Here are a few things I’ve learned and I hope might help others starting out on their own.
The endless amount of business advice books will tell you a million different ways you can ‘achieve exponential growth’ or ‘how to fail fast and iterate’ or ‘build measure learn’ - a mantra I drove hard during my time as a banks innovation lead. Having experience building my own bootstrapped business, I’ve come to realise that everyone will try to give you advice and you need to be selective about what you take on board based on what you’re working towards.
How to identify a gap in the market
There are a few universal truths when it comes to spotting opportunities, particularly in the technology industry. The first is that where the barrier to entry is high, so are the specialist skills required to create a solution.
For example, with the Consumer Data Right (where my expertise lies), the barrier to entry for companies is high because the technical knowledge is so specialised. Someone with the skills, experience and industry knowledge is already miles ahead of the team sitting within a bank or telco. And that’s when you need to identify that you have an opportunity on your hands to solve a complicated and therefore often expensive problem. It’s really about understanding your own skills and being confident enough to go for it. It’s also driven by the realisation that your ability to solve this problem is likely to be the combined experience of all your previous professional positions rather than a follow-on to your last prior to kicking off the journey.
The second truth is that wherever there is regulation involved there is immense pressure and time constraints and companies are therefore looking to find a solution that de-risks the outcome while delivering faster and more cost-effectively than they could do inhouse. Regulations mean customers have compelling events to meet and if they don’t meet them, then they are likely to incur large penalties or, at the very least, have challenging conversations with senior executives. This means there is a market to provide a solution to meet those requirements where the price is equal to or less than the penalty.
How to overcome the challenges of bootstrapping
The biggest hurdle will always be trying to get your first customer, especially in a regulated industry like banking. Customers want guaranteed stability, they want to know you’re going to be around and big enough to sue if something (hopefully not) goes wrong. A common problem is wanting to see two or three years of financial data, which is difficult if you’re only just starting out, and often it comes down to the founder sharing their personal financials, which isn’t really a situation you want to be in. There are a few things you can do, like getting an accountant to sign off on your profitability, but once you’ve won that first customer’s trust, the most important thing is to turn them into your biggest advocate. Your best marketing tool is your first customer. This means you have to over-deliver and then leverage this relationship to continue to grow all the while remembering they were the ones that backed you first and therefore if there is an opportunity to pay it forward it is worth taking.
The other big challenge that will inevitably face start-ups is whether to let go of equity or a percentage of profits early on in order to get funding. This can, however, be a real trade-off. As a small organisation, you want to keep hiring but you need the cash to bring people on. At the same time, if you want to go the bootstrapping route, you’ll need to tightly manage costs until you establish a strong revenue stream while identifying a funding source such as venture, a helpful benefactor (such as a long-suffering partner backing your dream!) or a business loan.
In saying that, it’s easier to bootstrap your company if the core knowledge of your service sits inhouse or, even better, you are a subject matter expert yourself. Those with the core knowledge need to be bought into the vision and the roadmap and not just there to earn a wage which may mean that drip feeding some equity over time to early hires is critical to a business that can scale beyond the founder themselves. If you don’t have people early on who see the value in what they’re doing and are willing to take some insecurity for potentially outsized rewards (and a wild ride in the process) then you will always be trying to hire and compete with established businesses willing and able to pay far higher wages – requiring increasing amounts of outside funding.
How to retain talent during a pandemic
The pandemic has taught us that people’s preferred ways of working vary greatly, and I think the best companies will take this as an opportunity to get to know their employees better. Biza.io was essentially born into the pandemic environment and yet had initially approached the remote working component as a temporary measure in favour of co-working spaces. Within months we realised that what employees really wanted wasn’t just the ability to work remotely but indeed, to work anywhere.
The term that most organisations use is “remote-first” but at the same time, we felt this may actually disadvantage those who preferred to work in an office environment. As a consequence, we instead adopted the concept of “remote-native” with the underlying idea being that all collaboration and work functions could be achieved no matter what the location. While it is important your business is competing for the highest quality, and happiest, staff it is also critical to set your own strategy for doing so.
According to a UK survey released earlier this year from PerkBox, for employees working remotely, their top three perks are money towards household bills (50%), budget for their at-home working setup (46%) and more flexible working hours (31%). Employee mental health is also a major issue that workplaces need to be taking more accountability for. According to the same survey, 41% of 25–34 year-olds would like time off for mental health/mental health days. The most important thing here is to listen to employees and what they need and actually deliver on this in practice.
There is also a level of trust required to create happy teams, particularly in a remote-working age. A Harvard Business Review article states that compared with people at low-trust companies, people at high-trust companies report 74% less stress, 50% higher productivity, 76% more engagement and 40% less burnout. Trusting employees and measuring their success based on outcomes, rather than hours, will have a powerful impact not only on your employees’ happiness, leading to less turnover, but also the success of your company in the long-term due to higher productivity and quality of work. It’s often not about the money, it’s about feeling heard and valued.
Ultimately, bootstrapping your own business gives you total autonomy to build and run a business the way you think it should be run. Without people helping to achieve your vision, progress will be limited. To find the team to support you toward success requires the consideration of the many permutations of what makes employees happy, as ultimately, they are the key to your business success, not you alone.
Stuart Low is Founder and CEO of Biza.io.
