The Big Picture

You have the business idea of a lifetime and you don’t know where to begin. On top of that, you’re a normal, human being: you have no major connections with rich Angel Investors or Venture Capitalists.

Authors Rich Christiansen & Ron Porter teach you how to bootstrap your startup with only $5,000 – $10,000. They not only teach you the cost effective way of setting up your business, but they also show you the way in obtaining the true values of a successful life.

Introduction

Authors Rich Christiansen and Ron Porter bring two decades of entrepreneurial and management expertise to help you start your business. Since completing his MBA, Rich has founded or co-founded 27 businesses each bootstrapped with less than $10,000 of initial capital. Nine are outright failures; seven were moderate successes; four are in the works; and seven have become multimillion dollar home runs. One of these multimillion dollar home runs is CastleWave.

CastleWave was created three years ago as a test case to prove the principles found in Boostrap. Ron and Rich came to the table with $2,500 each and built Everest Web SEO, a company built around search engine optimization. Within a few months, they had won deals with Warner Music, Frankilin Covey, and The New York Times. Six months later, Everest Web SEO merged with Interactive Acquisition forming a new company called CastleWave, LLC. By October of 2008, two years later, Rich and Ron were able to generate $110,000 of revenue per month at over 65 percent net margin. Bootstrap is the survival guide that Ron and Rich used to obtain this success.

Bootstrap not only teaches the principals of business success, but it also promotes the values of a truthfully successful life: achieving balance, reaching for purposes higher than amassing wealth, and remembering family & your trust relationships.

Chapter 1: GRIT!

Grit or an unalterable determination is the most important factor to your success as an entrepreneur.

There are four main components to your grit:

1. Knowing Yourself. You are who you are. Take the Entrepreneurial Appetite Test, or EAT, online at bootstrapbusiness.org to determine your entrepreneurial appetite. Hire strengths where you are weak.
2. Dealing with Terror. You will experience terror. Turn this into a motivator by facing the storm. Visualize the end goal. This will help you get through the torrent.
3. Understanding the Corporate Myth. You work for you. Be loyal to yourself, your family, and your trust relationships.
4. Organizing Your Day Job. You need an effective time-management strategy. You cannot let time manage you.

Chapter 2: Juice to the Light Bulb

Your ideas are only as bright as your information-battery store. Bathe your mind in the thoughts of others and plan constructive brainstorming sessions to continually charge your battery.

There are five means of charging your idea battery

1. Find Uninterrupted Time
2. Pick A Brain
3. Catch a Wave
4. Look to your Passions—but, beware!
5. A.S.K

Find Uninterrupted Time
Spend time planning for the future. Planning makes or breaks an entrepreneur.

“I climb mountains. The reason is to eliminate clutter and gain perspective on the world around me. This is my personal place for inspiration, and when it comes, it’s a moment of pure clarity and joy. The result is exhilarating.”

Pick A Brain
Personal connections are a significant factor to an entrepreneur’s success.

“Another great way to pick a brain is going to an industry-specific trade show. For me, this has been a very successful method for not only coming up with ideas, but, more specifically, for validating concepts and quickly progressing through the learning curve of the industry.”

Rich’s favorite questions to ask at trade shows:

• What are the services or needs in your industry that are not being met?
• What are two or three things you would change about the products or services you rely on?
• What do your customers like about the service or the product they are buying?
• What do you think the next big opportunity or change will be in your industry?

Two other secrets to success:

1. Make sure relationships go both ways.
2. Thank everyone you talk to.

Catch A Wave
One of the surefire recipes for success is to carefully watch the horizon and identify ripples that are forming.

Passion or Poison
Building a business around something you’re passionate about can be fun and fulfilling. It can also be torture.

Ask yourself these questions to determine if you should turn your passion into a business

1. Is this activity your release valve or primary escape?
2. Would doing it full time cause conflict with your significant other?
3. Will working in this field undermine your interest in your normal recreational activities?

