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10 Lessons for Bootstrapping Your Startup to $1M Annual Revenue

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In an entrepreneurial landscape dominated by headlines of unicorn startups and billion-dollar acquisitions, getting a company to $1 million in annual recurring revenue (ARR) may sound like small change. Let’s be real, though, hitting $1 million ARR is an aspirational milestone most young companies can relate to. And it’s not that easy, especially if you’ve secured modest investments or no investment at all.

The software-as-a-service (SaaS) company I work for falls in the latter category. We’ve never raised a single investment dollar, and it took us four years to reach the $1 million ARR threshold. It was a wild four years. Frustrating, fun, scary: you name the emotion, and we’ve felt it.

But more than anything, it was an instructive four years. We learned so much, and we want to share a few helpful tidbits with our peers out there in the trenches, scratching and clawing your way to your next big milestone.

Here are 10 things we think are most important that you can use in your own start-up journey:

1. Don’t quit

Steve Jobs famously said that the difference between those who make it and those who don’t is perseverance. At one point I remember hearing “Folks, I don’t know if we’re going to be here next month.”

It’s frightening not to know where you’re going to be next month, but you have to continuously figure out how to get a few more customers and extend your runway. You can’t “make it” or succeed if you don’t exist, so you can’t quit.

2. Give your customers everything

At the company I work for, Text Request, we spent hours with our customers. We built whatever they asked for (if it fit with our goals and other customers could use it too). We also gave away a lot of free software.

If you want to grow and gain customers, you have to create a needed product that solves your target customers’ problems. Determine who your target customers are, ask them what they need, and then tailor your solutions for them.

3. Try everything you can think of

The book Traction by Gabriel Weinberg and Justin Mares covers 19 sales and marketing channels for startups to test. We tried all of them. We went to events. We advertised. We started a referral program.

For us, cold calls and cold emails worked surprisingly well. We took an industry, looked for companies in a given city, and reached out to set up product demos. Organic search has increasingly helped our sales funnel, too.

Either of those could be the best plan for you, or it could be advertising in a particular channel. Every startup is different and targets a different niche, but you’ll only find successful strategies and channels for growth by testing all your options.

4. Focus on the basics

When you focus on doing the basics, opportunities open up. When you commit to SEO basics, your targets will find you online, and a big fish will occasionally swim by. When you provide fantastic customer service, a few users will leave reviews and tell their friends. When you keep your head down and do the work, eventually you’ll look up and have hit a big milestone.

5. Get the right people on your bus

This is one of the critical lessons from Jim Collins’ Good to Great. Thankfully, our small team had the right people from the beginning. Brian and Jamey Elrod, our husband and wife co-founders, had already started a successful company from scratch (Educational Outfitters). Our third co-founder Rob Reagan has created software for twenty years and published a book last year on building apps for global scale.

Rob brought a couple of top-notch developers with him, and the rest of us showed up determined to figure the business out. If you’re going to take a company from $0 to $1 million, every member of your team has to be dedicated to working together for the long-term benefit of the company over self-interest.

“Coming together is a beginning. Keeping together is progress. Working together is success.” – Henry Ford

There’s always something that keeps entrepreneurs up at night, but you can put the questions below to rest:

1. How do you build it fast enough?

In the early days, we worried about losing a customer because we didn’t have [X]. It was stressful knowing that So-and-So would move on to the next option if we couldn’t deliver fast enough, and many times they did. But that doesn’t matter.

Losing one customer isn’t worth pushing out a faulty product. Despite the pervasive Lean Startup mindset, it’s more important to your customers that you create needed features (read: solutions) that work great the first time. They have to trust that you’ll give them the tools they need to accomplish their goals, or they’ll leave.

2. How do you keep customers longer?

Our support is perhaps our #1 competitive advantage. One of the things we’ve learned is that a lower price, and sometimes even new features, won’t keep customers around longer.

To keep your customers from churning, you’ve got to do two things: First, provide a smooth onboarding process that immediately teaches customers how to gain value (solve their problems) with your product. Otherwise, they won’t pick it up, and they’ll eventually leave.

Second, always be there with kind words and helpful content whenever a customer needs help. If you aren’t, they’ll get frustrated and find someone else to help them.

“People do not care how much you know until they know how much you care.” – Teddy Roosevelt

3. How do you get people to your website?

Advertising might be a good option, but if targets aren’t already thinking about what you can do for them, they probably won’t care about your ad or purchase. Instead, create content to educate viewers and help them solve their problems.

