Dear founder,
When you’re starting with your business idea, you will be looking at how successful businesses have accomplished their success. You will see a lot of different sizes, markets, and business models. But they all have one thing in common: they’ve built a system that works. Their long-term and short-term goals may have changed through the years, but the system that kept them running never did. That system is the core of every business.
A sustainable bootstrapped business is successful when you have found a repeatable, reliable, and resilient system to continuously provide a value-producing product to paying customers at a profit.
Since “system” is such an abstract term: look at it as a set of rules and guidelines, like a recipe. To make a tasty omelet, you will need to mix the right ingredients and cook them for the right time, at the right temperature, using a specific technique. A business is the same thing. Having a recipe in place will make the transition from the Preparation Stage towards the Survival Stage less chaotic. No plan survives the first contact with the enemy, but it’s still important to think of the core growth engine of your business before you start selling your product to your audience.
A quick remark about goals: of course, you should have goals. A business without goals is an aimless venture. But goals are reached and overcome. New goals arrive in their place, and they often change shape mid-operation. A goal is meant to become obsolete. A system is intended to endure and allow you to reach your goals in the first place.
Let’s take a look into each of the properties such a system will need to have.
Building a Repeatable System
When you’re building a bootstrapped business, it will usually be just you in the beginning. Maybe you have a co-founder or two, but you won’t have an army of salespeople that you can unleash on your audience. Your business needs to be a one-person-show, and that means you will need to sell your product to your customers over and over again yourself. For that, generating revenue needs to be an easily repeatable process.
At best, you’re building a way to capture a never-ending stream of recurring revenue. The optimal situation is when you grow every month, and your revenue consistently increases.
This is so much easier to accomplish when the process you use to acquire a new customer is straightforward and repeatable. That usually means automated and self-serve. If not, you’ll need to make sales manually, which takes away attention from building your product and creating an automated and well-documented business that is built to sell.
The fewer steps there are to your process of acquiring a new customer, the better. Optimally, they come to your marketing content, sign up to your product, have their a-ha moment, and subscribe. Of course, each of these steps is incredibly hard to pull off, and that’s the entrepreneurial challenge. Fewer steps mean fewer chances of losing your prospect, so keep the process slim.
Building a Reliable System
Providing a reliable service sounds easier than it is. You might have set up everything to be well-tested and highly available only to find that your payment provider has a small glitch that is affecting customers in a particular state. Or your email service is being flagged as spam by Google Mail so that all those emails you sent out yesterday never arrived in your customer’s inboxes. These things happened to us at FeedbackPanda, and we had to find ways to circumvent these issues.
Being reliable doesn’t mean being perfect. But it does mean that your product is built with maximizing availability and performance in mind. No customer wants to use a sluggish or unreliable product.
This required two kinds of reliability: architectural and operational. Architectural reliability measures how well your service is designed to provide uninterrupted access to your product. Operational reliability measures the effectiveness of your systems to cope with external interruptions.
Research how the external services you depend on have failed in the past, and prepare steps to deal with this in the future. Create a process for reaching out to your customers when something goes wrong, because it will. Prepare a message stating that you’re working on it, with an apology and the promise to get back to them as quickly as you can. Keep this message in a note where you can quickly copy it.
You can hope that you will never have a fatal outage. Or, you can prepare and build a reliable product and business. It might take some work, but having the bases covered will give you peace of mind both when everything works fine and when things are a bit rough.
Building a Resilient System
Resiliency is different from reliability in that it looks at your business over a long time instead of being focused on mere moments. A resilient business is capable of surviving in an ever-changing market. Today, you might have hundreds of customers, but some regulations might make 90% of them cancel tomorrow. If you set up your business to be resilient, you will be able to survive situations like this.
A resilient business is independent. If you have 500 customers, one of them quitting is not a big deal. If you have five customers, a single cancellation can cost you twenty percent or more of your revenue.
A resilient business is adaptive. If your payment processor shuts off down your account or freezes your fund, your system should be able to integrate an alternative processor quickly. The same is true for authentication. Always have their email address in your database, even if you use an Identity-as-a-Service solution. In case that breaks, you can still reach your customers.