A.S.K.
Don’t be afraid to include your own spiritual beliefs in your entrepreneurial life. Decide to contribute to a higher purpose than building your bank account. Create your own map to success and use it.

Chapter 3: Power Tools

There are three tools that Rich uses to determine the viability of a business idea:

1. Five Forces Model
2. The Competitive Matrix
3. Four Filter Rules

Five Forces Model

The Five Forces Model is a fast way to evaluate the potential success of your business. Use it during your idea state to test your plan. Weigh your idea against a force and make a “+” mark by it if you have an advantage over others. Make a “–“ mark if a particular force is threatening.

The more pluses you end up with the better the idea.

The Competitive Matrix
Do not overlap your product or services with competitors if your target is a sale. Overlapping invites competitors to stomp you out; complementing invites them to buy you out. Map out current competitors on a Price/Quantity vs. Competitor scale to determine where potential possibilities lie. Look for gaps between competitors. The larger the hole the bigger the opportunity.

This is the matrix Rich and Ron used to build Campman.com. They decided to fill a small hole right at the intersection of Back Country, Sportsman’s Warehouse, and Kirkham’s. They sold the company within one year.

Rich’s Four Filter Rules List
These four questions or rules that Rich asks to assess the value of an opportunity.

• Is the business opportunity transactional?
• Will I own the customer?
• Is the opportunity digital in nature?
• Does the opportunity ride a wave?

Chapter 4: Got Gas?

Entrepreneurship is like flying to a far-off destination with only a vague plan. You must have three items to at least take off: (1) a flight plan, (2) gas, and (3) a runway.

Flight Plan
Your flight plan is your pro forma. Create a simple pro forma in Excel to mark out your financial projections. Plan for six months to a year as a start. Remember, numbers don’t lie.

Here is an blank pro forma that Rich uses often to project his finances:

Gas
The gas is your cash reserve. Have a store of $5k – 10k to fuel your bootstrapped venture. Here are a few potential funding sources:

• Debt Financing
• Credit Cards
• Bootstrapping
• Friends & Family
• Angels & Snakes

Runway
Your runway is the time you need to make a profit or at least to stabilize. Stabilize quickly.

Chapter 5: The Rules

One of the greatest joys of entrepreneurship is being able to create the rules; however, success will only come if you make them, and you live them. Begin now by creating your rules.

There are seven categories that you should create your rules around:

• Finances
• Culture
• Hiring and Firing
• Roles and Responsibilities
• Boundaries
• Exit Plans
• Time and Travel Commitments

Here are some of Rich’s business rules:

• Don’t Destroy What You Want to Create. Create your own rules and live them.
• Hold on Loosely, But Don’t Let Go. The best sign that you need to back away from a venture is that it starts to violate your rules. Be willing to let go if the ship is sinking.
• Be Concrete but Discreet. Keep those who are affected by your rules informed.
• Don’t Risk What You Can’t Loose. You know what you cannot loose. Don’t jeopardize it.

Chapter 6: Boring!

The business structure that you establish is critical. There are essentially five business structures that you can create each with their plusses and minuses.

1. Sole Proprietorship
2. General Partnership
3. Limited Liability Partnership (LLP)
4. Limited Liability Company (LLC)
5. Corporation

Work with your accountant to determine the best fit.

Chapter 7: Fish & Partners

“A partnership is not a life-long commitment. Rather, it is a merger of convenience based on skill, resources, present life situations, and the opportunity at hand.”

Partnerships are critical to your success; however, they can stink quickly if you do not maintain them appropriately.

Follow these principals to maintain healthy relationships in your business:

• Set the Expectations. Aligning your goals from the business outset is paramount. Commit to a clear understanding of expectations.
• Talk About Ownership vs. Upside. Upside is compensation for work done as a company succeeds. Have a frank and documented conversation with partners about ownership vs. upside. Determine who is willing to risk what.
• Align Your Goals. Write you goals down and share them openly before entering a partnership.
• Beware of Working with Your Best Friend. Just because you are “best friends” does not mean that you will be “best partners.” Make up for your weaknesses with your partner’s strengths. This is the foundation of a solid, durable partnership.
• Don’t Form a Three-way Partnership. Someone is always left out in a three-way partnership.
• Your Partnership Will End. Do not let the ending rest on happenstance. Plan it out.

