Ways to Bootstrap Your Way to Success vs. Applying for Investment

 

When starting a business, one of the first few things that many fledgling entrepreneurs do is find a potential investor. An entrepreneur presents their idea, and if an investor likes it, funding will be granted in exchange for an ownership stake in the company. While this may sound like a straightforward and viable option there are a few aspects that should be considered.

Applying for an investment

While getting an investor to support your company is good, a major drawback of it can be the stakes that are being asked for in return. A 20% equity may not sound like a big deal (after all, you still keep 80% of your company), but when you think about your operation on a bigger scale it can make a big difference. A backer who owns 20% of your company means that for a revenue of £10,000, you’d need to give to the investor £2,000. On top of that equity, you’d need to pay for your employees, the costs of running the business, delivery, imports, etc. So is a 20% stake of your company worth it? This will depend on whether your backer can help you enter different markets, expand your business, and help with the direction of your company. Often it’s what the investor can offer apart from their money that matters more.

One of the reasons why entrepreneurs get pressured into acquiring investments from backers is because of certain economic factors that affect revenue. For example, when inflation is high, the general public tends to lessen their spending. The Consumer Price Index (CPI) shows how inflation affects consumer trends, and entrepreneurs use it to base their future decisions on. FXCM’s economic calendar shows that the current CPI is clearly showing volatility in consumer trends in Europe. A high reading anticipates a bullish attitude from consumers, while a low reading is seen as bad for business. When the reading is negative, entrepreneurs often panic and sometimes seek investments in order to help weather the slump.

We know that finding investment isn’t usually the most important thing in business. There are five key elements to the success of a start up, which are listed according to their importance:

1. Timing
2. Team (execution)
3. Idea
4. Business model
5. Funding

Bootstrapping

Bootstrapping, in the context of business, is starting a venture with little to no money. This means starting a business without the support of venture capital firms. In layman’s term, it means turning over money that was earned from customer sales and putting it back into the business.

Bootstrapping may be the most realistic option for startups. The idea may sound impossible to do but it’s not. What do Braintree, AnswerLab, TechSmith, Envato, Campaign Monitor, and Litmus have in common? All of them bootstrapped their way to success.

Successful bootstrapped companies go through two stages: first they seed money. This is the stage where entrepreneurs either break the piggy bank in order to fund the business or seek money from friends and family. Funding may also come from the entrepreneur’s full-time job until enough capital has been raised for the business.

The second stage is about getting money from potential customers. Think about Kickstarter and GoFundMe websites where entrepreneurs ask for backing from interested customers. Growth may be slow in the second stage because the business has to keep its operating expenses steady.

Every time you accumulate funds from customers, you can launch your products/services and expand. Successful entrepreneurs keep doing this until they become more successful through every launch and expansion.

Bootstrapping may be a long and hard road in finding the funds for a business. However, it certainly lessens the risks of burying yourself with debt. Finding an investor for your company, on the other hand, will instantly give you access to monetary resources but the stakes that you need to give up in return may hinder your business’ growth. Remember to weigh up these options before making any major decisions for your startup.

[GUEST BLOG] Goal Setting

At our Hatch Social Club last week, Goal Practitioner Anne Burniston ran a workshop on Goal Setting. In this piece she explains the value of goal setting and how it has impacted her personal journey.

Here’s the thing about starting a business.  When you begin, it doesn’t exist.  At least, it doesn’t exist in the real world.  But it does exist in your imagination.  In your dreams.  You have a yearning, a need, an itch that needs to be scratched.  A wrong needs to be righted, a frustration needs to be gone, an ambition needs to be realised.

Your job, as an entrepreneur, is to take that dream and make it come true.  To create the vision you have in your mind, to build the future you hold so dear in your imagination.

It’s the thing that sets us apart from the animals.  The ability to dream a new future and make it happen.  We don’t just respond to our environment, we create it from the future we dream.

And that dream is important because it will lead to a better life.  For you, for others.  It will bring you more love, more satisfaction, more freedom, more money.  Whatever it is, you believe that bringing this vision into existence will bring you benefits.  And the drive to receive those benefits is what makes you act.

So it makes sense that the clearer your vision, the closer and more real it feels, smells, tastes, the easier it becomes to articulate it, to yourself and others.  And the more likely it is to come true.

The firmer you can hold your purpose, the deeper you understand it, the more driven you will be to make it happen.

And essentially, that’s what a goal is.  It’s a dream, with a deadline.  The deadline represents your commitment to bring it into reality.  Without that, it remains a dream.

