Archive for the ‘Bootstrapping’ Category
Tuesday, August 10, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, Creativity and Ideation, General Thoughts |
Tags: Bootstrapping, diy, diy artist, entrepreneurial artists, live nation, music industry, record labels |
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What is a DIY artist? DIY stands for Do It Yourself, and it basically means the entrepreneurial artist. The bootstrapping artist. It’s the musician who is using a laptop and a microphone to record his or her first album, using Facebook and MySpace to promote the album, and is playing at coffee houses, bars, and music venues in order to make some tip money and hopefully sell some of those self-produced albums.
The DIY artist has things both easier and harder with the proliferation of the Internet. Easier because for the cost of a basic MacBook ($999), a basic microphone ($200), and the cost of the instruments, an artist can put together a semi-decent, multi-track recording using Garageband, which comes loaded on the MacBook. The artist then has access to a host of free services (MySpace, Facebook, etc.) in which to promote themselves and their album. The harder part for the artist is distinguishing themself in this cacophony of new artists who have entered the market largely due to the lowered cost of entry.
Contrast the DIY artist with the artist of old who was discovered by a record label, was given up-front money for recording in exchange for a % of ownership in the songs (usually pretty high), paid exorbitant studio recording costs, and received widespread distribution through the label. Touring and album sales were mostly a way to pay back the record labels for the seed money they provided. The thought was that the label would give you better exposure and a small % of a lot was still more than 100% of nothing.
There is currently a big debate regarding the DIY artist and if they are actually making any money to sustain their craft. What is happening is that for many of the big record companies, their influence is rapidly waning. The big hope for the industry was that live concerts would take the place of lost album revenue. This has happened somewhat, but now Live Nation is also having its own rough patch. Live Nation is the major concert promoter and venue owner. So, with the decreasing influence of album sales and live concerts, artists are having to get more creative in their approach.
Perhaps the right answer is somewhere in between the record label-sponsored artist and the DIY artist. The artist’s skill is in writing music. They may also be skilled in Facebook promotion, but if time on Facebook takes away from the creative process of writing, then the Facebook time has not been well spent. The answer in the middle is to have a small team around the artist. As with stock options in lieu of salary, perhaps the artist can surround themselves with people willing to work on commission of album & live show sales as opposed to a straight-up salary.
Artists these days would benefit from a pro in social media, booking agents skilled in particular markets, and engineers who know what they are doing in the studio. If DIY artists can become Do It With Others artists, they have a greater chance for success than just recording albums by themselves in their basements. The key is surrounding yourself with great people.
For the music industry, this really does come down to a discussion on different views of entrepreneurship. One camp holds that everything must be in order before starting the business. You must write the business plan, have a superb website, and obtain gobs of Venture Capital money in exchange for company ownership before trying to sell your product. The other camp seeks to bootstrap their business with little starting capital so that they can keep as close to 100% ownership of their company as possible. This camp seeks inexpensive yet innovative marketing solutions.
We at The Entrepreneur School believe in the bootstrapping method. It doesn’t just work for starting a business, but can cross over to industries like the music industry.
Please share how you have bootstrapped your way to success in the music industry in the comment box below.
Tags: Bootstrapping, diy, diy artist, entrepreneurial artists, live nation, music industry, record labels | Posted under Bootstrapping, Creativity and Ideation, General Thoughts | No Comments
Monday, July 26, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, Entrepreneurship Tools, General Thoughts |
Tags: blogging, How to Start a Business, starting a company with no money, top 5 bootstrapping ideas |
1 Comment
Most top 5 lists on what to do to start a business include getting a business license, setting up a bank account, and finding a lawyer to complete your important documents. We at the Entrepreneur School think that these steps come much later in the process and may not even be necessary until you are actually selling your product or service.
The basic philosophy of The Entrepreneur School is to bootstrap your business by selling first and then using that money to build your business. This is opposed to the approach of raising money first and then trying to build your business. So, in light of the bootstrapping mentality, here are 5 ideas to get your business going at little to no cost:
1. Start a Blog
Four years ago, I was looking at getting into the business side of the music industry. I had a few meetings in New York with some big wigs in the industry. People who had worked with Michael Jackson, Mariah Carey, and many others. When I asked one of the gentleman of a good way to position myself for a job in the industry, he told me to start a blog about the music industry. I am a musician and had worked in International Business. He told me to approach the blog from that point of view. He said this would have the following benefits:
- It would keep me in tune with what was going on in the industry.