Focus on growing your organic traffic, becoming a trustworthy source, and honing your brand’s voice before spending lots of money on ads.

4. Do you need investment money?

When you’re floating in the middle of the ocean, you’ll do anything for a ship to pick you up. But sometimes you just need to swim. We chose to swim, and you might want to do the same.

When every dollar spent has to fight to prove its worth, you’re inevitably going to build something more valuable and more sustainable. Plus, bootstrapping gives you more control over what decisions you do make to grow your company.

5. How do you pursue 10X growth?

A growth hack is not going to propel you from 100 customers to 10,000 overnight. It doesn’t take one trick, but lots of little and big things working together to create exponential growth. It also takes time.

Instead of looking for a golden goose, create complete and actionable strategies. Those, and a little patience, will help you achieve exponential growth.

Growing your startup to $1 million ARR is not easy, but it’s possible – even without investors lining up to give you money. Put the 10 lessons above into practice, and, with a little time and a lot of work, you’ll get there.

Is there a business you’d like to start or have started? Share your ideas and suggestions for our readers!

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Startups

You Are The Problem With Your Business

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A great way to screw up your company is to get into the habit of blaming your suppliers, the market, your staff or your product for your failures.

I recently heard a story of a business that had set up a website. They sold various products and services focusing on helping people with psychological issues. The business owner was smart. The product solved a problem.

Unfortunately, the company was making almost no money. They’d hired someone to help them with their digital marketing and it wasn’t working.

Plenty of traffic was coming to the site, users were having a look around and then not buying a single thing. Who’s fault was this?

Well, according to the business owner it was the person running their digital marketing. As a result, they wasted approximately eight months marketing a website that couldn’t make any sales. The reason the business was failing according to the owner was because of the keywords that were being targeted in the marketing campaign. This is a horrible excuse.

The reason your business fails is because you’re blaming someone other than yourself. It’s the quickest way to bankruptcy. Don’t do that.


Your company is a reflection of you.

It took me a long time to figure out that a company is a reflection of its founder.

One of the businesses I had, had a toxic culture and a bunch of people that were rude to customers, arrogant and not nice people. That was a reflection of exactly who I was at the time.

The company was reflecting the flaws of my own life and what I refused to admit.

In the case of the business owner above, what was obvious is that they were good at telling lies to themselves. It was easy not to change as a business owner and insist that the change needed was nothing to do with their vision.

The issue of their company was not the digital marketing strategy but their lack of understanding around what their customer wanted.

The thought that their products were too complicated, not solving a real problem or priced incorrectly was an admission of guilt they wanted no part in. Hence the eventual demise of their company.


Take responsibility and it will change.

When you own the business, everything is your fault.

You have the power to solve any problem you choose. It starts with you being brave enough to admit that there’s a problem, and then secondly, being bold enough to insist it’s your fault and that you can change it.

The problems in your business can all be solved. That’s what it took me a very long time to understand. When I changed as a person and faced up to my hidden battle with mental illness that I didn’t want to talk about, the odds turned in my favor.

Had I have not taken responsibility for my mental illness, I would have never become a leader in a business or started another side hustle. I would have been crippled by the big, bad world that I thought I could control.

Control came from responsibility, and responsibility solved the major problem in my business: me.


Change is a must.

Not with your digital marketing strategy.
Not with hiring new people.
Not with developing a new product.

Changing yourself is the *must* because YOU attract the problems and the solutions into your business”

You can’t find the solutions or stop the never-ending problems until you stop the cause of it all: you. You’re the problem with your business. The good news is that it’s entirely within your control to fix.

Change you.

Not the business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Startups

The Different Ways of Measuring the Success of Your Start-Up

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You’ve probably heard people use the term “unicorn” in a business context. This means a privately held start-up whose value has grown to at least one billion American dollars. Think Airbnb, Uber, and so forth. There is no doubt that some start-ups have been major financial successes. And many smaller-scale start-ups are doing great as well, working hard and turning a steady profit. But that begs the question of whether finances are the only way to measure the success of a start-up. As it turns out, they might not be. At least, not always and not on their own.

How to Evaluate Success

As anyone who’s been involved with start-ups knows, you need a fair amount of flexibility to do well in this environment. Take the division of labour for example – rather than strict roles, you’ll often see everyone do a bit of everything. The same principle extends to measuring success. It can be vague and mean different things to different people, and it can change over time.

