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STARTUP

ON A

SHOESTRING

By Nicolas China

Co-founder of Pixilated & Startup Soiree

A young entrepreneur’s firsthand advice on bootstrapping your business.

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TABLE OF CONTENTS

1 How To Start A Business On A Shoestring Budget

2 Blood, Sweat & Tears

3 Lean, Mean Cash Flow Machine

4 Master Social FREE-dia

5 Lean Startup Founders: The MacGyvers Of Business

6 The Startup Scene Is The New Wild West. Be A Gunslinger.

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“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

– Steve Jobs, Founder, Apple Inc.

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1 HOW TO START A BUSINESS ON A SHOESTRING BUDGET

The Art of Bootstrapping: Own Everything. Owe Nothing.

Are you trying to launch the next big thing? Think you can’t afford it? You’re probably

wrong. You just haven’t learned how to bootstrap yet.

Bootstrapping your business simply means financing your company’s implementation and

growth without the assistance of others.

It’s not easy, but there are 2 major advantages. It allows you to keep full control of your

startup, and keeps you out of debt from day one. Bootstrapping is one of the

cornerstones of The American Dream.

Master the art of bootstrapping and you’ll rely on no one. Trust me, I’ve done it.

So here we go…let’s do this thing on the cheap!

Tip #1: Pour blood, sweat and tears into it.

If you want to thrive as an entrepreneur, you have to work your ass off. If you’ve heard it

once, you’ve heard it a million times, but there’s a reason for that. It’s because it’s true!

Ask any successful founder and they will tell you that drive and persistence are essential

to your startup’s success.

Whether you’ve got $100 or $100,000, without good ol’ fashion hard work, you’ll never

make it. So get to the grind.

Tip #2: Turn your company into a lean, mean cash flow machine.

When you’re bootstrapping, there’s no room for “fluff”. Every cent is precious, so make

sure you spend wisely. Plan accordingly and figure out exactly what your necessary

expenses are; then cut everything else.

Your team needs to be lean too. At the early stages, the most effective teams are made

up of individuals capable of wearing multiple hats. Always adapt and never stop tweaking.

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Tip #3: Become a master of social free-dia.

Social media is King…at least for now. So don’t miss out! It’s a great way to build a

reputation, create a following, and test ideas before bringing them to fruition.

The possibilities are endless…but here are just a few ideas:

Crowd source feedback on Facebook to avoid costly mistakes and potential

“flops”.

Convert client testimonials into tweets.

Build relevant pin boards that link to your robust blog content.

Instagram industry specific memes.

Tip #4: Stay clever with your resources.

What do you already have at your disposal? Probably more than you even realize.

Your cousin is a graphic designer? Free logo. Your old roommate is a CPA? Free tax prep.

Your neighbor has a pickup truck? Free fleet. You get the point. We all have access to

different people, assets and skills. No matter what yours are, be sure to utilize and

maximize!

On another note, the amount of free technology, apps and other web-based tools makes

things easier than ever before. Need to figure out how to do something? Google it. The

internet will bombard you with websites, videos, tools, information and the like. Soak it

in!

Tip #5: Barter like it’s the freakin’ Wild West.

What value do you bring to the table? Do people want your services? Do they need your

product?

If you need something, then find an angle and trade for it. If you have a product, skill or

service at your disposal, use it to trade other businesses for their products, skills or

services that you need. Make sure it works for both parties, but don’t be afraid to ask and

offer.

You’d be surprised how many people are in your shoes and would rather trade than

spend!

Go ahead! Pick yourself up by your bootstraps and get started!

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“A good plan violently executed now is better than a perfect plan executed next week.”

-General George S. Patton

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2 BLOOD, SWEAT AND TEARS

Pour blood, sweat and tears into it.

For your startup business to survive, you need to give it everything you’ve got. Let me

reiterate… Everything. You've. Got.

As mentioned in part 1, my first and most important tip is: “Pour blood, sweat and tears

into it.”

Starting a business can be daunting and isn’t for the faint of heart, but if you can muster up

the courage to dive in to entrepreneurship, you’d better do so head first! And if you’re

bootstrapping, you’re business will not survive without blood, sweat and tears.