The work I do helps with that process.  Goal Mapping is a technique that uses your whole brain to dream your goals, to imagine the future you want, to tap deep into your reason why you want it, and then helps you figure out what steps you need to take to make it happen.

Goal Mapping plants your vision firmly in your sub-conscious – your internal sat-nav.  From then on everything that you see is filtered by your goal.  So everything that happens is a possible way to help you move towards your goal, rather than something that is in the way.

I found Goal Mapping, or rather Goal Mapping found me just over 10 years ago.  I was at a particularly low point in my life, which can be summed up by saying I lived an outwardly successful corporate lifestyle, big house, sexy car, great income, yada yada, but I was slowly dying from a lack of meaning or purpose.  I was losing the will to get up in the morning.

Then through many twists and turns, I ended up in a hotel conference room in Austria with about 15 colleagues, listening to some guy telling me to draw my dreams on paper and commit to making them come true.

Well, 10 years on, I can’t actually remember what was on that first Goal Map I drew.  What I do remember is that I walked away from that meeting with something I hadn’t felt for a very long time – hope.  I still didn’t know what my goal was, I didn’t know what my life was about, but I did believe, for the first time, that I could find it.  And that was a powerful feeling.

Scoot on two years from that day, and I went home to my partner and told her I was about to be made redundant.  Which meant I would walk away with one month’s salary and no job to go to.  We sat on the sofa, held hands, and remembered our dreams we had dreamt on that sunny Austrian afternoon.   We allowed ourselves to feel the call of the mountains drawn in my partner’s map.  And in that moment we made a decision.  To go and pursue another life.

We had already found the house we wanted to live in.  It was in a tiny village on the edge of a large valley in the foothills of the Pyrenees.  We’d tried to move there once already.  We found it when we were on holiday.  We were sure.  So we came home, put the house on the market, drew an enormous project plan which we put up on our kitchen wall and off we set.

The week after we put the house on the market the financial crash happened.  The Estate Agent phoned me up to tell me that the value of my house had dropped by £100,000.  So we took the house off the market, I got a new job and we carried on.

One year later we looked up at the kitchen wall to see that we hadn’t completed a single action that was on our project plan.  So we took it down and forgot about our dreams.

This time, we decided to make it real.  We drew a goal map.  We drew what we wanted to happen, why we wanted it and what we were going to do about it.  And we put that on the wall.

Once we had committed to that map, everything changed.  We started talking about it differently – like it was happening, not like it was something that was going to happen in the unspecified and distant future.  The people we spoke to believed us which reinforced our own belief.  And because they believed us, they helped us.

We identified that we needed a shedload of cash.  We needed to find someone to rent our house in Brighton and we needed to arrange a mortgage for our new house in France.  We spoke to a colleague about it and she was looking for somewhere to move with her husband and baby.  So she rented our house.  Another colleague had just completed on a property in Spain and willingly handed over the details of her mortgage advisor.

Our families, initially dead set against us giving up on “Jobs for life” and heading off into the unknown, started showing more interest and even came to visit the place with us.  Our friends had encouraging conversations with us about France, and started looking at dates to come and visit us.

And somehow, the cash came.  Redundancies with technical errors and sympathetic Directors can result in unexpected outcomes and grateful beneficiaries.  Friends offered to invest in us because they believed in our story.  Family gave us somewhere to stay in between leaving our Brighton home and taking residence in our French one so we could save our cash.  Oh, and they gave us a car too.  And a rabbit hutch to transport the cats.

This April we celebrated our 7th year of living in Fosse.

That experience taught me to believe in the power of Goal Mapping.  So I became a practitioner.  I use it in my life and I help others use it in theirs.  The power in it changes depending upon what I need from it, but here’s what I’ve learned over the last 10 years.

Sometimes it’s about clarifying the goal, which may be something material, it may be an intention or it may be a soul contract.  Being focused on what you want allows you to see opportunity and bounce forward from external events, rather than falling at the first hurdle.

Other times it’s about the purpose: knowing why you want something and the benefits it will bring gives you the motivation to move.  It helps you find the energy to keep going when things get tough.

Sometimes it’s about the actions.  Knowing what you can do and who you can bring into your life to help you.  Seeing life as a series of opportunities waiting to happen rather than a list to be ticked off.

You see, it’s not really about the goal.  Being attached to the goal once we have set it can be damaging and potentially obsessional.  Because goals change.  As our lives change, so do our goals change.  And that’s ok.  What’s important is that we keep moving.  And going through the process of Goal Mapping helps us move.

And sometimes, all we need to do is move.

