In a market saturated with unicorn startups, it’s tempting for entrepreneurs to give up large chunks of their company for a boost in capital.
The idea of upfront funding may sound alluring, but truth be told, turning to investors in the early stages isn’t necessarily the right approach for everyone. It could even be argued that if you have the grit to bootstrap your business and fund things yourself, you’ll be much better off further down the line.
Fresh n’ Lean is a perfect example of that. Brother-sister duo Thomas and Laureen Asseo entered the untapped food delivery space in 2010 and bootstrapped a 9-figure meal delivery startup out of a 100 sq. ft. kitchen. Today, Fresh n’ Lean operates out of a 55,000 sq. ft. facility with 100 employees, and has delivered over 4.3 million meals nationwide.
Turning down offers from venture capitals was a difficult decision for the duo, but the limited budget raised from personal savings forced the company to innovate and find efficient ways to scale. If you’re a budding entrepreneur unsure whether or not bootstrapping is right for you, the lessons from Fresh n’ Lean provide some useful insight and serve as a refreshing reminder that raising capital isn’t the only way to grow a brand.
Weighing Up Risks vs Rewards
Any business owner knows that there’s an element of risk involved in starting a new venture, but forking out your own hard-earned money and bootstrapping your company can feel extra daunting.
“When I was making food out of a 100 sq. ft. kitchen, I never imagined growing to a 55,000 sq. ft. facility,” says Laureen. “We took a huge gamble and poured all of our savings into the business. But we were passionate about our mission and knew that we were doing something impactful.”
If you can make it through the uncertainty and your risk pays off, one big advantage of going it alone is that it can often lead to greater rewards and more flexibility with your business in the long run.
“Raising capital is great and I can see how it would make a world of difference to us,” says Thomas. “But I’m glad we didn’t take it because we didn’t have to give up most of the equity of the company. Now when we are looking for strategic partners we don’t have to worry about a Venture capitalist potentially getting in the way by trying to inflate the value (strictly because they are worried about their exit strategy).”
Whilst there really is no definitive way of knowing whether or not a risk will pay dividends, by assessing the situation, gathering as much info as possible and learning from the mistakes of others, you can maximize your chances of success.
Limitations Promote Efficiency
Low cash flow and capital can often seem like an obstacle, but in many cases, it can lead to more innovation and creativity. This was definitely the case with Fresh n’ Lean:
“We passed on many offers from venture investors”, states Thomas. “Bootstrapping the business was painful, but in retrospect, we now own 100% of our business and don’t have to answer to any investors. If we had raised capital, our business would have grown faster, but our limited budget painfully forced us to innovate and find more efficient ways to grow.”
Business owners are increasingly aware that too many choices can actually be a bad thing, leading to decision-fatigue, less free time to devote to business development, and poor decision-making further down the line.
“A real advantage [of bootstrapping] is that it is going to make you more resourceful with money,” Thomas continues. “The dangers of having a lot of capital wasting it because you are worried about development and not running out of money. I would credit some of our best logistic innovations directly to the fact that we did not have any resources to waste.”
Know Your Audience
With any business, it’s crucial that you know your audience. Due to the inherent risks of bringing in your own capital, this is especially true when bootstrapping.
“You’re going to need to define your audience and continuously get to know them in order to develop and deliver a product that will work for them,” says Thomas. “With that, if you can find yourself in a position to develop a product that you truly want for yourself, you’ll be in a better position. If you’re your own customer, you’re in a much better place to gauge how to keep your products, services, and company moving forward.”
A few ways to get in touch with your customer base:
- Carry out in-depth market research via social media, Google analytics, and tools like YouGov to define and locate your ideal customer.
- Occasionally send surveys to your existing customer base to create and update your customer avatars and personas.
- Map out content and any key business decisions around your target personas. How will it benefit them?
Evolve or Die
Business development is a key factor that many entrepreneurs mistakenly place on the backburner. But without investors to turn to, things can quickly take a turn for the worst. This is why it’s so important to stay on top of development from day one.
“You want to put more time into developing the business than keeping it afloat or else you’ll fall into a vicious cycle of just trying to keep it afloat,” says Thomas. “If all you are doing is keeping your head above water, you aren’t going in any direction. The more you’re in survival mode, the more aggressive you should be with business development, or you will slowly die.”
The key to success is to make business development a priority, carving out time each day to make improvements. Thomas explains: “When you are fresh, you are most likely more optimistic so it may be best to start your day doing business development so you don’t get beat up with the negativity of trying to figure out poor cash flow.”
What to focus on? At the end of the day, it all comes down to improving the customer experience. “In terms of focusing on development, a good aspect of that is to prioritize improving the quality of your service and product above most other things,” says Thomas.
Either Way, Be Resourceful
There are times where it seems like bootstrapping might not be possible. If you’re in a market that is highly competitive and growing extremely fast, it may seem like you’ve missed the boat. But the truth is that with a little thinking outside the box, there’s almost always a way to make it work.
Many solo-preneurs and bootstrap startups have great success with guerrilla-style tactics, getting innovative down in the trenches. An example of this is to capitalize on the decisions made by bigger businesses. Companies with larger budgets often pour money into branding. You may be able to take advantage of the fact that they’re effectively bringing eyes into a new space. If you’re clever and resourceful through social media and SEO hacks, you may be able to position yourself so that people find you as well when searching for your competitor.
The guys at Fresh n’ Lean also stress the importance of flexibility: “It’s important to be flexible with your model, and always open to change. As well as selling to your customer base, how else can you market your skill set and your services? For example, if you’re producing a physical product you may have space, equipment, and methods available that are interesting to others.”
By keeping your eyes peeled and always being open to exploring new opportunities, you can stay ahead of the curve and develop a brand that continues to evolve with technology and changing trends.
Founded in 2008 by brother-sister duo Thomas and Laureen Asseo, Fresh n’ Lean is an organic food delivery service. Their mission is to bring healthier choices and better ingredients to homes all across the USA. Started from scratch in a small home kitchen, the brand is now a 9-figure company and has delivered over 4.3 million meals nationwide.