A resilient business is extensible. If you can be integrated easily, your service will become part of the broader ecosystem of tools in your niche. More and more other services will interact with you, bringing with them a steady flow of new leads and reputation within the community.
The Evolution of a System
A repeatable, reliable, and resilient system will need to be continuously refined and improved. Your customers will change their methods. New regulations and requirements will need to be responded to. This is the heart of your operation. It must never stop working. Every day, it must deliver as much or more than the day before.
Over time, the number and complexity of your processes will likely grow. At the beginning of your business, you want to be flexible, but don’t mistake that for winging it. Write down what you do, why you do it, so that you can eventually turn your evolving system into a collection of Standard Operating Procedures. Having everything documented that way will make your company a well-oiled machine, and that will make it more sellable, even if you don’t intend to sell.
You can read the full article called Forget Goals, Create Systems: Foundations of a Sustainable Bootstrapped Business on the Bootstrapped Founder blog.
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Links I Found Interesting
In an IndieHackers post about her desire for money and passion being at odds with each other, Nadya Primak states very clearly what many founders experience: a disconnect between what we’re passionate about and what pays the bills every month. I personally find myself in many of the things she mentions: jumping around between projects, being dissatisfied with the day job but not turning the side project into an actual business, I’ve been there before. The comments on that post show that a lot of other founders share those pains; some even share how they found their way out of there.
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I talked about Hypefury last week already, and I would like to point out a few things that this wonderful product allows me to do. I’ve been scheduling tweets (and threads, a feature that I find extraordinarily useful) a few days in advance for many months. It allows me to time-block my sharing on Twitter in a way that opens up stretches of time where I can work on my book and other content without interruption, knowing that my tweets will go out reliably. If you’re trying to grow your Twitter audience, check out Hypefury. It will change the way you engage your audience.
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My FeedbackPanda co-founder (and most amazing person to share my life and apartment with during these weird COVID-19-induced quarantine days) Danielle has shared this incredibly insightful spreadsheet highlighting the Impact of COVID-19 on European tech with me earlier this week, and I believe that every serious founder should take a look at this. Even if your product is in a completely different industry, learning about the direct (and ripple) effects of the pandemic, who benefits and how they do it, will give you something to think about.
With everyone being a remote worker at this point, I would like to share something I found regarding International Payments for Remote Freelancers. I assume that many founders are freelancing or consulting to get through the pandemic, and payment is always an issue when you’re working for a business in another country. The Hacker News conversation around the article has a lot of quality insight as well if you want to avoid hidden fees and markups.
Bootstrapping Success Stories I Noticed
Every now and then, one particular thread emerges on Hacker News: the Ask HN: Successful one-person online businesses list reappears at least once a year. As usual, there is a good turnout, and the businesses linked in the comments are worth checking out if you want to see the kind of niches and services that can be run profitably by solopreneurs. I recommend looking at how those businesses often make no distinction between the service and the entrepreneur. That is the kind of leverage that you should aim for as a bootstrapper: overlap your personal brand with the service.
Brett Williams of DesignJoy ran into a fascinating problem this week. Someone from Shark Tank reached out, and going through with it might blow up Brett’s business, and he’s worried. He’s at an interesting point: his side project is at the $12k revenue mark, and he still has a day job. Doubling his clients overnight is not possible under these circumstances. The comments on this thread are particularly insightful. It appears that a lot of indie hackers would love to see such success, and the majority of them has been very encouraging, bordering on almost forcing Brett to pursue the opportunity.
Sabba Keynejad from VEED.io shared some great news with the community: he counts 2000 subscribers and a MRR of $40.000+ for his video-editing platform after just nine months. He and his co-founder Tim have built a fantastic product that solves a critical problem for their customers by making it extremely easy to add titles, subtitles, and progress bars to videos. Great founders, great product, well-deserved success.
Thank you for reading this week’s edition of The Bootstrapped Founder. If you like what I wrote about, please forward the newsletter to anyone you think would enjoy it too.
If you want to help me share my thoughts and ideas with the world, please share this episode of the newsletter on Twitter or wherever you like, or reach out on Twitter at @arvidkahl.
See you next week!
Warm Regards from Berlin,
Arvid