Blood is thicker than water.

Your support system is integral throughout the life of your business, but it’s completely

essential for survival in the early stages of launching your business. Whether it’s your

family or a tight-knit group of friends, make sure everyone is on board.

Let them know your goals. Talk about your aspirations and ideas. The peop le who love

you are the ones who will support you. They’ll have your back through thick and thin.

These people want you to succeed as much as you do (or in my Mom’s case, even more!)

Most importantly, your close friends and family will give you a sounding board. So if you

have a strong support system in place already, heed their advice! It will help you “see the

forest for the trees”.

No goal was ever met without a little sweat.

This one seems a little obvious, but I’ll say it nonetheless. Without action and effort,

nothing will happen! Acting with a purpose and giving your business 100% effort all the

time is not easy, but it is crucial.

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Entrepreneur Mark Cuban says, “Sweat equity is the most valuable equity there is. Know

your business and industry better than anyone else in the world. Love what you do or

don’t do it.”

Not only will constant action and effort propel your startup, you’ll also find that you’ll

gain irreplaceable experience along the way. Learn the game, practice the game, and then

master the game. Never quit.

A tear is made up of 1% water and 99% feelings.

Passion is immeasurable. It’s a feeling. A fire that burns deep.

Although you can’t quantify it, it is absolutely necessary. If you don’t love what you’re

doing or the direction that you’re headed, stop now! Refocus. Figure out what motivates

you and ride the wave.

For true success, you must love what you do. Not just what you do in business, but in

totality.

Go ahead! Pour blood sweat and tears into it!

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"The competitive flair that built our country--entrepreneurship--is one of the most undersold resources that we have as a nation."

-Kevin Plank, Founder, Under Armour

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3 LEAN, MEAN CASH FLOW MACHINE

REVENUE IS VANITY. MARGIN IS SANITY. CASH IS KING!

Truer words have never been spoken. My Dad, a lifelong entrepreneur used to kick

around the above phrase like it was going out of style (and my guess is that he probably

still does, I just don’t see him every day to hear it!) Heck, he even had signs made with

these affirmations written in big, bold letters.

As I blaze my own entrepreneurial trail, I want to slip in a quick "thanks" to my Old Man.

He is my mentor and sounding board, and without him I don't think my path would have

been the same.

My second tip in part 1 is: “Turn your company into a lean, mean cash flow machine.”

So back to it...

Revenue is vanity. Margin is sanity. Cash is king!

Revenue, without cash flow, is simply that: vanity.

Although so many people in the business world measure success in terms of revenue, you

would be remiss to think simply more revenue translates to more cash. What if you sold

$100 worth of straw? Sounds good right? Not if it cost you $110! Context is key!

Profit margin can be deceiving, too.

Say this time you sold $100 worth of sticks, and now your cost is only $50. A 50% profit

margin! Awesome, right!? Well, sort of…but what happens if your customer waits to pay

you for 6 months? That means that there is still no money (read: CASH) to pay the bills!

Cash is king.

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Cash flow is the reality of your business.

On the simplest level, cash flow is the movement of money coming into your business less

the money going out of your business. It is a more dynamic measurable than the other

two because it factors in the timing of the movement of the money.

This time, you sold $100 worth of bricks, with a cost of $50. You then negotiated terms

with your "brick guy" to pay him in 30 days. Meanwhile, you deliver the bricks to your

customer, who pays upon receipt. Now you have $100 cash in hand, with 30 days left to

pay your $50 invoice. Now go sell more bricks, continue to bring in cash faster than it

goes out, and create more and more runway for your business. Soon enough you'll have

enough runway to take off!

Companies that cash flow positive on a regular basis have the capacity to reinvest and

spark growth. Companies that don’t, can’t.

Now it’s time for you to get lean.

If you’re truly launching your startup on a shoestring budget, you need to prioritize. Big

time.

What is important? Where do you make your money? What is your focus? Are you

focused on the right thing?

Asking yourself these questions will help you to avoid “spinning your wheels”. If you can

be clear and concise about your goals, you’ll be surprised how clear and concise your

decisions, and thus, actions will become thereafter.