But amongst all that vagueness, one thing has become clear. Predicting the success of a start-up is very difficult for external observers. As a matter of fact, it’s often impossible. Therefore, in order to evaluate how successful a start-up has truly been, we need to know the goals of its founder(s).

“Success means we go to sleep at night knowing that our talents and abilities were used in a way that served others.” – Marianne Williamson

The Numbers

When people think about business, it’s common to boil matters down to the finances. And it certainly is possible to use numbers to measure and predict the performance of a start-up business. Net worth, gross margin, customer acquisition cost – these can all be indicators of success. But, a start-up can post impressive numbers for a while, perhaps even attract large investors, and still shut down in the end. So does this make it a failure?

The answer to this depends. If the founders wanted to start a lasting business, then yes, they failed to meet their goal. However, that isn’t always the case. If they were looking for a short-term solution and came out with more money than they had coming in, a closed-down start-up needn’t be unsuccessful. It can actually be the opposite of that.

So, looking at the figures isn’t enough, and there are different perspectives to consider. When they start planning their business venture, start-up founders may not have any particular numbers in mind when it comes to profit. Instead, they can judge their success according to some of the following criteria.

1. Happy Customers and Solving Problems

The story of a start-up often begins with a problem. The desire to help people overcome a specific issue can be the spark which ignites the creation of an entire business. And in the end, that may be all that matters to the founders.

This is closely connected to the happiness of the customers. If the resulting product or service has made people happy by helping them solve a problem, that is all that may be required for a start-up to be a success. Now, no business wants unsatisfied customers. But in cases like this, happy customers aren’t the way toward the ultimate goal – they are that goal.

In other words, some start-up founders don’t just use financial reports to measure how much they’ve achieved. To them, the one metric which stands above all others is the quantity of positive feedback they’ve received. The main area of focus is customers who use the start-up’s products or services to solve a problem they were having.

2. Impact

Every start-up founder likes doing well in terms of revenue. But for some of these entrepreneurs, the profit is merely a side effect of what they actually set out to do – impact the world in a positive manner. You can see an example of this line of thought with Elon Musk. He said that back in college, he had wanted to be a part of things that could end up changing the world. The continuation of this philosophy is evident in his electric cars (which aim to reduce pollution) and the SpaceX program (which strives to break down some of the barriers of space exploration).

In both cases, the furthering of mankind is the ultimate goal. Many other start-up founders feel the same, even if they have smaller goals in mind. To these people, there is no greater proof of success than if their company has had a positive impact on society or even a small segment of it. In their view, to make a difference is to succeed.

“The only limit to your impact is your imagination and commitment.” – Tony Robbins

3. Freedom

For some, starting up their own business is less about getting rich and more about gaining the freedom to conduct their business the way they want to. In this case, financial success is just a means to an end. The endgame is to be your own boss.

The fact is, some people don’t do well when they’re constantly receiving orders. They are simply hardwired to be free thinkers and they require an environment that allows them to do things in their own way.

Being in a position where you hold all the cards can be exhilarating. The knowledge that your decisions are final is very empowering, and many strive for such freedom. If a start-up can allow such people to go from being a regular employee to being in charge of making all the decisions, then it has already achieved all the success that it needs to.

4. Time for Friends and Family

As many people know all too well, a job can easily turn into the focal point of your daily life. Instead of being a way to support your lifestyle, your work dominates your time. And when that happens, the time you have to dedicate to your loved ones becomes scarce. Combating this is precisely what some have in mind when they decide to take the leap and start their own business.

Now, running your own company is no mean feat and it will require a lot of effort. But the beginning is the most time-consuming part of the process. Later on, it can be possible to create a system which leaves you with a lot more time on your hands. You can spend this time with your significant other, your children, or your friends. A start-up which gives you this opportunity is perhaps the greatest success of all.

A start-up is an extension of its founders and so are that company’s goals. Some entrepreneurs are in it for the profit, but not all of them. In the end, there is no single way to measure the success of a start-up. It all comes down to the specific aims of those who established it. But if the founders can end their day on a happy note, then the venture is a success even if it doesn’t fit some standard definition of the term.

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Startups

The Problem Is Not Your Website Or Your Product.

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spend a lot of my time talking to business owners. They focus on their product, their marketing channels and trying to make more profit.

I met one such business owner who was in the plastic surgery business. Their product (boob jobs and nose jobs) was not working. Their website sucked and people clicked off as soon as they visited it.

People would call their office, get put on hold, listen to the on hold message and hang up.