- It would show potential employers that I was daily reading and commenting about the industry.
- It would get me in the discussion. Others would read the blog, comment, and I could begin building a network within the music industry.
I took his advice and faithfully blogged for a long time about the music industry.
2. Share your business idea with Family & Friends
Professor Jim of The Entrepreneur School recommends sharing your business idea with those closest to you. Those whom you can trust. The important thing here is to be sensitive to their response. If they say, that’s a good idea and don’t offer any criticism, the opposite may be true. Jim says that the true test of a good idea is to see if your friends and family argue with it. As A.O. Scott wrote yesterday in his NY Times review of the new movie Inception, “Any movie worth seeing is worth arguing about, and any movie worth arguing about is worth seeing.” The same should be true about a business worth starting.
3. Put out an Ad
I wrote about this option in a previous blog. When I think of an idea to make money, one of the first things I usually do is place an ad on Craigslist for that service. Posting to Craigslist is free. This is a great way to gauge interest in your idea. If you get a lot of response, you know the idea is worth pursuing more. A good thing to do is to engage your responders in conversation to see what other services or products you could provide to meet their needs. Let your potential customers define what they want instead of you defining what you think they want. And be diligent in your ad placements. Put up a new ad every 4-5 days so it is fresh.
4. Check Forums
Another great way to see what types of services people are demanding is to visit forums. For example, I am a website developer and when I am on website design forums, I often see questions from new designers trying to make changes to their pre-existing templates. They don’t know how to do it and often times are asking people for help & pay if they can fix an item. This tells me that there are probably a lot of people out there who would be willing to pay money for a web developer to make small changes to an existing site, and not just create a website from scratch. Most web developers only target clients who want a site from start to finish.
5. Look for Opportunities where Big Companies are Failing
I had breakfast with a friend last week who told me about an acquaintance of his who was making a good living by doing the following. In a specific mall in the Atlanta area, there was a store selling a certain product off the shelves at a rapid pace. Most of the consumers who purchased this product needed to have a customized addition to the product. For some reason, the store within the mall was not filling this need of the customers purchasing the product. So, this guy would wait outside of the mall in the parking lot and fill the need this store failed to meet. What ancillary items are bigger companies in the industry you are targeting failing to complete? Is there an opportunity there for you?
Please use the comment box below to add other ideas about getting your business going for little to no money.
Wednesday, July 7, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, General Thoughts |
Tags: Bootstrapping, entrepreneurship ideas, Saving Money, starting a business |
1 Comment
Just a few weeks ago, I launched a one page website for a service business and advertised by using Google Ads capped at $2/day. I currently offer more services than I could provide with the equipment I currently have. Is that dishonest? No, because if my client wants the service I advertise, I will purchase the necessary equipment to get the job done.
What I am doing is testing the market and at the same time, saving a lot of money. There is no need to purchase equipment to offer a service with no demand.
One of my favorite real-life stories from The Entrepreneur School Faculty member Jim is when he started his company in the 90′s that grew into a multi-million dollar a year business. He placed an advertisement in the local newspaper and waited for the phone to ring. He didn’t have a clear direction on his company at that point, but he let the callers answering his advertisement tell them what they were looking for. He then built his business around demand.
He also sold first and then worried about the details. This flies in the face of most teaching on entrepreneurship that says one must raise money, purchase equipment, and then sell. The Entrepreneur School’s approach is to Sell First, then worry about the details. Why do you need a fresh business bank account if you don’t have any client’s checks to deposit?
A great way to bootstrap your business is to place an ad for a product or service, see what type of response/feedback you receive, let these customers tell you what they want, and then build your company around their needs. You will end up saving yourself a lot of start up costs.