Chapter 8: Avoiding Cow Pies

There are four business cow pies that you must avoid:

1. Unmonitored cash flow
2. Lagging accounts receivable
3. Out-of-balance suppliers and customers
4. Failure to assess your ever-changing business landscape

Chapter 9: I Never Want to be a Doctor

Scalability is the ability to increase sales of a product or service with minimal impact on unit cost or effort given. It is the key difference between being a doctor or a business person: doctor’s exchange time for money, while business owners create products or services who then scale them.

Don’t attempt to scale your business until you have an asset. An asset is something that puts money into your pocket. The more money it puts into your pocket with the fewer resources the better. No matter what your current profession is, you can find a way to scale it. Scale it with the fewest possible resources.

It’s important to document what works and what does not as your assets begins to scale. Learn from your failures and keep a plan. Refine your system or product to the point of perfection. Good companies (KFC is indicated in book) have fine-tuned systems or secret recipes that continually produce results.

Chapter 10: Motion or Momentum?

Motion is not momentum. Do you remember the last time you saw someone working frantically at the office but little was being done? That’s motion. Momentum is force gained through refined focus of work done persistently.

There are five ways that you can establish momentum in your business:

• 80/20 Rule. This rule that states that 80 percent of work done comes from 20 percent of your effort. Do you find yourself working on the easy parts of your to-do list? Stop. Do the most important things now.
• The Five-minute Whiteboard. The Five-minute Whiteboard exercise is a stand-up morning routine where everyone in the business shares what their tasks are for the day. If loads are too heavy for some, the loads can be shifted to someone else. This exercise increases communication and accountability.
• Walk and Talk. Keep those who are affected by your rules informed.
• Act or React. Eliminate distractions and do what you have to do.
• Urgent and Important. The easiest way to determine if a task is important is to categorize it with Stephen Covey’s, “Time Management Matrix.” The heart of effective personal management is found in Quadrant II. 80 percent of your time should be spent here. Re-focus energies on all Quadrant I activities when they come.

Chapter 11: Climb High, Sleep Low

Rich and his family are passionate mountain climbers. This chapter extracts some fundamental principals that Rich has learned through his experience climbing.

Here are the principals:

• Imagination is Essential. “Entrepreneurship cannot exist without imagination. You have to dream it before you make it a reality. Imagination is your mind’s ability to create a blueprint by which you achieve great things.”
• Reward Yourself. “Even the smallest rewards motivate us to reach the top of big mountains…. If you don’t take time to reward yourself, your subconscious will start asking, ‘Why am I doing this, always?” Money is very seldom a powerful motivator.
• Keep Climbing. Experiencing failure does not make you a failure. Learn from it and move on.
• Getting to the Top is Optional. Getting Down is Mandatory. Don’t jeopardize your family for a business venture. Plan ahead of time and get your financial life in order.
• Climb High, Sleep Low. Don’t climb faster than you have strength. High-altitude sickness can kill climbers who don’t acclimatize. Make sure that you achieve balance as you progress in your business.
• Cross the Line. Entrepreneurship requires you to go out of balance all the time. Choose to go out of balance to accept growth. “[W]hen you must go out of balance at work, communicate to your loved ones that your schedule is a deliberate choice, not an uncontrollable accident. Help them understand that the effort is critical for a specific time period. Then ensure you stick with the time period.”

Chapter 12: The Heart and the Head of the Entrepreneur

The attributes and skills required to experience success deal directly with what you have in your heart and in your head.

