How to Bootstrap Your Startup

Original set publish date: December, 2011

Paul Grant started coaching with events on topics like how to raise funding based on his experience as an entrepreneur having founded a London based company through private equity and debt finance. The company offered London-wide catering to the corporate and retail markets. He has since been involved in building a network of over 500 business angels at Capital Partners Private Equity Ltd and more recently at BA Capital Ltd, while assisting young businesses with fundraising and coaching. He has also the founder of “The Funding Game” seminar series which offers practical guidance and networking opportunities for entrepreneurs seeking capital for early-stage and growing ventures. Paul’s passion is playing a part in helping other entrepreneurs launch and run their own successful businesses.

Matthew Arnot is blogger, business analyst, and ghostwriter living in London, England. He first became interested in startups after creating his own proofreading company based on his experience at the London School of Economics. Shortly thereafter, he worked in sales and then as a business analyst at Groupon UK which is arguably the fastest growing company in the history of the internet. He is now developing his own startup by building on his academic and work experiences. He writes a blog and he has also ghostwritten Don’t Screw Up Your Bride’s Wedding Day.


This How To Bootstrap A Start-Up guide is designed to help you avoid the most common pitfalls when creating a startup. If you take the time to quickly read this eBook, it will fast-track you towards business success, and it will save you countless hours of unnecessary work that startups commonly create for themselves. This eBook is built around the central idea that bootstrapping is the best way to create a functional, and thriving business.

Only after you have proof of concept as a bootstrapped company can you begin the process of seeking investment. The techniques, and real life advice contained in this eBook come from years of aggregated knowledge from expert literature in business, as well as the direct experience of Paul Grant at BA Capital Ltd, and his own startup experiences in the early 2000s.

Avoiding The 99%

Starting a business is an attractive path for ambitious, self-motivated, and hardworking people. After all, being an entrepreneur provides greater control of your life, as well as the freedom to think creatively, and to take on the responsibility for your own successes, and failures. The problem is that it is hard work, risky, and there are huge barriers to entry in today’s business environment. Most often, so-called entrepreneurs end up doing nothing more than doing the classic case of: buying yourselves a job (BYAJ). Since there are thousands of long established businesses already vying for market share, the challenge of creating a successful venture that is scalable is a rather daunting one.

You will need to avoid the mentality of the 99% of entrepreneurs who have failed, and instead seek to be part of the 1% of entrepreneurs that convert their aspirations into successful scalable businesses.

Take the Blue Pill Or the Red Pill

Whether you are aware of not, every entrepreneur makes a choice between dealing with the reality of the challenge that awaits them, or sugarcoating their strategy with the cozy illusion of ‘common-sense-know-how.’ It is much easier to simply approach business as a game founded on the logic of common-sense-know-how rather than the extremely unstable work of startups. There is a low chance that you will raise equity with this Easy Root/Blue Pill strategy. As Paul Grant’s experience suggests, VC/Angel Groups will not be interested in a poorly conceived product.

In this eBook, we are asking you to make a serious choice. You could take the Blue Pill which is a primrose path to buying yourself a job. Or take the Red Pill which this eBook outlines. Many people take the Blue Pill which consists of following the conventional steps to getting a startup going; creating a detailed business plan that you will spend months creating, and then seeking out investors with your insistance that you have “the next big thing since Facebook.” Taking the Blue Pill will even include asking friends and family to fund and support, in order create an inflated sense of success in your entrepreneurial endeavour.

1%…typical success rate for start-ups that take the Blue Pill.

Why have so few entrepreneurs succeeded? You can follow the common-sense approach BUT this lower performance happens because they haven’t played the game well. In 99% of the startups, there is no proven revenues, and the product has not been tested. 1 out of 100 entrepreneurs actually acquire funding of + £250K from Venture Capital of otherwise.

These are Paul Grant, and VC/Angel Groups findings. In fact, the 1% figure is actually an optimistic reading considering how many startups are never recorded..

The 99% Approach….(Road to Buying Yourself A Job)

 Step 1    An entrepreneur has a great idea, and has the guts to see it through!

 Step 2    Sets out writing a detailed business plan: a robust business plan, which experts have been paid to ensure will work. Some entrepreneurs buy business plans, and end up spending a year working on a business plan. There are some people who spend £50,000 on business plans, and only get £5,000 back in investment. Everyone thinks it is all about the plan, but continually fine tuning this blue print for the business actually detracts from reaching your funding goal.

