Raise Funds or Bootstrap

Raise Funds or Bootstrap

The majority of organization leaders want their organization to do more. These leaders either want to serve more customers or provide more value to existing customers. This growth mentality is at the heart of the capitalist system. It’s ingrained in us. Our desire to do more is not necessarily a bad thing, achievement is at the heart of the human existence. While many companies want to grow, the manner that they grow can be quite different. The central question is: are you going to raise funds or bootstrap?

The Virtue of Venture Capital Funds

The rise of venture capital is a microcosm of the capitalist system. At the core of capitalism is the believe that markets will resolve discrepancies. Venture capital is the creation of a market to validate business ideas that have not been completely flushed out. While an injection of cash certainly helps many organizations grow, it does not guarantee it. In fact, there are instances where the injection of cash creates more organizational hurdles for companies that were not yet ready for growth.

The Trials and Tribulations of Bootstrapping

Many new organizations are still finding their footing and bringing on investors can be scary. As a result, many organizations choose not to take on any capital, they choose to make it on their own. However, this approach has challenges of its own. Without expanding the team’s knowledge beyond the existing group, the organization is limited to the skills of the existing team.

Bootstrap to Raise Cash

While venture capital funds can be beneficial to growth, often times it glazes over the structural business problems. On the other hand, there is nobility in trying to make it on your own, but that also has limitations.

Our advice to our clients remains the same–bring on investors when you don’t need them. Run your business off cash flow and grow as the cash grows. When an investor wants to help you grow and brings capital to the table, you will get much better terms without needing the money. This route ensures that your business will never be incumbent to shareholders and their often unrealistic expectations.

If you are curious to know how to get to market without raising any venture capital money, let’s have a conversation–I bet we can help you figure it out.

Business Growth Stages

Business Growth Stages

There are many organizations who want “more”. They want more revenue, more customers, or more growth. Some companies have more success getting new customers than others. The companies that find new customers tend to follow a series of steps to make sure that their marketing is heading them in a positive direction. These organizations view their marketing activities as a laboratory. Each time they aim to expand what they know and their network of customers. In the early business growth stages, organizations should be using their marketing activities to learn more. As the organization grows, they can learn more AND add more customers.

Building a Marketing Foundation

The first step for many companies is to “stop guessing” what will work and build a data ecosystem to start to understand customers’ sentiments in more detail. Believe it or not, companies have a number of free tools available to them in the early stages. As the company grows, they can add more sophistication to their data capture and learn more about their customers. Building a marketing laboratory will show organizations which messages will land which ones will not. Repeating the messages that resonate is a key to success.

Business Growth Stages

Building on the marketing foundation, the first few stages can be pretty overwhelming.

  • If your organization does not have any existing customers, you are “pre-market”. This means you are exploring an idea that might be worth exploring. We strongly encourage entrepreneurs who are “pre-market” to ensure you have your customer pain nailed. Developing a new business or a new offering is expensive–and if it does not have any customers coming with it–it will be devastating.
  • There are some organizations that have some customers, but they spend all day every day serving these customers and cannot ever find another set of customers. These companies are on the treadmill. Unfortunately, they’re likely to stay there until they can improve their operations to serve their customers and start marketing to find new customers.

There are many businesses who provide an incredible service to the marketplace, but they do not provide strong marketing. Thus, their business never expands beyond their current size. These organizations are forever in the early stages. Hiring a marketing service provider to broadcast the value of the message will allow the company to focus on its offering and serving the new customers. If you are ready to take your business to the next phase, let’s talk about working together.