Insight
Successful start-ups – how to become one
If there is one thing I've learned founding my own business in Australia, it is while it's true that most successful start-ups receive external funding, this is not the only path to success. By working with personal savings to be self-funded and provide initial capital, or beginning thanks to the trust of people, all expenses must be geared towards growing your business.
What is a common point between Facebook, Apple Inc, Microsoft, and Corematic Engineering? Each of these successful companies was built through self-financing working capital.
Mark Zuckerberg founded Facebook from his dorm in Harvard as a student project with the financial help of his friend Eduardo Saverin. When Steve Jobs was 21, he sold his Volkswagen to start ‘Apple Computer’ in the family garage with the financial assistance of his collaborator Wozniak, who sold his beloved scientific calculator. As for Bill Gates, he sold his first computer program (timetabling software) to his high school for $4,200. He used that cash to start Microsoft with his childhood friend Paul Allen.
Passion and trust are the best ingredients to start a business!
In terms of successful start-ups stories, there is yet another line that can be drawn between the aforementioned world leaders and Corematic, and that is a collaboration between mates! The importance of friendship cannot be discounted. It holds more value than any issuing price and provides a more secure base than any venture capitalists.
What is a self-funded company, and why you should give it a go?
Using personal money to start a business is by far the best way to keep your feet on the ground.
Instead of looking for the next injection of cash, our vision was to keep COREMATIC fit and in shape, putting our efforts towards finding the leanest processes, and greatest efficiencies in order to deliver our services and increase our profit margin. The simplicity and flexibility developed during this early-growth stage put us in a favorable position as challenges have arisen since.
Bootstrapping a business, what does it mean?
It means that you're building your company with nothing but personal savings. And with some luck, the cash coming in from the first sales.
Thanks to the level of currently available technology, it has never been cheaper to build successful start-ups. The initial investment amount will continue to decline. This is by no means a golden ticket. More access equals more competition, as well as greater difficulty in standing out from the crowd. I suggest staying focused on your customers and ensuring you provide them with the best solutions and services that they actually want.
Work with what you have.
Cash is king for self-funded successful start-ups. So before you get too focussed on balance sheets, revenue forecasts, or profit/loss statements, figure out exactly what you can do and for how long. Calculate how long you can sustain your operations with what you have. Then identify the best ways to grow your business and increase your revenue during that time. The greatest plans can be lost without the base capital to keep their dream alive!
For example, when we started Corematic Engineering, we had to ask ourselves a question. Are we motivated by money or by delivering a unique approach to business? Since we are funded purely by our client contracts, we must turn their ideas into solutions worth paying for in order to survive. A consistent challenge for startups is always what’s the next move? Should we spend money hiring an expanded team, promote a new concept, or find a more productive space? Or should we build our savings in the bank? These are questions you’ll have to be ready to ask yourself.
How to apply bootstrapping strategy in your business and what are the advantages?
A self-funded company gives entrepreneurs the FREEDOM to control their own destiny; mission, vision, growth rate, strategy, product, team, etc. An ample list of opportunities that can only be possible if you integrate this business strategy in the early-stage. This way you can earn your way up to validation before scaling on strong foundations.
Self-funding COREMATIC allows us to demonstrates our commitment and determination while winning the trust of our customers by focusing the business into a qualitative service and tailored solution.
Bootstrapping your startup is an excellent way to learn more about your business, it’s processes, what you want to achieve, and the best way to operate.
By taking the lead yourself on tasks that would otherwise be outsourced, you will develop a greater skill set that will reap benefits into the future.
The best advantages of bootstrapping (self-funding) a company.
- With no one else to answer to, self-funded businesses are able to listen to the needs of their customers, not shareholders. They are able to focus on product development instead of investment return.
- By completing your own market research you’ll be fully aware of both your competitors and your potential clients. You'll be more prepared to navigate the threats and opportunities that come along with both.
- When you attend events and show presentations, it will be your face that people see, and your hand that people shake (after Covid that is!). Those you meet will immediately identify you with the business. The formation of trusted relationships begin here.
- In order to ensure that a solution is viable, self-funded bootstrappers have the freedom to test the market in smaller ways than investors or venture capitalists would approve of. Instead of having a solution ready for mass production, you will have the opportunity to nurture your relationships and micro-test your ideas. You will be able to offer tailored solutions and personalised customer service.
Take away advice to anyone who wants to self-fund a successful business.
- Decide on your financial risk appetite before you start. How much are you willing to go into the black before putting the financial security of yourself and those you care about in jeopardy.
- Use lawyers and accountants to make sure you’re doing things correctly from the start.
- Take every opportunity to network, you never know where the most valuable ideas may be hiding.
- Be humble: Be frugal everywhere-drive instead of flying, choose cheap hotels, and use your personal computer and printer. Don’t show off!
- Have fun. There are going to be hard times. But don’t let that take away from the exciting journey that your startup will become.
- Spread your passion. If you don’t care about your product or service, no one else will either.
- Trust. Your team, your product, your goals, yourself.