Tags: Bootstrapping, entrepreneurship ideas, Saving Money, starting a business | Posted under Bootstrapping, General Thoughts | 1 Comment
Tuesday, June 15, 2010 | Written by Jacob Dearolph
Posted under: Bootstrapping, Business Ownership, The Entrepreneur School |
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I just finished a series of Real Estate Development classes from the Urban Land Institute. The Urban Land Institute offers 2 certificates : 1. Real Estate Development & 2. Real Estate Development and Finance.
So I’m focusing on Development and Finance. Two years ago I took 2 of the 4 needed classes in LA and the experience was wonderful. I flew out with my wife to a classy hotel and spent 10 days learning about one of my passions and spending time with colleagues from all walks and places. Quick note – 2 years ago I was employed with a boutique developer/finance firm. They paid the cost of the trip and classes. Now, I’m self employed and its coming out of my back pocket – needless to say the current trip to DC is a bit different than the previous trip.
Two thoughts have occurred to me as I’ve been in class:
- How can one employ the premise of low risk entrepreneurship to Real Estate Development and achieve success.
- The difference between continuing education for the entrepreneur versus the employee.
Point 1.
So a central premise to The Entrepreneur School is that of lowering your risk to start a business to such a point that the risk is greater to not start that business. How does this work for the “highly risky” environment of real estate development? Real Estate development is capital intensive and extremely risky on the front end of a deal. What do I mean by risky? Well, if you had $100,000 to invest in a Real Estate Development project you could eat that up in the first 2 or 3 steps of evaluating a deal.
1st as a developer you have several places from which to start – you can start with a piece of property, an idea for a certain area, money to spend on a development project, or a combination of these. Much like the entrepreneur a developer has a choice as to how he starts his first project or any project. Given that a developer can start from many different angles, then the developer can choose to put priority on profitability and the ability to bootstrap the project. It takes intentionality.
Ways to Bootstrap Development:
- Sell sweat equity
- Find lower risk niches in the development process
- Fee Development
Posted under Bootstrapping, Business Ownership, The Entrepreneur School | No Comments
Wednesday, June 2, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, General Thoughts, Total Entrepreneurial Activity |
Tags: kaufmann foundation, opportunity vs necessity entrepreneurship, robert reich, self-employment |
No Comments
Robert Reich makes an interesting distinction in his op-ed in this morning’s NY Times. He asks if we are seeing a rise in entrepreneurship or a rise in self-employment. The question really comes down to whether or not we are seeing a rise in Opportunity or Necessity entrepreneurship. Typically, in wealthy countries, the majority of entrepreneurs start a business because of opportunity. The opposite is true in poor countries. Someone needs to start a business.
Mr. Reich references the Kaufmann Foundation’s recent numbers showing a sizable increase in USA entrepreneurial activity. The report states that 2009 had the highest number of business start-ups in 14 years.
The interesting data here is that the rise is contained within specific age groups. The 35-44 year-old’s have the highest percentage of new startups while the 55-64 year-old’s come in second.
If it is true that the majority of new entrepreneurs are on the Necessity side rather than the Opportunity side, this has enormous financial implications. Generally, Opportunity entrepreneurs have their own start-up capital in which to get their business up and running. Necessity entrepreneurs on the other hand don’t have the start-up capital and therefore must bootstrap their business. Bootstrapping is the art of keeping costs down to the bare minimum by selling right away and reinvesting funds into the business. Many entrepreneurs, opportunity or necessity, feel the need to have everything in place before making their first sale.
The professors of The Entrepreneur School believe that bootstrapping is the best solution for both Opportunity & Necessity entrepreneurs. By funding the business internally as much as possible, entrepreneurs maintain more ownership in their company and maintain more control.
Wednesday, May 26, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, Entrepreneurship Quotes |
Tags: Bootstrapping, Entrepreneurship Quotes, jay-z, rap quotes |
No Comments
Many rappers out there have followed a bootstrapping model for their business. They started using inexpensive recording equipment in their own basements, used social media such as MySpace & YouTube, and used viral marketing techniques to get their music heard at a very low start-up cost.