 Step 3    In Search of Capital: while people aren’t even keen he/she flies to Silicon Valley where they meet VCs who are disingenuous, and rarely say “no, thanks” for fear of passing up the next Zuckerberg. There is no margin for saying “no.” For the VCs, in other words, there is no reason to turn someone away completely, but instead they will spur on an entrepreneur and give the entrepreneur false hope about the possibilities of successful deal being made after further research. Plans are refined, and entrepreneurs then go back with a better business plan, and a bigger team, but it is a waste of time, and have to get salaried jobs.

 Step 4  Entrepreneur quits after a year of searching: they might have good team etc and they blame the business plan, or the company who wrote up the business plan for them, perhaps some interest occurs but disappears before any contract or commitment to investment occurs.

The Choice Is Yours

Yes, of course, there are UK-based entrepreneurs who have received millions of pounds in funding with a business plan no longer than just 10pages, and no revenue to show for his project. Random cases of such success are rare pre-2008 case, and in the end, almost all startups fail to couple equity capital with sustainable revenue growth. BUT they are not going about it the right way. Otherwise, instead of taking this Blue Pill for the easy road forward, we encourage you to take the more rewarding Red Pill which asks you to strategically assess the reality of your situation in. The Red Pill means thinking strategically about how to maximize your potential as an entrepreneur. Where you might find yourself conducting several pivots in your value proposition because of new information about what customers really want (whether they know it or not).


You chose the



You have choosen to pursue the Blue Pill strategy. You’d better get started on that 100page business plan ASAP. Please send an email to so that we can process your refund for this eBook within no less that 5 business days.

How about that Red Pill?

Excellent choice!

Boostrapping isn’t easy: the shed above was the starting point for Hewlette Packard so get ready for a tough, and lean experience. What doesn’t kill you makes you stronger. Businesses go bust regularly by tripping on the same early-stage problems, and not being tough enough. Our guide will help you avoid the false assumptions surrounding getting your startup off the ground. By taking the Red Pill, you are heading towards a much more promising path which is where we now turn.

I. What is Bootstrapping?

Bootstrapping is creatively using the limited resources that are available to you. The term bootstrapping comes from the book The Surprising of Baron Munchausen. In one of Munchausen’s exaggerated tales of magical adventure, he claims to have lifted himself out of the Spanish Ocean by pulling on his own hair, and boots. In other words, Munchausen creatively claimed to do the impossible, and defy the odds, as well as gravity.

Of course, Munchausen is a caricature of the swashbuckling-sort but the idea has grown from that original meaning. You will need to be creative to generating revenue early. You absolutely must avoid the false assumptions surrounding getting your startup off the ground.

II. Why Bother Bootstrapping?

We recommend that you start with minimal resources, achieve the Proof Of Concept stage, and then an Angel Investor or Venture Capitalist will come through. At an early stage in the project, errors cost 100pounds or 1,000 pounds, but for these VCs, they could spent upwards of 100,000pounds for one small mistake. The risk is too great for any VC to bare. In fact, there are many examples of bad startups that follow this approach. One in particular has caught Paul’s direct attention while working on projects in London. These folks had a few employees, everyone had mobiles, and because they had the money, and spent like fools.

They bought a massive floor-space, everyone had a car, and a business flat in London. This business was in the last 1990s, the only problem was that it was another The company did not have Proof Of Concept worked out because they did not have a track record of revenue generation, and profitability. They had an idea they believed in, until it was shown to be fundamentally flawed. It is a waste of time going after VCs after the lessons learned from the first dotcom bubble. They are not interested. Some people spend two years trying to develop their business. Entrepreneurs come with three ideas at once, and it’s maddening for people working equity.

The KEY POINTS for why you should start with bootstrapping:

  • Boostrapping creates massive value based on learning as you go;
  • Bootsrapping reduces the risk for investors. As the Managing Director, you come to know how the business works because you have created, and ran it;
  • Boostrapping allows for mistakes at low prices: you can afford to upset 100 customers in the process of discovering that your operations are faulty;
  • Bootstrapping allows for the codifying of what works in your business and what does not. This inside knowledge is an absolute asset for maintaining a competitive advantage;
  • Bootstrapping allows you to build the connections needed when the time comes. You will need to build a viable team around your business;
  • Bootstrapping helps raising funds about 20x easier, and reduces risk to investor;
  • Boostrapping helps the founders retain large controlling stakes of the company.

III. Bootstrapping Versus Instant Venture Capital

Getting a startup does not require much startup capital, but unless you have a lot of money, you might be tempted to seek out Angel Investors or Venture Capitalists before you have even bothered to secure office space. It has been known to work for some. With a few powerpoints, and a solid pitch to investors, it is indeed possible to secure major investment on even the most slimmest of business plans.

