My column this week in the Tennessean explores how to build a bootstrap culture:
When starting a new business, most entrepreneurs have to bootstrap their business — that is, find ways to get things done with limited resources.
But why do so many owners keep bootstrapping even when the cash starts flowing and they no longer have to bootstrap out of necessity?
Bootstrapping over the long term helps keep the business efficient, which reduces the need to secure external financing. This allows the entrepreneur to keep ownership of the business, reduces the need for taking on debt and helps strengthen the business during recession.
In addition, continuing to bootstrap helps build a stronger cash flow. And the stronger the cash flow, the higher the value of a private business. Bootstrapping, therefore, helps build wealth for the entrepreneur by increasing the value of the venture as it grows.
An entrepreneur has to get everyone in the organization to become a bootstrapper. This requires the creation of a bootstrapping culture throughout the company. Entrepreneurs should communicate a consistent message about bootstrapping. Highlight its importance in every form of communication, ranging from informal conversations with employees to formal communications such as newsletters, annual reports and policy manuals.
A consistent message reinforces the importance of bootstrapping behavior.
For example, include a feature in every company newsletter about an employee who was the “bootstrapper of the month,” offering a story of how he or she accomplished a task with minimal resources. Remember, storytelling is a fundamental part of building a culture in a business.
However, remember that your actions need to reinforce your message about bootstrapping. The leaders of a business should bootstrap at every opportunity to serve as a role model and demonstrate their commitment to bootstrapping.
Building a bootstrapping culture also requires careful recruiting of new employees. When bringing new people into the business, look beyond their technical skills and experience to fill the position. So, if you want a bootstrapping culture to flourish, find out if prospective employees fit into a bootstrapping way of doing business.
Ask the right questions
One approach to evaluating the fit of prospective employees is to develop open-ended interview questions that assess their bootstrapping temperament. For example, you can ask all the applicants the following: “Tell me about a time when you had to accomplish a task when limited resources were available.”
If the interviewee answers by saying that she always had more than enough budgetary support in her old job, it might be difficult for her to adapt to a bootstrapping environment. Or, if she answers by complaining about the lack of resources in her old job, or about how her old boss was always a cheapskate, it’s a sure sign that this person will not have bootstrapping in her blood.
On the other hand, if she speaks with enthusiasm and pride about how she got the job done within the limited resources available, the candidate is a perfect fit.
To keep bootstrapping alive as a company grows, entrepreneurs must create a culture in which bootstrapping is simply “how we do business around here.”
I think this is a great post but would be careful about “looking beyond their technical skills and experience to fill the position”… In my experience I can hire one person who may not fit the bootstrapping culture but will do the work of 3. So then you have to ask yourself is the culture or employee mindset on bootstrapping more important than the employees ability to perform and achieve company goals?
Great article!
Bootstrapping can definitely lead to efficient Business Success where you can start and grow a successful company with almost no money.
Alan, You are offering a false choice. It is not choosing the person with either technical skills OR fit with culture. These are not mutually exclusive criteria. Technical skills are the baseline requirement. However, technical skills are necessary, but not sufficient. Of the pool with required technical skills, you need go one more step to ensure that you select the person who fits best with your culture.
And since cultural drift is a serious problem many entrepreneurs face as their ventures grow, I think it is very important and ultimately effective for the entrepreneur to take the time to establish their culture in the beginning and take strides to preserve it as they grow. Boothstrapping or not, looking beyond technical skills to see if there is a cultural match is key.
Jeff,
Great post (and comments). Bootstrapping is what entrepreneruship is all about. To me, bootstrapping is all about sales, revenues, and uptake … who buys into your value proposition, is interested, and what are they willing to pay.
The creative entrepreneur has to look to their value chain – NOT an investor – to craft a creative deal to get their company to the next level (whatever level that is).
Investors truly get interested whey they are told, “We don’t NEED your money.” They have a need to find out WHY.
john@iterateventures.com
this is a great blog…it’s true how that if we have unalterable determination, an undeviating support system and tactical and financial literacy along with communication our business’s can flourish but if the sole reason to
bootstrap is to cash a huge check, you’re in the race for the wrong reason. You see, making money should be more of a side effect of achieving your goal. This will make the journey more meaningful, more valuable, and more purposeful. Make sure your motivator is deep and enduring. These types of motivators are far more powerful than making any amount of money.