One thing I hear rappers do a lot is introduce themselves. If they are a new rapper, one of their first songs will say something along the lines of “Hi, my name is Slim Shady” and the entire song will revolve around that theme. It’s simplistic, but effective. As a new company, your first marketing objective is to introduce yourself in a simplistic manner. A 15 second elevator pitch.
So, here are a few quotes from some of the more famous rappers. I encourage you to add additional quotes in the comment section below:
“Far from a Harvard student, just had the guts (different word used there) to do it.” – Jay-Z
“I dropped out of school because I wasn’t learning fast enough. I learned from real life better.” – Kayne West
“If you had one shot, or one opportunity to seize everything you ever wanted, one moment, would you capture it or just let it slip?” – Eminem
“I’m not a businessman, I’m a Business….man!” – Jay-Z
Tags: Bootstrapping, Entrepreneurship Quotes, jay-z, rap quotes | Posted under Bootstrapping, Entrepreneurship Quotes | No Comments
Tuesday, May 11, 2010 | Written by Jim Beach
Posted under: Banking, Bootstrapping, Financial Concerns |
Tags: business credit cards, credit card reform |
3 Comments
On February 22 of this year, Congress passed and President Obama signed major changes to the consumer protection laws, called CARD (Credit Card Accountability, Responsibility and Disclosure Act). Among other changes, it prohibits raising rates on old balances and other interest spikes. However, the law does NOT apply to small business credit cards. Yet another reason to be very aware of these types of credit instruments.
Business credit cards, unlike corporate cards, are backed by the card holder, meaning you are personally responsible. I got in the hole about $250,000 back in 98 or so, and I can attest to the extreme efforts AmEx will go to to get their money! I doubt I will ever be able to get another AmEx card. Business cards account for 15% of the credit card market, but currently the laws remain rather disjointed. The law did direct the Fed to make changes to the way small business cards are handled, but that additional reform stalled in the House. The National Small Business Association is pushing to add changes to the next jobs bill. The banking lobby is fighting these reforms, saying that business cards carry an inherently higher risk, and should therefore have a high rate.
Bank of America and Capital One announced they would voluntarily treat business cards the same as consumer credit cards, but this could change easily, especially if credit remains super-tight. I just got a small loan, and it was like pulling my own teeth. Beware of your credit!!
Consumer credit guru Dave Ramsey recommends only using debt cards, which forces you to only spend money that you already have. This fits in very well with The Entrepreneur School strategy of low-risk entrepreneurship and bootstrapping. Wise words to consider…….
Tags: business credit cards, credit card reform | Posted under Banking, Bootstrapping, Financial Concerns | 3 Comments
Tuesday, April 27, 2010 | Written by Kristin Diver
Posted under: Bootstrapping, Business Ownership, Entrepreneurship Stories |
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1 Comment
I recently spoke to someone with a fledgling business, with just the occasional low-dollar sale. I started asking questions as to whether they’d done any serious research on where they could sell their product – and was shocked that they were resistant to going an extra 10 miles out to find a customer.
But, but….that doesn’t make sense, you’re an entrepreneur! This totally goes against Jim’s bootstrapping concept! By definition there is usually a bit of hustle needed to make your dream happen.
I grew up in Puerto Rico and just about everyday, when my Dad drove me to school, I would see men and women at stoplights hustling all kinds of items – candy, newspapers, potato chips or kitchy toys. My favorite was the guy with the spray bottle and rag who would clean your windshield, whether you wanted it clean or not, forcing you to give up some change for the service. They would usually stand in the middle of the four-lane road on the dotted white lines, in between oncoming traffic. Dangerous, but that way they could walk by two cars at once. Or the guy with his open truckload of oranges that sold like 20 oranges for a $1 – we had wonderful fresh-squeezed orange juice everyday. Or the guy at the side of the highway with his mobile rotisserie unit who served the best rotisserie chicken you’ve ever tasted. If you’ve ever been to a third-world country, you’ve seen these small time entrepreneurs everywhere. They work hard and hustle. They probably didn’t dream of peddling knickknacks by the road their whole life but at that moment they were at least making the sale.