This business didn’t seem all that special. I’ve talked to many businesses and didn’t think for a microsecond that a plastic surgery clinic could ever teach me anything valuable.

I’ve been to Hollywood on holidays and the issues of body image are all too apparent to me. Anyway, this post is not about body image.

I ended up losing this business as a customer — not that I would ever have sold anything to them if it were up to me. I sat down one afternoon and thought about why we no longer did business with them.

That’s when I realized it’s not about your product or your website. All the issues with this plastic surgery clinic and a lot of other businesses I’ve dealt with stem from one thing. Let me explain in more detail.


Your Google Reviews say you’re an piece of work.

I looked up their Google Reviews and their customers said they were assholes.

They spoke down to clients, they didn’t deliver their clients what they wanted, they argued with their staff in front of customers and they treated people like they were nothing more than a dollar sign.

All I had to do was read their Google reviews to see that the problem wasn’t their product or their website.


Your clients tell you every day that you suck.

I asked the plastic surgery what their clients said.

Many of their clients told them that their services sucked and they would prefer to go to places like Thailand where they could get a better product at a much lower price.

The business owner made the mistake of thinking it was their product that was the problem and that a new website will tell clients a different message.

That wasn’t it.


You abuse your staff and they consistently leave.

I spoke with many staff that worked for this business.

Every single one of them hated the company and were not afraid to say what they thought of the business owner.

The business owner would sit outside on a nice sunny day and look across the street at all the yachts and the people boarding them.

They’d sit there and think that every lead they got was going to take them one step closer to owning their very own yacht.

“If only I could deliver more boob jobs, maybe I could have one of those,” they thought quietly to themselves hoping that no one else could hear how ridiculous this sounded.

I can remember multiple times being on the phone to the business owner and having one of their staff burst into tears halfway through the call.

The first time it happened I didn’t think much. After the third time, I got the message. During the short time I dealt with this business, people consistently left. If you made it to the six-month mark, you were some sort of hero and would probably be given a free surgery to say thank you for your work and make you feel worse about your own body at the same time.

It was free noses and boobs in return for daily abuse.

The problem still wasn’t the website all the product.


You don’t solve real problems; you solve your own problem.

A good business solves a problem.

That problem typically affects human beings and solving it is how you make money in business. Solving problems can start out with a problem that affects you, but at some point, you’ve got to start solving that same problem for other people/businesses.

This owner of this plastic surgery clinic was only trying to solve their own problem which was making more money to buy fancy items like yachts.

Only solving your own problem is not just selfish but bad business.

Good business is solving a big problem or lots of small problems for entire strangers who you don’t know thus doing something valuable for the human race.

Solving only your problem will make you poor.

The problem still wasn’t their website or product.


Creating more problems.

Everything this business owner sold created more problems.

They’d film videos to purposely make people feel like their body wasn’t perfect.

They’d write articles suggesting that everyone needs botox to feel young.

They’d take photos of men and women who were supposed to be perfect so that young people would dream of looking like them.

Not only was their business not solving a real problem; it was also creating more problems every day that it existed.

If your business creates more problems than it solves, you’re in real trouble.You need to take a long hard look at the business and become obsessed with doing everything you can to change it — and do so damn fast to limit the whirlwind of problems you’re creating behind you.


The heart of the problem.

It’s the business owner.

The business I mentioned will fail. That part is certain. The problem with the business is not the website or the product.

The problem is the business has no heart because the business owner has no heart.

You cannot focus on your own selfish desires, create really bad problems in the world, treat other human beings like garbage and expect to go buy a yacht and live happily ever after. It just doesn’t happen like that.

Whether you are a plastic surgery clinic like the one I described or a solo entrepreneur, the problem with your business is you.

Fix the problem of YOU. You can’t get away with being horrible forever.
Being horrible is bad business.

Being respectful, kind and valuable is the final answer to the problem with your business.

<<<>>>

If you want to increase your productivity and learn some more valuable life hacks, then join my private mailing list on timdenning.net

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Entrepreneurs

18 Must Read Business Books for Emerging Entrepreneurs and Startups

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Reading is both relaxation and training for the mind. Who reads, dives into another world. Learning, entertaining and breaking out of everyday life for a short moment. One could go even so far as to say reading is the second most beautiful thing in the world! Whether it is non-fiction or a novel of all the world’s man has created, the book is the most powerful tool. That is also, why we wanted to find out which business book you should undertake in the new year. (more…)

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