In reality, we believe that being able to acquire venture capital relies on a much harder, but more rewarding process called bootstrapping. In order to make your startup work, you will need to generate a cash-flow from customers that is capable of generating sufficient income to survive, and with any luck, afford you much more than the predictable career paths that most people take. We recommend that you strive to produce a string of early successes before turning (within the first year) to other sources of support for your startup.

You need to try to work out the business while keeping that cashflow. You need to keep this cashflow in the game long-enough until you work out an investor arrangement. You need to survive the first year, so learn how to manage cashflow.

IV. In Good Company

Most of the successful brands created in the last two decades were the product of bootstrapped operations. You may recognize some of these companies. By bootstrapping their company, these entrepreneurs were able to build their own management skill-sets, and better understand through codifying their experiences, ad learn how to run a company from the ground up. They did not require Angel Investors or Venture Capital at an early stage in their development, but rather bootstrapped with minimal resources.

eBay: Pierre Omidyar started ‘AuctionWeb’ in San Jose, California in his garage as a personal hobby. The original website included a tribute to the Ebola virus. The first sale on eBay was a bid for a $14 broken laser pointer.

Hewlett-Packard: David Packard and Bill Hewlett started their company in a one-car garage in Palo-Alto after completing a mentorship with a Stanford University college professor. Bill Hewlett’s Master thesis was on audio oscillation which was instrumental in their first major high-tech audio equipment.

Body Shop: Anita Roddick started the Body Shop after visiting an American store of the same name. She painted the walls of the first of her shops green due to the mold growing on it. An early investor gave her only 4K into the company. Body Shop was very recently bought by L’Oreal.

Ben & Jerry’s: Ben Cohen and Jerry Greenfield completed  a correspondence course on ice cream making, and with under $15K in startup capital, they opened their first parlour in a Vermont, USA gas-station in 1978.

IKEA: Ingvar Kamprad started their company in 1943 by focusing on building a better shed more cost-effectively. It was not until 1953 that he opened his first store. He still owns 100% of IKEA to this day.

Marks and Spencer: Michael Marks and Thomas Spencer started their company in 1884 in Leeds by opening as stall in the Kirkgate Market of Leeds.

Oracle Corporation: Larry Ellison, Ben Miner and Ed Oates started their company after leaving Ampex, and IBM in 1977. They had no startup funding for over a year. Jeff Bezos realized that a cheap online retailer of books would cost much less to run than the bricks and mortar operations in the local Seattle, Washington area. His slow growth formula bucked the bubble burst in 2000.

Don’t worry if you do not have a garage….you just need a revenue generating idea.

V. Clarity of Vision

There are all kinds of entrepreneurs, but frequently they are wide-eyed and have hundreds of these great business ideas. The mistake they make is trying to implement a handful of ideas simultaneously. This is a source of failure across the board. You need to focus on your core business idea, so that you can apply all your energies to prove that it will generate revenue, and profitability in the first year. This is highly risky, but a greatest risk comes from overspreading your time, and energy. The biggest reason for failure is that the entrepreneur has several different projects, but at some point you have to find your main focus, and you will need to build a team, and outline your goals as a company. You will need a clarity of vision.

Once you have isolated your vision, you should turn to your Unique Selling Proposition (USP).

CASE STUDY: What Makes A Great Unique Selling Proposition?

Domino’s Pizza was founded in 1960 by brothers, Tom and James Monaghan, with a down payment of $900 in order to pay for their first store in Michigan, USA. After a few years, James traded his stake for a used Volkwagen Beetles partly because the business appeared to be a case of BYAJ (buying yourself a job). Soon afterwards, Tom developed a major innovation in his business’ unique selling point by asking: What do customers really want? Tom’s idea was to bring in the now famous Domino’s Pizza promise of fresh hot pizza delivered in 30 minutes or less: guaranteed. If you didn’t receive you pizza in less than 30 minutes, you would get it free of charge. Domino’s Pizza changed its value proposition from standard pizza joint to getting your pizza delivered in least than 30 minutes. This completely changed the business. Afterwards, the business gained appeal against its prominent rival Pizza Hut and by 1978 they had over 200 stores across the US and Canada.

So, what is unique about your service? You need to pinpoint what it is that you do better than the available competition in the marketplace.