I’m not suggesting we entrepreneurs all start selling candy on Peachtree St, but my point is that you’ve got to be willing to drive the extra 10 miles for a potential sale – especially at first. Once you have a steady stream of business, then maybe get picky about where you’d go. These people on the street I saw as a kid were doing just that – the entrepreneur hustle.
Posted under Bootstrapping, Business Ownership, Entrepreneurship Stories | 1 Comment
Sunday, April 11, 2010 | Written by Jim Beach
Posted under: Bootstrapping, Business plans, Entrepreneurship Stories |
Tags: new orleans entrepreneurs |
5 Comments
I just got back from a mini-moon in New Orleans. A mini-moon is a short honeymoon, when you don’t have enough time to go for a normal one or two week honeymoon. When Megan and I married, events prevented
us from taking a normal honeymoon. I wrote earlier about our mini-moon in Vegas, where we had a great time. We won our second mini-moon at a silent auction for a charity, making the New Orleans trip tax deductible, and the trip included 4 nights in a great condo and first class airfare for the two of us.
The trip struck me for the number of entrepreneurs we ran across. Going to Vegas or Orlando or most other cities seems like traveling with huge companies. In New Orleans, everyone involved in the tourism industry seems to be an entrepreneur. Of course, all the big hotels are there and Harrah’s has a big casino there, but the entrepreneur rules New Orleans. The city is know for its great, world class restaurants, all of which are owned by entrepreneur chiefs. Emeril’s (Bam!), Commander’s Place (where the owner’s daughter greeted us personally), John Besh’s Restaurant August, Galatorie’s (150 years in same family), and Cafe du Monde (beignets on the right) are all famous entrepreneurial stories. We dined well, didn’t we…..
For play time, we rewarded entrepreneurs for their cool ideas. On Thursday, we rented Segway scooters and went riding all over town. Neither of us had ridden on Segways before, and we had a 
blast. The owner started his company 3 years ago to capitalize on people just like us, tourists that wanted to see things while playing on the newest toy. Some of the most fun I have ever had. And the company started the way The Entrepreneur School likes. It started slow and grew organically, slowly. He started selling tours to plantations and saved money to buy the 10 Segway scooters he now owns.
Friday we went on a tour of the plantations in the sugar growing area, just up river from the city. One of the plantations, Oak Alley, 
is the 2oo year old home of sugar entrepreneurs. The house has been in tons of movies, most recently John Travolta’s Primary Colors and Interview with a Vampire. The house is a testament to entrepreneurs of another time and another generation.
On Saturday, we headed to the swamps and went air boating. The business was run by a family, with dad the owner and master guide, his son as a boat drivers, his daughters running the store and selling tickets. I counted about 15 employees, all relatives. And they are doing what they love, which is spending time in the swamp, playing with alligators, telling tall stories, building air boats, and hopefully, saving the swamp for other generations. The infamous levies that broke during Hurricane Katrina have 
been killing the swamp and marsh lands south of New Orleans. The levies prevent the annual flooding of the low lands, which builds and refreshed the marshes. With no annual flood, the marsh disappears over time and the buffer that protected New Orleans has shrunk by 1000′s of acres.
The travel industry is a great way for entrepreneurs to share their love of a city. It usually takes very little start up capital to get going, and the licensing fees are small. And, you get to do something you love. A great way to proceed.
So, now we are talking about our third mini-moon, after all, it takes 3 mini-moons to make up for 1 real honeymoon. We have discussed Disney, Atlantis, and other places.
I will keep you posted.
Tags: new orleans entrepreneurs | Posted under Bootstrapping, Business plans, Entrepreneurship Stories | 5 Comments
Friday, February 26, 2010 | Written by Erik Rostad
Posted under: Bootstrapping, Creativity and Ideation |
Tags: business idea, craigslist, low-risk entrepreneurship |
1 Comment
We at The Entrepreneur School are all about starting businesses that require little start up costs. One way to search for these types of businesses is to pay attention to what your friends, family, and colleagues are asking about, are discouraged about, or need help with and see if you can assist them for a small cut.
