Waste or Worth It? A Bootstrapper's Guide
When starting a new enterprise, it’s so hard to know what’s worth spending money on, and what can be done for free/cheap.
Having seen a lot of mistakes and masterstrokes, made either by us or the teams we advise, this guide will help you make some wise decisions and avoid the traps:
Logos – Worth It
Your logo is your first impression, so make a good one.
Ensure your logo is one that you love, or don’t bother with one at all, and just have your company name in a nice font.
7 out of 10 isn’t good enough either, it’s worth spending a bit of money on something that makes you proud.
Photos – Worth It
Good Hi-Res photos are a valuable asset. They’ll be used in every article, banner, website, etc, so don’t settle for grainy or unflattering pictures.
You need at least one great product shot and one great team shot – which are worth paying for.
Marketing Agencies – Waste
You probably don’t need a marketing agency at this stage. You also need the founders actively in touch with the market, to gauge interest, problems and feedback. Learn from professionals, but do the work yourself.
Phones – Waste
Your old iPhone does just as good of a job as the latest model – it makes calls to customers.
You want a better phone? Go ahead, but that’s your responsibility, not the company’s.
Computers – Worth It
Your computer is a great tool – for work in the office or on the road. You’ll pull it out during client meetings, and use it to write notes while sitting on a plane.
Have a computer that is reliable and at least not embarrassing, even a second hand macbook or thin Lenovo laptop. The jury is out on iPads.
Your Own Office Space – Waste
You probably do not need fancy office space at this point – you need a desk, a whiteboard and Wifi. Co-working spaces are great, and try to hold off signing your own lease for as long as possible.
Work Clothes – Worth It (Sort Of)
Like with photos earlier, you’ll want to have 1-2 great outfits that make you proud, which you can wear all the time. Not a full corporate wardrobe, but at least one tailored blazer and some good quality shoes (applies to all genders).
Flights – Waste
Airfares (plus cabs and hotels) chew through money at a disgusting rate. Unless it’s for business development, try and limit your travel, and fly on the budget airlines.
Coffee – Worth It
A coffee meeting with a potential client costs about $8. That’s very cheap, and is a variable cost (unlike buying your own coffee machine).
You’ll spend $30-60 of your own time during the meeting, so the coffee itself is the least of your worries. Don’t cheap out, go somewhere with excellent coffee and you make a low-cost good impression.
Team Meetings – Waste (Sort Of)
Unless you’re going to do these meetings well, like how Patrick Lencioni suggests, don’t bother.
When you calculate how much it costs to have your whole team in the room (several hundred dollars an hour), you’d want it to be about something important.
One to One Meetings – Worth It
Much cheaper, more personal and more effective. Meeting one on one offsite allows a proper dialogue, honest conversation and a genuine connection with your team members. Worth every cent.
Conferences – Waste (Sort Of)
These are very expensive and it’s often hard to gauge the benefits. If you have a sales plan – great, you might meet new clients. If not, it can cost several thousand dollars to attend, and you don’t know what you’re getting in return.
Furniture – Waste (Sort Of)
Your furniture can be done well and for cheap – if you do your homework. You don’t need expensive chairs, tables and couches if you have good taste. Hard rubbish, op shops and IKEA are wonderful sources of interesting and beautiful furniture, if you put in a some effort.
Staff Parties – Worth It
Celebrate the wins. If you want the team to persevere in the hard times, reward them in the good times. Even just 2-3 great meals/nights per year does wonders for morale.
Media Exposure – Worth It
Rather than buying ad space, try and do something worthy of media attention, like a competition, stunt or interesting offer. People trust articles more than ads (even if the line is now blurred), and it adds both visibility and credibility.
Vehicles – Waste
Cars are frighteningly expensive to buy and to run. Wherever possible, use car sharing services or ubers – variable costs that don’t drain all your money. When you are larger, by all means buy a vehicle because it’s cheaper. For now, stick with rentals.
Website – Worth It (Sort Of)
You want a good website, it’s the first place most customers will look to research you.
That means one with a nice layout, clear fonts, easy navigation and Hi-Res photos.
Spend the time to get it right, but don’t pay some flog agency tens of thousands of dollars. Wordpress and Squarespace are great, as are cheaper agencies like Squareweave that charge very reasonable prices.
And the controversial one... Management Salaries - Waste (Sort Of)
There's no doubt that the right leaders transform a startup, and it's worth paying well to attract the right leader. This is a timing question, not a value question. By all means, once you have momentum, reward the founders handsomely.
If you aren't making sales, then founder salaries become an enormous drag on cashflow.
We once worked with an impressive startup, but eventually discovered that the two co-founders were taking $150k each, from Day 1.
That's $300k+ of sales, to recoup just those two.
The startup's sales were ok, but nowhere near enough.
Founders should be receiving at least $35k, but anything over $100k presents a serious risk to an early stage business.
So what are the common factors?
· Variable costs are better than fixed costs
· It’s worth spending money to make a great first impression
· Take your ego out of the equation, this is no time for posturing
· Learn how to create presentable content on your own
· Depreciating assets are terrible
· Good taste allows you to buy presentable yet cheap things
If you enjoyed this list, you will also enjoy The Art Of The Start 2.0 by Guy Kawasaki.
For more on the Lencioni meeting structure, I recommend his book Death By Meeting.
For more on media exposure, you'll enjoy Purple Cow by Seth Godin.