A lack of focus typically ends with a lack of accomplishment. Without a plan, money will

get wasted on the wrong things. So spend effectively and efficiently.

It goes without saying (hopefully) that cushy leather chairs, waterfront views, and a

company leased Mercedes are out of the question (for now)!

Your team needs to be lean, too.

At the early stages, find people with multiple skills who can wear various hats. Find an

office manager with graphic design skills, an assistant who has a bookkeeping background,

or a manager who happens to double as the office handy man. You get the point.

Utilize any and all skill sets!

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There is a time that this will change and specialization will be key, but agility and flexibility

within your team is key in the beginning.

And don’t forget to be mean!

You don’t actually have to be “mean” like a bully, haha. Think: Tenacious and Persistent.

Make sure that your company can sustain a high level of effort and production to drive

sales and execute work. But a lot of startups fail to put the same emphasis on collecting

money owed. This is where cash flow comes back into play.

If you can’t collect the cash to pay your bills and reinvest for growth, you will fail.

At the end of the day, if you sell a lot, execute a lot, and put more money into your

business than it spends on a regular basis, you’ll be just fine.

Don’t forget though, it’s all about timing!

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“I have not failed. I’ve just found 10,000 ways that won’t work.”

– Thomas Edison

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4 MASTER SOCIAL FREE-DIA

BUILD A REPUTATION. CREATE A FOLLOWING. INFLUENCE.

In a technologically driven, social media addicted age, exposure for broke, young business

owners is easier to get than ever before. Think about it…every thought in your

overflowing brain can easily be out there in the universe with the click of a mouse or tap

of a finger.

The beauty of it all!? IT’S FREE!

Or is it?

My third tip from part 1 is: “Become a master of social free-dia.”

So before Facebook or Twitter ever existed, if someone would have told you that you

could expose your brand to thousands or even millions of people without spending an

exorbitant amount of dough, you would’ve probably never believed it.

Social media makes that entirely possible, and it gives bootstrapped startups the ability to

market brand culture and awareness with little capital. It gives you the power to create a

fan base which will ultimately influence your client base.

Without further ado, I’m going to do a quick dive into each of the major social media

platforms. I’ll briefly describe one aspect of each social site that I like and one aspect that I

hate. I’ll also give you a single tip; some tidbit that we implement on my companies’ social

pages regularly. I’ve also included a quick “cheat sheet” graphic to help you optimize your

social media photos across all platforms.

Let’s start with…

FACEBOOK

What I like.

There is a very broad demographic, so the sheer volume alone makes it attractive for

exposure. If a post's engagement picks up traction, it will be shown to a wider and wider

network of users and can go viral.

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What I hate.

The same algorithms that Facebook uses to help your posts take off can kill them just as

fast…especially with Facebook for business. Personal pages are given preferential

treatment over business pages. It sucks that you can have 10,000 people following your

biz page, yet maybe only 500 are shown your posts. BS, right!?

Also, clutter. Facebook is just littered with crap, ads, and lots of morons.

Tip: Upload video directly to Facebook.

It will perform much stronger than shared video links. Facebook is trying to compete with

the likes of YouTube and Vimeo, so they are favoring their direct video content over the

others'. They also give analytics on video performance and allow you to customize CTA’s

(calls-to-action) at the video conclusion.

TWITTER

What I like.

The ability to tailor your news and information is a HUGE benefit to Twitter. You only

have to follow who you want to follow, and your followers have to choose to follow you.

My entire Twitter feed is filled with things that I want to see. And when I tweet, my

followers are interested in what I have to say (at least I hope so!) or why would they

follow me?

What I hate.

The learning curve. It can take some time to get accustomed to the Twitter -verse, and I

think a lot of users quit before they figure it out.

Oh, and also The Kardashians.

Tip: Check out Hashtagify.

Hashtagify is a really cool web tool that helps you choose how to #Hashtag your post.

You just enter the main theme or topic of your post and it populates other relevant hashtags to use that will help your post get the most targeted exposure.

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INSTAGRAM

What I like.

Instagram is my absolute favorite social media platform. Simple and easy to post and

peruse your feed. Strictly photos and captions with minimal advertising give it a pure feel.