One need I see over and over is helping people sell things online. I come across people quite often who are cash-strapped and would be greatly assisted financially if they could sell or rent something they own. Take something as big as a house, condo, or apartment. Do you know anyone losing sleep over their inability to sell their house? Instead of trying to sell the house in a down market, why not try to rent it out and let someone else pay your mortgage? Well, there are many people who don’t know how to list their place on Craigslist or on a rental site. I have rented out my condo twice only using Craigslist.
Or what about some extra furniture. I just got married and had some furniture I needed to sell. It took very little time to sell the items on Craigslist. I recently sold an unnecessary wireless router on eBay. And I even advertise my violin playing online through Google Ads.
Do you see the business opportunity here? Pay attention to your friends and family and what they need to sell right now. Help them sell or rent something they own and take a 10 – 20% cut of the sale. No start up costs. Very little risk. A nice little addition to your income stream while you help out your family and friends.
Send me a reply comment if you need help selling or renting anything you own in the Atlanta area.
Tags: business idea, craigslist, low-risk entrepreneurship | Posted under Bootstrapping, Creativity and Ideation | 1 Comment
Tuesday, January 5, 2010 | Written by Erik Rostad
Posted under: Angels, Banking, Bootstrapping, General Thoughts, The Entrepreneur School, Total Entrepreneurial Activity, Venture Capital |
Tags: babson, Bootstrapping, entrepreneurship in 2010, entrepreneurship predictions |
1 Comment
2010 will be the Year of the Bootstrapper. It will be the year of the Entrepreneur who can figure out how to do the most with the least.
2009 was a bad year for entrepreneurs. Most predictions for 2010 show a slight improvement in conditions and funding, but still, a difficult time to start a business. But we at The Entrepreneur School believe that now is as good a time as any to start your business.
The Wall Street Journal had a great article this morning covering the different funding avenues available for Start-ups:
Angel Investors
Angel funds fell by 30% in the 1st half of 2009. Predictions are that Angel funds will stay flat in 2010. An interesting fact about angel funds is that even though the total dollar amount invested has decreased, the number of start-ups funded has increased. Fewer dollars for more entrepreneurs. The bootstrappers will win.
Venture Capital
Average deal size in the 1st half of 2009 was $5.7 million compared to $7.5 million + average from 2005 – 2008. Venture Capitalists are saving their money for companies in the late stages of development or are giving more funds to companies already in their current portfolios. Bootstrappers will be a step ahead by not having to wait on the dwindling number of venture funds to come through and will also retain more of their company.
SBA Loans
Less than 45,000 SBA loans were approved from Sept ’08 – Sept ’09, which is 36% lower than the year before. Right now, SBA loans only make up 1% of start-up lending. This is expected to increase to 5 – 10% in the near future due to the government’s stimulus packages.
The end of the article describes how Babson College, which is one of the elite entrepreneurship universities in the world, estimates that the average entrepreneur needs $65,000 to get their business up and running. In this economy, with savings accounts, nest eggs, and house values in disarray, it will be difficult for most entrepreneurs to come up with $65,000.
We at The Entrepreneur School teach ways to start businesses for much less than $65,000. There are a number of businesses that can be started where Bootstrapping is considered for each aspect of the business. One of Babson’s professors, Dr. Zacharakis states this in another way:
“Instead of capital infusions, there might be a lot more exchanges of services or trading favors.”
Take a look at the first set of entrepreneurship lessons at The Entrepreneur School.
All info and statistics for this blog post were gathered from The Wall Street Journal on Tuesday, January 5th, 2010.
Monday, January 4, 2010 | Written by Jacob Dearolph
Posted under: Bootstrapping, Uncategorized |
Tags: Communication, Costs, Phones, Saving Money, Skype |
10 Comments
As a person starting a business it is absolutely necessary to sell and to watch costs. Thus, you must use Skype for part of your phone services.
I just extended my Skype number for a year for $30.00. Basically, this is unlimited time on a phone to call any number in the US or within Skype. I can roll the line to any number I want. I get voicemail. All this for $2.50 a month. Nothing beats this.
If you have good internet access I would advise to switch immediately and start saving $$$.
Tags: Communication, Costs, Phones, Saving Money, Skype | Posted under Bootstrapping, Uncategorized | 10 Comments
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