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Edit Comment Close Premium member Presentation Transcript Bootstrapping Entrepreneurship: Bootstrapping Entrepreneurship “Building a significant important business starting with a low amount of funds” Howard J. Leonhardt, November 2004Entrepreneurship: Entrepreneurship “The explorers of the modern era are the entrepreneurs; men and women with vision; with the courage to take risks, and faith enough to brave the unknown” Ronald Reagan 40th President of the United States of AmericaEntrepreneurship: Entrepreneurship “Most of our new jobs are created by entrepreneurs – independent business people pursuing their dreams. Small innovative companies that tap new markets, with products born out of their own ingenuity. Governments do not produce economic growth, people do.” Ronald Reagan Entrepreneurship: Entrepreneurship “Economic success is a good thing. In particular, it enables us to offer work to those who need it: business is good for oneself, for others and for society at large. If everyone lived a monastic life and begged, the economy would collapse and we would all die of starvation! (LAUGHS) I am convinced Buddha would say “So now, all go out to work!” (LAUGHS) The 14th Dalai LamaEntrepreneurship: Entrepreneurship For thousands of years on earth a man or woman born into an home of poverty was destined to remain in poverty for life. Capitalism and entrepreneurship was the tool that brought opportunity for the average man or woman to achieve great heights. Opportunity to break the bondage of birth status. A system based on merit and exchange of good for good brought a greater good for people on earth than any other invention. Basics of Bootstrapping: Basics of Bootstrapping Get operational quickly! This means find a customer fast! Sell that customer something that costs you less to acquire or produce. Mind set – bring more cash in than goes out. Be creative in utilizing resources to get business cash flow rolling.Basics of Bootstrapping: Basics of Bootstrapping Look for quick – break-even, cash-generating projects. Look for cash in advance sales opportunities. Provide over-the-top incredible fantastic service to your first customers! Work from your home. Keep overhead low. Buy used equipment & office furniture. Do not hire any paid employees until profits allow you to pay them, if possible. Use low to no paid help at first.Basics of Bootstrapping: Basics of Bootstrapping Keep the product and/or service concept simple! Focus on cash, not on profits, market share, or anything else. Cash is a by-product of providing great service and great value to customers, that costs you less to provide them than what they pay you. Niche markets are usually the best start-up opportunities. The margins are higher. Personal selling opportunities give small businesses a chance against large competitors. Customer Focus is Essential!: Customer Focus is Essential! Focus on what your customer is receiving in value. Customer’s care nothing about how your office looks, your business plan, your accounting system, or the degrees your employees may hold. They care about one thing – value they receive for the money they pay you, compared to what they could get elsewhere. Treat customers as customers not sales targets. Spend as much of your day personally meeting with customers as possible. Get off of your computer and into your customer’s place. Opportunities for profits are discovered by identifying solutions to customer’s problems, which is best done through “DIRECT CONTACT” with the customer! Customer Focus: Customer Focus People buy with emotion and justify with fact! Put emotion and enthusiasm into your sales pitch! Tell a compelling story. Focus your pitch on what the customer will receive in value, the benefits not the features of the product should be the emphasis. You have to provide the service your customer wants and expects. That comes first. Create “total customer responsiveness” with superior quality, superior service and fast reaction. Supplier Relationships are Very Important!: Supplier Relationships are Very Important! Personalize your relationships with your most important suppliers early. Gain their trust! Focus on building these relationships. Pay on time when you can. When you cannot, provide an early warning and a clear understandable explanation. Develop a payment plan. Live up to payment plan promises.Keep Things Simple!: Keep Things Simple! Keep your accounting system simple. Keep your advertisements simple and to the point. Keep your product or service design model simple. Focus on overcoming one simple problem that your customer’s have with their existing suppliers. Avoid unnecessary paperwork. Root out bureaucracy!Organizational Operations: Organizational Operations CREATE A LIST OF WHAT NEEDS TO GET DONE. GET THOSE THINGS DONE. REPEAT. Avoid silly bureaucratic procedures, demeaning regulations and dispiriting working conditions. Building the Team: Building the Team Bootstrappers cannot afford expensive personnel. Hire people willing to accept a low base pay and stock options. Hire people willing to work 12+ hours a day to get the business launched. Hire passionate people that have persistence and will not give up when the going gets tough. Hire entrepreneurial people that understand the basics of business survival – a company needs to bring more cash in than goes out to survive. Experience running a successful lemonade stand or a similar small business is more important than a Harvard PhD. Degree to the hiring bootstrapping entrepreneur. Hire people with a healthy positive attitude! Continuous Improvement : Continuous Improvement Improve customer service everyday utilizing feedback from the real world market. Improve your products a little bit everyday. Improve your organization. Improve your quality systems. Improve the image of your company. Improve speed to market for new products. Improve communication – in and out. Improve net profits!Managing Your Own Mind is ½ The Battle: Managing Your Own Mind is ½ The Battle Learn to take criticism. Learn to deal with rejection. Develop a thick skin. Critical attacks come with the territory of leadership and initiative. Do not take things personally. Develop a sense of humor. Train your mind to avoid unnecessary suffering. Follow the principles of Positive Thinking. Seek out the best in people and situations. Be an optimist! Never ever ever – give up. Enjoy what you are doing!Example of Bootstrapping: Example of Bootstrapping World Medical – Founded 1986, $3000 in capital. Step 1 – Identified underserved niche market – supply cardiovascular supplies to hospitals in Saudi Arabia. Step 2 – Asked potential customers simple question “What do you need, what are planning to buy in the next weeks”? Received list.Example of Bootstrapping: Example of Bootstrapping World Medical – Founded 1986, $3000 capital. Step 3 – Found way to supply some of the items on the customer’s list of needs and requirements at a small profit. Step 4 – Convinced customer to pay in advance. Step 5 – Convinced suppliers to provide credits – net 60 days. Cash flow is king!Example of Bootstrapping: Example of Bootstrapping World Medical, founded 1986, $3000 capital Worked out of house. Low overhead. Used old computer and fax machine. Provided 24 hour ultimate customer service. Focused on serving, at first, one customer very very well. Built business one customer at a time. Hired (low cost) people based on enthusiasm and work ethic. Developed World Class, unpaid, Experienced Advisory Board. Great team of people obsessed with providing the best customer service possible! Example Bootstrapping: Example Bootstrapping Step 6 – Began private labeling to establish World Medical brand. Step 7 – Used market feedback to continuously improve products. Step 8 – Expanded catalog of products. Lots of tries with new product entries. Kept what sold in catalog. Dumped what did not sell out of catalog. Step 9 – Started manufacturing products with low regulatory hurdle. Example Bootstrapping: Example Bootstrapping World Medical, Founded 1986, $3000 capital. Step 10 – Developed high margin cutting edge implantable products with high regulatory hurdle. Step 11 – Continuously improved flagship product with constant feedback from the real world market. Turned around improvements faster than all competitors. Step 12 – Focused on highest quality possible. Step 13 – Customized products. Step 14 – Developed pipeline of products. Step 15 – Merged with another growing company in same focus area.Examples of Bootstrapping: Examples of Bootstrapping World Medical, founded 1986, $3000 capital. Focused on developing foreign revenues early. Got paid for every clinical trial case in the USA. Did not hire expensive CROs, consultants, lawyers or accountants. From 1986 to 1997 did not pay anyone base salary higher than $36,000 including CEO. CFO $27,000, VP R&D $24,000. Paid cash bonuses from profits each year profits were achieved. Example Bootstrapping: Example Bootstrapping World Medical, founded 1986, $3000 capital. Merged company sold to Medtronic for $4.3 billion (World Medical portion $62 to $120 mil.) – 1998. World Leading market share for implantable stent grafts 30 to 65%! 1987 FY $3.2 mil. in sales, $230,000 net profit, 4 employees. Profitable in 1986, 1987, 1988, 1989, 1991, 1998, 1999, 2000, 2001, 2002. 1998, $9.2 mil. sales, $1 mil. net profit., 230 employees 500 employees by 2000. $18 mil. in sales., $3 mil. profit. $44 million in annual sales in 2001, 27% net profit.Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Richard Branson, Virgin Group Always be jotting down notes. Work from a simple daily to do list. Manage and motivate by example – be highly energetic! Strive to always hold more than 50% ownership. Hire based on enthusiasm and energy not experience. Marketing is important – very important. Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Bill Gates, Microsoft, Inc. Make sure you are the one’s making your products obsolete not someone else. Spend on R&D. Set priorities based on what customers are asking for and what they need. Business is very simple. Profit. Loss. Take the sales, subtract the costs, you better get this big positive number. Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Steve Jobs, Apple, Inc. and Pixar Focus on getting your product to market as fast as possible. With passionate people you have a company with a lot of arguments – which is good. Hire people based on their past results or willingness to work very very hard and to learn. Leaders should often say “That isn’t good enough, you know we can do better”. Push people beyond their comfort zones. Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Michael Dell, Dell Computer, Inc. Have high expectations. Customize products to precisely meet customer needs. Provide absolutely the best customer support in your industry! Build customer loyalty by providing high performance products with great service. Engage everyone in the company in a serving customer’s mentality. Make everyone in the company a co-owner. Get them to think like owners, since they are owners. Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Bill Hewlett, Hewlett & Packard People are everything. At the beginning do what-ever it takes to get an order. Getting an order means survival. Do what your customers want. Only hire the minimum amount of people that you really really need, not more. The customer comes first. No customers = No profits = No business to pay workers. Hire people that WORK HARD above all other considerations. Provide profit sharing to employees. Show hard working people that you care. Locate near a great university. Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Walt Disney, founder of Walt Disney Co. “In route by train back from New York Walt learned the news that the bank loan necessary to keep his company alive had fallen through. In his nervous doodling he drew for the first time a little mouse. He tossed and turned trying to fall asleep worrying about how he was going to save his company and pay his workers. He convinced himself somehow that the little mouse he just drew was going to save the company. When he arrived back in Los Angeles - he pulled his team together and with a sense of energetic enthusiasm and optimism convinced his colleagues that “a mouse would save the day”. It worked.Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Howard Schultz, Founder Starbucks “How did it happen? I willed it to happen. I took my life in my hands, I learned from anyone I could, grabbed what opportunity I could, and molded my success step by step. Fear of failure drove me at first, but as I tackled each challenge, my anxiety was replaced with a growing sense of optimism. Once you overcome seemingly unsurmountable obstacles, other hurdles seem less daunting. Most people can achieve beyond their dreams if they insist upon it.”Lessons From Great Entrepreneurs: Lessons From Great Entrepreneurs Earl Bakken, founder of Medtronic, Inc. Ready, fire, aim. “During my long and instructive career in business, health care, and technology, I’ve come to believe the “secret” to long term success fits neatly on the face of a button. Pay special attention to the order of those three little words. Its READY, FIRE, AIM.Lessons from Great Entrepreneurs: Lessons from Great Entrepreneurs Bill George, former CEO Medtronic, Inc. Be your own person, authentic in every regard. Develop your own unique leadership style. Be aware of your weaknesses. Work with a sense of purpose. Instill this in others. Practice solid values. Lead with the heart! Establish long term connected relationships. Demonstrate self discipline. Be consistent. A balanced life makes you a better leader. Entrepreneurship is about Doing Something Good for Society!: Entrepreneurship is about Doing Something Good for Society! “Entrepreneurship is applying ideas and action to do good. To provide something needed of value to society. Any rewards received are a by-product of doing good.” HJL “Anyone who is indifferent to the well-being of other people and to the causes of their future happiness, can only be laying the ground for their own misfortune” The Dalai Lama You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.