 

Our next Hatch Social Club will take place on January 25th.

Join our Meetup Group for more details.

The Goal Work:

 

 

Meet Our Incubator Entrepreneur, Elly and Her Group of Children Food Waste Warriors!

In honour of Social Enterprise Day, we are featuring one of our Social Entrepreneurs, Elly, and her group of young food waste warriors!

 

Bubble & Squeak is a children’s ran social enterprise based in West London set up last February by Elly Harrington and Lydia Gandaa. The children collect surplus food from supermarkets, markets and other outlets which they then redistribute to the local community. They sell the food on stands at school on a ‘pay as you feel basis’, whilst simultaneously drawing and selling amazing wonky fruit and veg artwork worldwide -inspired by the yummy healthy food they collect!

“The children truly embrace all aspects of the business such as running the surplus food stalls from creating and selling their artwork, to cooking the surplus food so nothing goes to waste” says  co-founder Elly Harrington.  

What inspired you to start this journey as an entrepreneur?

I had co-set up a successful pop up food business before and fancied a new entrepreneurial adventure where I could create change for good. This idea formulated after a while of thinking and trying different jobs, including grass root community work in East Acton, the area where I set up Bubble & Squeak. I had already done a lot of the leg work before starting the company- such as understanding the community, building stakeholder relationships and finding a business partner to work with who shared the same passions and also worked in primary school education.   

What is the most valuable lesson you have gained from the Hatch Incubator Programme?

I learnt many, but the most significant would have to be to not underestimate the power of positivity to push you forward with your business.  The Incubator provided a great weekly space to tap into this feeling.  Everyone around you on the programme has a natural confidence in what you are doing, regardless of what stage you are at – it’s really shown how valuable it is to surround yourself with like-minded individuals who understand the ups and downs of the entrepreneurial journey.  

What are some of the struggles you’ve faced? And what is your advice to other entrepreneurs to help overcome these problems?

With all the different hats you have to wear when running a business you can feel like you’re on a constant journey of up-skilling yourself. However, learning several different skills is essential to growing your business and is part of the fun of doing your own thing. My advice is to identify what you don’t know, embrace it, and then actively seek out any opportunities to change it. This can vary from going on a business course to You-Tubing a tutorial or even forcing yourself to network more to find people who know what you don’t!      

What is your focus with Bubble & Squeak now?

To really develop the whole story of our brand and how to present it in the best way to grow our entrepreneurial impact! We are great at creating change but we need to also operate as a sustainable business. This is actually a really exciting prospect as we feel that there are not many social enterprises in London as unique as us, and we can’t wait to shout some more about it.

What are your views on social enterprises vs. charities?

I think the recent rise in social enterprise is a reflection on an increasingly challenging financial climate for charities/third sector.  When you combine this with a younger generation who are incredibly dynamic and compassionate it becomes an interesting mix.  Armed with our laptops we can challenge the status quo of the past and look at how to answer some of society’s biggest challenges in an original way that doesn’t resort back to asking for money all the time.  Not to say that social enterprises are worthier than charities – it’s just a reflection on the current climate.  Both could not operate without grant funding so it’s essential that social enterprises are not seen as a replacement of charities.

Why did you want to start a business with an impact?

I felt a drive to try and answer some of the needs of the local East Acton community. I had worked with the community for over 3 years and was a Community Involvement Officer at Old Oak Community Centre.  This insight was very useful as it allowed me to work from within the community instead of coming in as an organisation and assuming what their needs were.  My business partner Lydia Gandaa (who has extensive experience working locally in education) shared this ‘need’ led belief too.  We had always believed in Bubble & Squeak’s USP – child power! We had talked about how remarkable it would be if they could own their own idea.  When they came up with the concept of saving surplus food for the good of the community, we thought it was perfect and ran with it.  This ‘army’ of 400 local children hold an amazing power to create an impact.

Given the growing social enterprise movement, it is never too early to engage children with the new, mission-driven business path. Bubble & Squeak gives children the opportunity to think and act in enterprising ways, and develop skills that are essential for business, such as: problem solving, decision making and risk assessment, whilst encouraging them to question existing norms and help combat social and environmental issues such as food waste.

Help Bubble and Squeak win £10000 by voting for them in the Aviva Community Fund!

Instagram/Twitter/Facebook: @bubblesqueakeat

Website: bubblesqueakeat.com

Bubble and squeak pitching Video:

https://www.youtube.com/watch?v=z9U3gbcUv8w

 

Have an idea for a social business?  Applications for our next Social Launchpad close November 17th. 

Book a call with our programme manager to find out more!