It also has the Twitter-esque tailored feed, only showing those users who you want to

see, and vice-versa.

What I hate.

There isn’t much to hate…but one of my biggest frustrations with Instagram is that you

can’t put links in your captions. (It took me a while to think of this.)

Tip: Use Iconosquare to grow your fan base fast.

Iconosquare is a third party tool that kicks back analytics on your Instagram account. It

reports your total number of likes received, your most liked photos ever, your average

number of likes and comments per photo, your follower growth charts, and more. With

these simple analytics, it makes it easy to figure out what works and what doesn’t.

If it doesn’t perform well, stop doing it. Duh!

GOOGLE+

What I like.

I’ll be honest…there isn’t much that I like about this platform. I hate to say it, and now

Google will probably bury this blog post so deep that it will be unsearchable…LOL.

What I hate.

This platform has been force-fed to us as the apparent alternative to Facebook. For

whatever reason it hasn’t caught on, and I think it’s because people aren’t looking for an

alternative to Facebook, they are looking for something different altogether. Facebook,

although still very relevant, is going out of style as fast as it came in, so why is Google+ trying to imitate?

Tip: Suck it up and exist on Google+ anyway.

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The truth of it is, as long as Google pretty much has control of the internet, you might as

well appease and feed their social platform. Why? Because it carries weight with your

Google ranking. Maintaining a G+ page is a small price to pay for the boost it’ll give your

SEO.

PINTEREST

What I like.

Pinterest is amazing for niche businesses. It’s an awesome way to display expertise within

a field, and to showcase products and ideas. Not only are pin boards a great tool for

display, but Pinterest is an incredible inspiration resource.

What I hate.

Sometimes there can almost be too much. The over-saturation can sometimes make it

hard to navigate what you’re really looking for and, in effect can make it difficult for

others to find you.

Tip: Pin other people’s products…especially things that accompany or

accessorize your own product.

Create pin boards for each of your products or services so you can routinely be updating

and re-framing to show that your business is active and alive. You also want to create

inspiration pin boards of other cool products that parallel your own. It can help bring

attention to you within your industry and can get others to discover you when they aren't

really sure yet what they might be looking for.

LINKEDIN

What I like.

Legitimacy. LinkedIn has done a great job of getting its users to fully build out their

profiles and has done so from a “professional” perspective. This makes it very easy to get

a quick snapshot of who does what, and what their goals are.

What I hate.

The down side of the LinkedIn profile is that, much like a resume, there are a lot of

legitimate people with horrible profiles (or none at all) and a lot of phonies with smoke-

and-mirror filled profile descriptions.

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Tip: Publish long form posts on LinkedIn to drive people to your website.

Are you already preparing content for your business? Blogging? A tactic we are using with

this very post that you are reading has been used on LinkedIn. Any time you write a blog

post for your website, publish it as a long form post on LinkedIn. Here’s the kicker…only

publish about half of it. At that point, insert a link that directs the reader to your website

to finish reading. Drive the traffic to your site. Thanks LinkedIn!

BONUS TIP: OPTIMIZE YOUR PHOTOS ON ALL SOCIAL PLATFORMS.

Here's a cheat sheet.

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“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.”

– Mark Twain

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5 LEAN STARTUP FOUNDERS: THE MACGYVERS OF BUSINESS

A Startup Entrepreneur's Guide To Resourcefulness

YOU'LL NEVER BE READY, JUST DO IT ALREADY!

Back when I used to work a 9-to-5, I would obsess about quitting my job and going out on

my own. The problem was I had no direction...and worst of all, I was absolutely paralyzed

by the fear of failure. This fear was my worst enemy. It was producing excuses and causing

me to procrastinate and ultimately stagnate.

While I was at work, in between projects and during every bit of downtime I could

find, I'd read business books, I'd fill up notebooks with off-the-wall ideas and rudimentary

business plans, but most of all I would DAYDREAM. I would dream about the life I wanted

to lead...a life filled with freedom and creative opportunities.

Every evening I would come home from work and "talk the talk" about my next great

business idea. And then every morning I wouldn't "walk the walk". I'd go back to work just

as I had done the day before.

