Process (and it’s Never Finished) It is a marketing process, not a list of specific tactical methods. Bootstrapped businesses do not fail, philosophically …because if pre-sales do not fund the creation of a product, a business isn’t started. A Practical Example Lissa D’Aquanni The Chocolate Gecko 1999 Christmas Rush Discount gift Certificates 2 Weeks = $5000 Pay with Chocolate Accountant Web site designer Leveraging Other Peoples’ Money, Resources, or Good Grace Pay later Borrow talent instead of cash Barter products and services Split profits Trade agreements Giveaways and promotions Leveraging Cont. Create a message that will disseminate itself for free BloggingontheSide.com Internet site Ebook Resources Valuable information Discover What Customers Really Want Western Pacific Airlines Mystery Fares National Media Attention Flexibility to book passengers to low performing flights Business-trade publishing industry Free in the front Sales in the back Bootstrap Marketing Communications Unprecedented ability to bypass intermediaries and leverage forces. The internet allows individuals to sell, promote, produce or deliver globally, from the comfort of one’s own home. Moving Forward Distinguish term “bootstrap marketing” Need for scholarly research Inclusion in entrepreneurial education Employ bootstrapping methods in current businesses Questions?