VI. Crafting Your Unique Selling Proposition

What does your business do? Who is your customer? What is the biggest benefit of doing business with you? Can you prove your claim using numbers? How will customers perceive this benefit compared with the competition?

Unique Selling Proposition in 1-Sentence or The 30-Seconds Pitch

Entrepreneurs who are serious absolutely must have the Unique Selling Proposition completely consolidated in your mind. From working with VCs, and having read over has seen over 1,000 business plans that do not have a USP it is clear that being able to explain who you are, and what you offer in a very short span of time is essential. In fact, attention spans are so short that you really need to be able to explain your USP in less than 30-seconds. If it takes longer than that to explain your business, then you have too many verticals.

Think of this basic outline for your unique selling proposition as follows:

My Company, (company names), is developing (a defined offering) to help (a target audience), (solve a problem), (with a unique twist).


Madlibs for Pitching from Founder Institute on Vimeo.

For example, My Company, Google, is developing a search engine, indexing tool to help internet users find what they are looking for quickly, and objectively.

Naming Your Business

Saatchi & Saatchi believe that selling should be done in one word. Google’s one word is “search”, eBay’s is “auctions.” The title of your business is best if it is self-evident, and it does exactly what it says. Being able to do this is obviously rather  difficult with domain names being less and less available.

VII. Street Smart Accounting

In Bootstrapping, there is no excuse for not learning as much as possible about accounting. The bootstrapping phase of your business venture is all about cash-flow – creating and managing money. Do not create a business plan until you have some cash-flow. You need to work out what the daily processes are for your business, learn about the formula, nail down the profits, and be able to predict accurately how your market behaves. You need a customer volume, and you need the accounting tools to keep an eye on the cash-flow. You must avoid being in the red for too long. EVERY single day you need to review the cash-flow, and accounting.

Watch These Figures Like A Hawk: accounting relies on your observation of the numbers in your business. This is an objective measure of how your business is performing so pay close attention to these variables:

  1. Cost per sale: how much do you spend to get a customer, Paul’s early 2000s startup cost 8pounds to get one customer, and make about 6pounds. This is widely referred to as the acquisition cost. You do not want to make a loss on the first sell, you need to get it down to about as low as possible 4pounds.
  2. Average value of sale: If you change your business by ten percent, then that can mean a lot in the long-term. How much are you making per customer on average, this helps create a predictions about your companies future.
  3. Repeat orders: you need to get new customers, but you also need get re-ordering of clients. You need to track how many people are ordering. Only about 30% of customers re-order your services, the average value is 30 pounds, so it’s a good deal.
  4. Gross Profit: the cost of delivery, and the total. This is not including your over heads. Find out if the services are viable. Retail has to be over 60%, catering has to be 70%. You need to have a buffer to survive.
  5. Overhead: How much you will pay for your rent? Once you start hiring people, those people want to buy stuff from you. You have a very predictable overhead.
  6. VAT Return: if you miss your payments 3 quarters in a row, VAT return government have the rights to arrest you, and take your children away from you if you couldn’t pay the VAT. If you talk to them they may take your business out. Be nice to HMRC people.
  7. Projected Forecast: it is a fantasy to project over year one. See how far you are off from a projection? You will get a more and more accurate projection of your plan as you continue to bootstrap the project.
  8. Comparison Against The Previous Year: to find out how much your growing, you will need to have accounting details organised in greater detail. If you are not doubling after the 1st year, then you have likely BYAJ (bought yourself a job).

Alternative Sources of Capital

1)      Vendor funding: use their supplier money, and credit terms to fuel the business.

2)      Rentals: rent a van, equipment that you are using in your business, and pay a few extra pound a month.

3)      Factoring/Invoice discounting: Invoice discounting: if you get some sales with credible clients: they don’t pay you for 90 days, or 30 days. They use that as an interest free loan. You can sell your invoice.

4)      HP/leasing: lease your office space, or use a friends office space.

5)      Overdrafts: use your banks overdraft policy as this falls under the radar. Getting an actual bank loan to head office will not work, 90% of people don’t stand a chance of that.

6)      Credit Cards: pay it back on time, and use the limit regularly. This will allow them to give you an increasingly valuable Visa card.

VIII. Travel Light: Avoid Spending Frivolously

When bootstrapping, it is always wrong to spend money frivolously before you make money. The overhead needs to be outlined. You need to try to cover the overhead, and customer overhead. Paul’s wife started a business, which included getting some staff, and an office. If you need an office that you can borrow for the startup stage, don’t hire staff. Massive overhead of employees would be a disaster, because you end up training them, and paying them without the guarantee of business flow. They would use free office space through business partnerships rather than buy their own office space. A competitor started in a nice office in Victoria, long lease, full time staff doing nothing, and then after a year they were really struggling, but lost it, and ended up closing shop. You could have identical contacts with your competitors but by bootstrapping you will save yourself a lot of hassle and the danger of complete failure. You should get freelancers, and contractors initially.