I felt my creative edge start to dwindle, my confidence sunk and my freedom felt

dictated. I became depressed. It sucked.

"YOU'LL NEVER BE READY, JUST DO IT ALREADY!"

My girlfriend at the time (now my beautiful wife!) said this to me. It was something I knew,

something I felt, something I thought; but to finally hear someone else say it to me aloud,

it felt different. It resonated like nothing before. These words echoed in my

head...and finally woke me up.

I realized that my fears weren't actually rooted in my abilities or self -confidence, but

instead they were caused by what I thought I knew. I thought I needed money. I thought I

needed connections. I thought I was too young. I thought no one would take me seriously.

This realization was epic for me. I had made a final decision to take the plunge into entrepreneurship. There was no Plan B...so I went all-in on Plan A.

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Time to get my MacGyver on.

Day after day, month after month, I focused on all of the things that I thought I needed to

start my own business. My "AHA" moment occurred when I realized that my focus should

be on all of the things I already have: my resources .

So if you haven't ever seen the old TV show "MacGyver", I'm assuming you at least know

who he is. For those of you who have never heard of MacGyver, please click the "X" in

the upper corner of your web browser and stop reading...Just kidding!

MacGyver is resourcefulness personified. The Swiss Army Knife of men. He can literally

make a grenade out of a kitten and a paper clip.

Find your inner MacGyver.

What do you have at your disposal? What are your intangibles? Skills, talents, motives,

driving forces?

What have you always been good at? How do other people view you? These are questions

that you have to ask yourself if you decide to venture out on your own. If you can figure

out what you are good at and what you struggle with, then you are on the right track to

identifying your internal resources: your inner MacGyver.

Once you can recognize your skill set (and sometimes lack thereof), your direction

becomes clearer. You can identify where you fit, where you don't, where you need help

and where you can help others.

What (and who) do you have access to?

After figuring out where your skills and talents lie, it is also necessary to assess the

external factors that can help. People, information, you name it .

First, look at family, friends and other existing relationships...it's an easy and comfortable

starting point. Who can help you? Who do you know that "walks the walk"? Seek them

out and talk to them!

One of the most important resources you can ever have is a sound mentor. If you can find

these types of people within your existing network, it is an invaluable resource. Who

better to talk to than someone who has already blazed their own trail!?

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Second, if you don't have anyone to help you in a certain area of expertise, think again.

We all have access to a common friend named Google; effectively giving you the power to

learn just about anything.

Finally, with the ever-evolving world of technology, making the entrepreneurial leap is

easier than ever before. Companies who are bootstrapping have a plethora of apps, tools

and free services available that have never existed before.

Here is a bonus list of my 5 Favorite FREE Productivity Apps

1. Google Drive - Get access to files anywhere through secure cloud storage and

file backup for your photos, videos, files and more. Easy for teams to share files

and store in one place.

2. Tiny Scan - A mobile PDF scanner for documents, photos and more. No need to

buy an expensive, clunky scanner anymore!

3. Evernote - A digital workspace to store and share notes, ideas, photos and more.

It is a great app for brainstorming and ideas sessions.

4. Dashboard - Have your Google Analytics key performance indicators al l on one

screen. It is a really effective way to keep the pulse of your company website

without an insane amount of data.

5. Buffer - A great tool for preparing, scheduling and tracking your social media.

Integrated with most of the major platforms including Facebook, Twitter and

LinkedIn. Set it and forget it (just like those old rotisserie ovens!). Then look back

and see how your posts perform. Tweak, optimize, repeat!

YOU'LL NEVER BE READY, JUST DO IT ALREADY!

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“You don’t learn to walk by following rules. You learn by doing and falling over.”

– Richard Branson, founder Virgin Group

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6 THE STARTUP SCENE IS THE NEW WILD WEST. BE A GUNSLINGER.

The Art Of Bartering While Bootstrapping

Be a gunslinger.

When you’re building a business, especially bootstrapping and doing it for the first time, plan to fly by the seat of your pants every once in a while. Things move fast, agility is key, and the one

who masters his or her resources most efficiently perseveres.