Here are the components of the entrepreneur’s heart:

• The Race Seldom Goes to the Fastest. “[T]he race very seldom goes to the fastest, the prize to the smartest, the award to the most beautiful, or the brass ring to the cleverest. The individual who simply refuses to die and continues to press forward will eventually get the win. That is unalterable determination.”
• Trust Your Gut. Because the entrepreneurial path is not always clearly laid out, you must develop the ability and courage to follow your instincts.
• The Loneliness of Leadership. Great leaders are often required to stand alone. One of the greatest leaders to walk the earth did so two thousand years ago. His life exuded loneliness from birth to death.
• Embracing Failure. Learn to enjoy, embrace, and savor your failures.

Here are the components of an entrepreneur’s head:

• The Secret. Life gives you what you expect it to. Expect great things.
• Abundance Mentality. Give! Philanthropy is the surest way to release you from unnecessary panic. Giving is a surefire cure for scarcity mentality.
• Breaking Through the Mental Barrier. Do not allow mental barriers to keep you from succeeding. Break through them.
• The Zone. “There are two kinds of work: hard work, the kind that requires all of your focus and amazing amounts of energy, and zone work, the kind of work that leaves you feeling exhilarated and energized. Zone work usually follows hard work.”
• Do the Hard Thing. Enough said.

Chapter 13: Fire, Fire, Fire, Aim

Most hunters aim then fire. To be successful as an entrepreneur you must fire, fire, fire and then aim at one idea and fire.

Rich grew up in a rural community and he loved to hunt rabbits as a teenager. He learned that if he fired a few shots into the unknown that multiple rabbits would start jumping. At that point, he could then aim on a good, close, hopefully fat, rabbit and take fire. This is the best approach for choosing a business idea.

Most people take too much time to aim on their business idea. Some aim so much that they experience analysis paralysis and never take fire. Instead of aiming forever, shoot! You will find all types of business ideas pop up and start hopping. Once the ideas start hopping, don’t get greedy and try to get them all. Aim at one rabbit and get it.

Each successful business goes through four phases:

• Phase One: Brainstorm
• Phase Two: Examine
• Phase Three: Optimize
• Phase Four: Protect

Chapter 14: Act Big, Behave Small

Your appearance to your consumers or clients is critical. Keep your behavior frugal but present yourself as a serious, big-time business.

Mind these seven points to maintain an appropriate public image:

• Act Big. If you don’t have a big office, don’t worry. You’re an entrepreneur. You have big dreams—let those be your office, and act like you mean them! Learn from the way large and small companies work.
• Your Office Assistant. Your executive assistant is one of the most important employees you have. He or she must know everything but convey nothing. Treat your admin well and he or she will elicit like behavior.
• Your Phone System. Be polished and professional, even if all you have is your cell phone. Consider purchasing an automated phone system.
• Don’t Do Desperation. A good business relationship is almost intangible and unwritten. It’s not strained, emotionally charged, or jittery. It needs to feel natural and comfortable. You won’t create that feeling if you’re operating out of desperation.
• Escalation. You need to put an escalation path in place—admin, mid-level management, owners—for those times when you require time or space to respond.
• Do You Need It? Outside of your organization, act big. Inside, behave as small as possible. Don’t let your employees think you are cheap. Frugal and cheap are not the same thing.
• Don’t Hire Stupid. Run with no more than 15 employees. Wages payable are the most expensive part of a business. Growth must be deliberate, not accidental. Know when it’s time for spring cleaning.

Chapter 15: Building a Killer Team

No one has every amounted to greatness or found success without a team.

The three most important people in your life are (1) your accountant, (2) your attorney, and (3) your spouse (or significant other). Look for accountants and attorneys with a “can-do” attitude. If one of these two crucial people gets annoyed when you ask “Is there a better way?” then you know you need a better fit.

The most important hire is your administrative assistant. Define your company culture before interviewing him or her. Your admin, more than any other employee, has to fit the culture and your specifications. Consider having one of your trusted relationships, such as your spouse or mentor, interview the candidates as well. Conduct real-time, surprise skill tests with all finalists: how do they handle phone calls? Can they write intelligent and purposeful letters?