The Key Points are for Traveling Light:

  • Keep to variable costs, rather than fixed costs. Avoid the payroll sweats.
  • Outsource all but what makes your company great. Don’t produce the product. If you manufacture, always outsource those products, or just go to South Korea.
  • You might pay online, and they will deliver it. A pay as you go warehouse is optimal
  • Become a kitchen table tycoon: WORK AT HOME. There was a 5 million turn over, sitting at the kitchen, running their company. Why use an office?

IX. Protecting Your Ideas

“Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats” Howard Aitken (built the first IBM ‘Harvard” computer)

It is how you implement the idea that really matters.

Do not get your product patent protected. Patent lawyers, and government agencies are the winners from getting your idea patent protected. Why is that only 3% of people actually pay back the cost of the patent? 97% of people lose out in the patent process so stay away from patents. It is very difficult to protect an IP anyway. You might have someone steal your idea, but then to go to a lawyer to take them to court is rather difficult, and most people don’t have the resources to pursue legal action. You need to evolve with new products regularly, and move on anyway. It is a waste of your time, just make sure that the channel is very tight, and the sales process is very closed. Tight channels are valuable. You should worry about creating a competitive advantage over your competition.

Still want to go for it? Get one hour – free meeting with an IP lawyer. Lawyers always want to get your stuff patented. Lawyers will sometimes just say no, it won’t stand in some cases. The Patent process is rather difficult anyway, you need three different patents, and you end up having to have 3 times over in the patent process.

  • Put together the application yourself
  • Do the search yourself
  • Research and get the product right
  • Then, and only then should you hire a patent lawyer.

Case Study: was created in the wake of the Groupon collective buying power industry. One of the problems with the Groupon model is that it is decepitively ‘easy’ to copy. The person who created company followed the bootstrapping method  in order to tweak the Groupon business model into a more automated structure. He researched the market in the UK by size. He then launched his website from his bedroom with £300 worth of paid advertising. He promoted his product on Myspace and Friends Reunited. While his marketing message usually gets lost, within a year he was achieving £1K in sales on a daily basis. He flipped the business model in order to make it more scalable: [THIS NEEDS TO BE FURTHER EXPLAIN BY PAUL] his company pays partners a commission, and then started emailing for 10% of every deal done. His first big customer was Dell, then he launched across Europe. This year has a turnover of £9million. This was all done by bootstrapping. It is important to note that had he not flipped the business as he had, he would have failed.

X. How To Bootstrap

Pick A Battle You Can Win: don’t tell people that you are the next Google. Think niche, niche, niche when it comes to your product and industry. If at all possible, work on something you are passionate about. You need to hit areas that you can dominate. You have to think in closed terms. Who are your early adopters? Certain people love new stuff, and these people are going to be supportive of your goals.

Sell Aspirins, Not Vitamins: cure a pain, don’t be a vitamin. Your value propositions needs to entail solving a problem. Start to build some momentum by finding out where your customers are and sell aspirin-like solutions. Create a picture in your mind of your ideal customer which outlines their motivations.

Do Not Try To Educate The Marketplace: Paul pooled services, and food into one portal on booklet form, because people wanted greasy food. People didn’t understand the butler service, that was introduced so that was scrapped. You need to narrow down your service, and specialise into a specific area while ensuring at the same time that you can generate sufficient cash-flow from that one vertical.

Focus On Top Tier Relationships: you should sign up for a kudos account at by your social interactions, people who get significant respect will respect you in return.  You want word of mouth to carry your message to others. Apps: everyone has a new app only 3% or 5% will actually make any money. How to get attention for an App. You will want to continue to innovate overtime.

Advertise Yourself Creatively: there are some good and bad points from this book called Four-Hour Work Week. One hugely important point is that the author targeted the top bloggers, and other people at conferences, and other social events who picked up the book. He trialed the title of his book through Google Adwords to test which names would perform best in search.

Your Optimum Sales Strategy: sales is closing a deal face to face, marketing is understanding that customer, where they are, the framework behind your product, and the formula that you are can reproduce over and over again to win customers.