About three years ago, I co-founded a company called Pixilated. Pixilated provides photo booth

services for events; weddings, corporate, bar/bat mitzvahs, birthday parties, trade shows,

conferences, etc. We built and configured our own equipment to create the most refined,

efficient photo booth services company on the east coast.

Without diving too deep into the technical side of the business, allow me to divulge the

situation in which Pixilated was launched. We were attempting to build and systemize a highly

technical, labor-intensive, trend-driven business with intentions to grow nationally by way of

franchise or some other similar turn-key format.

We launched at the end of 2011, while the economy floundered. We were not a necessity at

any event; at least not as essential as a caterer, DJ or band, venue…you get the point. We were

simply an add-on, an accessory...a photo booth. People weren’t spending money.

But guess what!? We killed it. We killed it because we made the decision to not work for

money, but for value. It was a new angle. A necessity.

Sure, our initial plan has changed course several times since day one, but we continually assess,

and thus, continually grow.

Side note: Did I mention my wife was 5 months pregnant when we started the business? Or

that my first son was a two month old when I quit my 9 to 5? Or that I had to sell my house to

make ends meet when we had our second son only 15 months after the first? We were cash

strapped and had a short runway.

It was during this period that I honed one of my greatest skills: the ability to barter.

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Barter like it’s the wild west!

What value do you bring to the table? Do people want your services? Do they need your

product?

Trading products or services, in some ways is actually better than buying and selling, especially

in the early days of a cash-strapped startup. Here are the four reasons why:

1. Exposure – When you barter, it’s a two-way transaction. It’s a buy and a sale at the

same time, assuring your product is alive on the street, or that your service is in action

and on display.

2. Practice – When people are trading, the agreement tends to be a lot more loose than

when people are buying or selling. This lax nature lends itself well to trying out new

methods, new technology, training employees, etc.

3. Testing – What a great opportunity for proof of concept, right? Rather than have

someone pay for the next big “flop”, a barter agreement for something of lesser value

(or even a donation) will relieve the pressure and let you fail quick and move on.

4. Value – You might have something that people are willing to trade big ticket items for.

Test the waters…figure out what your true value is. It may be more than you think.

Assess what you have. Assess what you need….but most of all, know your cost!

Is it a product? Is it a service? What pain points do you relieve? What’s your value?

There are a lot of factors that play a part in bartering. Most of all, you need to know what your

cost is. How much does your product cost to produce & deliver? Be sure to factor in the labor

and materials necessary for your service.

What about your time? At the early stages, when you’re broke YOUR TIME is your proverbial

“Ace in the hole.” As your business matures, the value of your time as

founder/partner/CEO/what-have-you skyrockets and your time must be a factor.

In its infancy, your business needs you to add value without cost – so roll up your sleeves,

Boss-man.

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At Pixilated, we focused on trading with big brands for exposure at large events. We

traded for ad space with publications both online and offline. We continue to donate our

services to large charity events, and often are rewarded with sponsorship status and all

that comes with it. We’ve bartered with small bars and restaurants to test new photo

booth software and equipment because it guaranteed us a samp le audience on an “off-

night”.

Interested in bartering with Pixilated? Get in touch!

BARTERING TIP, TRICKS, “DOS & DON’TS”

Know your worth, find the synergy, and equate value. Make sure the trade

is fair, but also make sure the other party vibes with you. If you aren’t on the same

page from the jump, this isn’t the right trade partner for you.

Don’t be cheap!

Close the loop. Be very clear about what you are giving and getting. Gray area

leaves you vulnerable to be taken advantage of.

Let people know you are open to bartering. If you don’t ask, or put it out

there, you may be missing opportunities!

Convert your trade partners to customers. What better way to demo a

product or service? Make it so good that they keep coming back even after they’ve

got nothing left to trade (except for $$$!)

Only barter with the real decision makers. Typically sales people and account

execs are not good trade partners because it doesn’t directly affect their

commission. Make sure they can “walk the walk” and deliver on their promises.

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“You have to learn the rules of the game. And then you have to play better than anyone else.”

-Albert Einstein

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COPYRIGHT STARTUP SOIREE 2015