Guy Kawasaki - "Art of the Start" and Bootstrappable Business Models

I am starting to get into Guy's new book - The Art of the Start. Chapter 5 is called The Art of Bootstrapping (I like to skip around in most business books and use them more as reference guides).

There is a lot of great stuff in this chapter, but today I want to focus on Guy's thoughts on a bootstrappable business (meaning one that you can start and grow on your own steam). I think this is a really important topic because let's face it, 99.9% of all entrepreneurs and startups have to bootstrap. Also, as I have written before (as has Guy) most startups that are not bootstrapped, but instead receive venture or corporate funding don't succeed. Why? Because they don't have the laser focus you are forced to have when you count every penny. This includes not only how you spend your money, but even more importantly, how you spend your time. There is nothing like the concept of limited funds to focus everyone on speed to market!

On to Guy's characteristics for a bootstrappable business:

• Low upfront capital
• Short sales cycle (less than 1 month)
• Short (under a month) payment terms
• Recurring revenue
• Word of mouth advertising

I would also add some additional characteristics of my own:

• No inventory
• Don’t need proportionally more people to handle more sales (scalability)
• Can be marketed and sold effectively online (means don’t need partners distributors, etc. when you start out – no shelf space issue)
• Free trial/Guaranty can be offered at little or no actual cost
• High margins
• Only solution available for target customers (means lower customer acquisition costs and also can get out there with limited functionality)

By the way, our new startup has all of these characteristics!

Guy's book has a lot more great stuff for startup entrepreneurs. The Art of the Start, combined with The Innovator's Solution by Clayton Christensen are really a "cookbook" for creating a great startup company.