Build a powerful team. Make sure that you are particularly deliberate in your first few hires to find the best. Trust and empower your team to make decisions and take actions for the good of your company. Give them problems and let them come to you with solutions, always looking to make them stretch a little more than last time. Ensure your team has comfortable, up-to-date equipment.

Be slow to hire and quick to fire.

Chapter 16: The Holy Grail

Your company culture is your Holy Grail. As the founder or CEO, your responsibility is to own and direct the culture. Your cultural foundation is established early and pretty much stays the same. Make sure that your foundation is built on the traditions, values, and ethical practices you choose.

Stephen R. Covey in his book First Things First teaches that all humans are born with an innate drive to fulfill four basic needs:

• To live
• To love
• To learn
• To leave a legacy

You must understand and address those needs as part of building your business. Each one will contribute to the culture you develop, as well as to the way your company accepts your leadership.

Own and build your culture.

Chapter 17: Embrace Accountability

Personal ownership equals personal accountability. The tendency for far too many individuals is to avoid accountability rather than embrace it. Ask yourself if you say these phrases to determine if you avoid or embrace accountability:

Avoiding Accountability

• “That’s not my job.”
• “I can’t find anything to do.”
• “I’ve been working here a year, and I still don’t have a job description – what am I supposed to be doing anyway?”
• “Why do we need a self-improvement class at work?”
• “When is upper management going to get it right?”

Embracing Accountability

• “I’d love to help, what do you need me to do?”
• “I did it because it needed doing.”
• “I’m glad the company is providing us the opportunity to learn and apply self-improvement techniques.”
• “Maybe upper management hasn’t made the right choice because they don’t have enough data. How can we help them get that data?”
• “No, I don’t have a job description. I’ve just observed and determined where we needed help and jumped in.”
• “Yes, I’d love to participate in a team-building activity!”

Chapter 18: Dancing with the Devil

You’ll have to face competition to win in the end. Accept it, do your homework, and know your competitors well. Facing your competition is like dancing with the devil; the dance is essential to perfect your skills but it can be destructive if you don’t mind your step.

Let’s take some dancing lessons to prepare you for your competition:

• Competition is Good. If nobody is in your market, ask yourself if there really is a demand for your product. The way to your competitors’ customers is through the employees who interact with the customers and through the customers themselves. Contact these people and ask them about what they do. Take careful notes on how you can improve.
• Do Your Homework. In the planning stage, list all aspects of your business that might run up against competition. Starting with Internet searches and moving into actual legwork (malls, phone books, industry directories, etc.), make a list of all your competitors.
• Know Your Competition. After you draw up your Competitive Matrix Model, determine when and how best to approach each of your competitors. “Co-opetition” does not always mean that you cuddle up with everyone in your market.
• Reduce and Improve. One of the best ways to compete is to reduce your transactional costs.

Chapter 19: No Exit Strategy?

In business, one of the first things you need to do is plan the last thing you need to do: create an exit strategy. Map your competitive landscape (See Chapter 3) and determine how you’ll find an exit from the beginning.

There are seven types of exits for your business:

1. Market Failure or Natural Catastrophe
2. Competition Closing In
3. Selling Your Business
4. Merging
5. Going Public
6. Raising Venture Capital
7. Systematizing and Cash Cows

The biggest obstacle to successfully timing your exit is your greed. When you are new to the entrepreneurship world, sell! Decide when you enter how you want to exit. Be sure to have thought through all the possibilities and have backup plans in place. Rarely is a business a straight shot from start to finish

Rich’s Last Words

Entrepreneurship is worth the climb. It provides countless individuals with financial stability and has facilitated exhilarating and liberating lifestyles for many. The ultimate question that remains is, “What is the key thing that you need to know to be successful?” There are three critical attributes Rich has found that are necessary:

1. Unalterable Determination. The single most important factor to success in entrepreneurship and life is unalterable determination.
2. An Undeviating Support System. Your spouse is your greatest support system. Without him or her, it will be very difficult to succeed.
3. A Greater Purpose. The final key to entrepreneurship is having the source of your motivation rooted deeper than the shallow objective of making money.

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