Case-Study: Sweet Cheeries & The Importance of Trial and Error

There was salesman who inherited his grandfather’s fruit stand in California, and decided to work at it by developing a system for selling cheeries. Now he makes a million in a 100 day period, and takes the rest of the year off, because he really understands the marketing, and he knows how to build a sales system. His first stand only made about $100 per day, and so he figured there must be a better way to sell fruit by the side of the road.

He started thinking about signage, he changed and tweaked his fruit signs to see how that might impact sales. He tried over a 100 signs with different combinations to come up with the key name “Sweet Cheeries.” He also used nostalgic California signage. These signs resonated with people which said slogans like “picked today” Or “today’s pick.” He was too close to his competitors, he found that in between the two cities and found was a better place away from farms to set up his stalls in the San Franscisco Bay area which was the right location. He doubled his sales again. He even found that if he had his back turned to the customer when they were approaching, that this would work better. He would sell his cheeries by the basket instead of weighing them. He figured out how much cheeries cost, and tested how he might sell more cheeries through bulk-pricing through the local fruit brokers. He found that he could double his profits by working directly with local farmers for peaches, and cheeries this way. He would then also confuse the customers with the pricing. His samples were always small slices. He also found that if customers paid by dropping the money into a container without him handling money that he could double his profits because of hygiene concerns.

Your value as an entrepreneur is the codification of your businesses operations. Only through hard work in the bootstrapping phase will you be able to build the skills, and knowledge needed to put your company forward, and command it as the leading expert in its operations. You need to build a predictable system, and you need to get that business to keep it alive until you understand the business.

XI. Leverage Other People’s Resources

  • Premises: getting a place to work for cheap entails leveraging your network. Can you have a small concession in the corner of your store, and then pay them a small amount for using that space?
  • Technology: find someone that designs websites, or find someone that has the technology and leverage their time in exchange for something of mutual interest to you.
  • Contacts: you might start with no contacts, you might be someone within the advisory. Consultancy connections will also help. You need to network quickly, and effectively to get what you want out of your local business community.
  • Databases: you need to have a databases, who holds all your customers. Universities have a list of all the students in their university. You should try to acquire the databases from the universities, other business or elsewhere if legally possible. Do a joint venture with a university or business. If you put me in your database, I’ll give you 20% off. Although it may be problematic from your customer’s perspective, have an opt-in for your email marketing so that you can exchange databases with 3rd party suppliers.
  • Distribution Channels: create the means through which you connect with your clients. This typically involves building a website.
  • Credibility: get someone credible to attach to your brand. Believe it or not, you could try to email Bill Gates. If you have a value proposition that is related to his industry: Why not try?! You can reach anyone if you go through the right channels.

XII. Building Credibility

Case-Study: The Top-Down Flop Built On Credibility

Bill Nyugen’s startup called “Color” raised over $41 million USD from Venture Capital after only a one 45 minute mind-blowing pitch meeting. Nyugen did not have Powerpoint slides, no assistants, just himself pitching for over 45 minutes about his new product. The idea behind ‘Color’ (and most new tech startups) is that he would be able to link people in the real world to their online selves. ‘Color’ literally allows individuals to take pictures of eachother, and immediately connect, and communicate with each-other online leaving a digital record of their conversation via the ‘Color’ app. He explained that he did not have a plan for how to get ‘Color’ to market…The fact is that Nyugen had a strong record of getting in and out of companies leaving investors rather wealthy.

How was he able to close such a massive investment so quickly? He simply had credibility having started 3 or 4 companies prior to this pitch include He was successful in getting exits for himself in these previous projects, and had an impressive track-record that made any VC at least interested in what he had to say. ‘Color’ was launched with a massive campaign. ‘Color’ is unfortunately a top-down idea. Most users gave it a low rating because it didn’t work properly. Unfortunately, it failed because ‘Color’ only works if all the users are within the ‘Color’ database as existing users. Bill Nyugen’s problem was that he was not thinking niche, or starting out small.

He is good at pivoting an idea however, so people have not written him off. Nyugen is now going after Facebook who have a massive database of users to help make his top-down social app work properly.

Credibility Through Association: three ways of going about acquiring credibility.

1) Find Grey-Hair Mentors: Unless you are in the same category of entrepreneur as multi-millionaire Bill Nyugen, you will need to create the appearance of credibility through other means. You should locate first class mentors/non-execs. Finding credibility will mean that you will need to pay them [13]equity stakes of up to 5% or a consultancy contract. Be warned that there may be several startups working with this mentor, and that they are humouring you just in case your idea is a winner.

2) Associate Yourself With Established Brands: attach yourself to something that is more well known then yourself. Who is the most credible brand in that niche? Paul’s experience was in working with Blockbuster and throughout the community, and associated with them. The deal entailed returning blockbuster videos for customers. Now associated with the Blockbuster brand, some people thought Grant’s company was owned by Blockbuster. asked if he could get the advert for free: Coca-cola, we will even give you a free coke. Again, finding a mutual interest lead to business development, and Grant successfully associated himself with the Coca-cola brand. Don’t spend a large amount of money on these partnerships. Ride on the credible brand.

3) Get High Profile Customers At Cost: Build a list of testimonials from your client base. Let your best customers tell the story for you, and people are always looking for social proof of your companies credibility. If you can get a model, actor, or business leader to endorse your product then you are going places. It may seem unrealistic but you should think about this as a viable option. Network with people who have existing credibility to advance your cause.

XIII. What Is Your Business Model?

How do they like to pay for this service? How is your business going to create cash? What is the best model behind your competitors?

Find the things that work for you, then find the customers.

Low Investment Of Time: ideally you want to ensure that you are not required to micro-manage the service delivery process. In one case, a landscape gardening professional would go and get 50 pounds per job. Then this gardener decided to do a contract system where by the gardening would occur after for a year. Then he had regular returning.

Low Acquisition Cost: how much does it cost to get a customer? Pay per click workd out how much it will cost per customer. Google Ads is extremely expensive there is no time or head space. Using Google, you could get a click per 10p but they are now 1 dollars. Facebook is still the wildwest of online advertising. Facebook is still is worth going after for advertising your services.

Get The Cash Quickly: Repeat customers are key. You should always try to upsell them as much as possible. That is an absolute essential aspect of the process: another add on services. Warrantee services: sell them another cup of coffee. There is more and more profit overtime in repeat customer uses. Although it is not always possible, having a product that can be repeat purchased is advantageous.

Prepare For the Pivot: On average, over half the businesses have to change the business model. It is almost guaranteed that you haven’t got it quite right in the initial stages of your development. The made money through an initial strategy then he changed the business model to get a commission. You will have to keep your eyes open to the 5 or 6 business models that will work. Every business can be pivoted. The business is going to change, so be open to such change. Steve Jobs did not want PC users to have access to iTunes, when he finally agreed to allow them to use his service, Apple’s profit margins grew massively with this compromise.

Case Study Glasses Direct

You should ensure that you have researched the market. A 21 year old bootstrapped Glasses Direct by find a lab to produce a pair for 6pounds online. The startup spent 1K of seedfunding on a website, and then quickly proved the concept works. This entrepreneur then sent a live sheep into a Specsavers in London, in order to illustrate just how baaaaddly Specsavers was fleecing everyone on high price glasses. This was a major story that crashed his website, but in the process of gaining attention, he found an investor, and recently raised 20million. He was not sued by Specsavers because that would have drawn further attention to his marketing strategy.

XIV. Bootstrap Marketing Approaches

1) Use the Power of Joint Ventures: don’t go for corporate marketing books because they have about half-million in funding. They are crap at doing marketing. In on case, a startup spend ½ million pounds. They had a problem, and can’t make it work. Where is your marketing plan? We haven’t got one, we thought it was so powerful people would just buy it. But it turns out that the shit ideas: ceramic mugs 10K mugs, general advertising, poster advertising doesn’t work. Poster advertising doesn’t work.

2) Only Measurable Marketing: if you can find a way to measure your marketing then do it.

3) Crystal Clear USP: needs to be super clear.

4) It’s a numbers game: always quantify everything, use as a resource, while she was building the sales system. She got a sales person in and listened to this guy for about a week, and worked out the numbers he was getting. Learnt from the system. If you call 50 people 10 appointments, average sale is 1000 pounds to train people to do what we did. Reproduce the results, and sell this business. It’s a numbers game.

5) Test, Test and Test again: isolate variables, and test two cases to see which performs best. The key has been to create a changing business model that responds to customers.

6) Discover your optimum sales strategy: to market message and price. Angel investors won’t be needed until you have figured out how your company works. (See the Sweet Cheeries example.)

Low Cost or No Cost Marketing

PR – find an angle, and create a story around your company. PR that works, who is the audience and what do they want? Turn the traditional model. Create press to generate initial interest. Connect your business with a real human story.

On the SEO side: iPad, Facebook, Twitter. Learn how to manage these tools.

Social Media: highly effective but you have to work at it. Become a Facebook, Twitter, and Linkedin expert. Pick a couple of social media tools, and master those products, give it 5 minutes a day.. HootSuit is a great way to organize your Tweets, and other posts. An example of effective social media use is that Wine tasting Warehouse: but they were short of sales, so they knew a friend of Steven Fry. Stephen Fry is one of the most follower tweeters in the world. The free giveaway: you can get a PR story for free. Repeat customers.

XV. When Is It Time To Quit Bootstrapping?

If you bootstrap for two years, and you have the sales figures but your growth was not stellar, it can work against you as you try to transition to the core aspects of the Funding Game which is trying to gain seed funding, or get the interest of Angel Investors.[14] Your time frame should be about 1 or 2 years. If you have successfully made a scalable product with impressive profits then you need to find an investor. Be careful for the passion dying out on their idea, you might lose the buzz overtime, and excitement.

[   ] When you have proven the concept.

[   ] When you have a predictable system.

The core goals of this eBook was to emphasize the importance of proving that your concept works, and then developing a predictable system around that process. You want go flat out; you want to get out before the drip. Bootstrap, and Joint Ventures, don’t worry about planning and details, just work out the formula that works. Codify What is working by write everything down like a Franchise Guide for your business operations, this business will work stick to this strategy, then you have something really valuable. Bootstrapping is essential for getting the next stage.

XVI. What’s Next?

See our eBook on How to Fund Your Startup for more information about topics like the Six Essentials Tools for acquiring funding. The 4 Levels of Startup funding. [Insert pitch for other content]. Good luck.

Perhaps a visualisation of the eBook would be worth pursuing? See for example, The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo. Have to better understand how the eBook could generate revenue, and justify its creation.



  • British Library IP & Business centre – tons of free info, low cost training and 3 hours of a professional researches time
  • for on the job researching an industry
  • Funding
  • – effective crowd sourcing for equity capital
  • – crowd sourcing for loans. Quick and cost effective
  • – quick and cost effective
  • – database of over 4,500 grants and incentives
  • Premises
  • from £55 a month for hot disking workspace
  • Hire offices by the hour, day or month
  • for hot disking or affordable fixed desks
  • Networking
  • Open coffee meet-up group for networking & advice
  • for hanging out and working in networking area – free
  • great network for women and men
  • online and offline social network for early stage businesses
  • Training, inspiration and know how
  • – Free audio training for marketing your company
  • Great for keeping you on track with your goals
  • Employment
  • for smart, enthusiastic student working on a 3 month project
  • very effective for recruiting part-time staff
  •  finds someone to do a task for about £3.50.
  • effective student recruitment tool
  • UK based site for hiring freelancers
  • for recruiting freelancers
  • Equipment
  • – Very useful for free computers, office equipment and furniture
  • – for sharing resources
  • Communication
  • – free or cheap phone calls using VOIP
  • send bulk sms messages at about 3p each
  • free webinar hosting service
  • receive faxes free of charge
  • sends faxes from your computer (30 day free trial)
  • IT
  • – free operating platform – an alternative to Microsoft “Windows”
  • – free alternative to Microsoft office
  • free alternative to Microsoft Outlook
  • – free virus tool for the computer
  • – Wi-Fi locations around the UK
  • www.dropbox. For backing up and sharing documents. Free up to large size limit
  • Free CRM tool for organsining your list of clients, contacts or prospects
  • free open source management tool for projects, finances, sales & more
  • Website development
  • – Free blog or website creation tool
  • – Very cheap and easy website builder
  • Hosting platform for your website for under £10 a month. Great service
  •  Free CRM tool for organsining your list of clients, contacts or prospects
  • – free linux based servers to host your website
  • Legal
  • build your own Non-disclosure agreements for free
  • huge range of standard legal and other documents from £39 a year
  • More legal inexpensive UK documents
  • Federation of small business – Useful for the legal docs and support
  •  free powerful listing company
  • Products
  •  – “drop shipping” website
  • – Another “drop shipping” site
  • to create model of a product idea
  • For PR\Marketing
  • 250 free business cards and still cheap when improving quality
  • free tool to create a logo.
  • brilliant web tool to understand how your customers buy
  • highly focused online marketing solution
  • Groupon for small business deals – good for promotions
  • Useful as a guideline
  • free platform to get your story on the web
  • another website that gets the word out
  • for more PR releases
  •  UK focused PR website
  • One of the best PR sites. Totally free.
  • Finances
  • cost effective accountancy package
  • very good rates on offer
  • free online accounts package
  • Free to sign up and try them £19 a month.

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