There are no easy answers when it comes to startup life. As each startup is 100% different with its own unique set of challenges and routes to take. But some challenges are commonplace, such as how many co-founders to have? And how to fund your startup during the first few months. Should everyone quit their jobs and go all in? Or should you take it on a part time basis. Should you look for funding immediately? Or should you spend the first few months figuring things out first?
Different strokes for different folks. But for the most part, you'll want to gauge your startup on a daily basis. You'll need to measure the housing and hunger needs of everyone in order to maintain a relatively stable and healthy team. And this all comes down to how you choose to fund yourselves. So the path that you take early on will dictate much of how the work gets done. The fastest option is to Bootstrap it.
Bootstrapping essentially means funding your company yourself either through your current income, business loans, family and friends or a combination of all. It's a popular choice because it doesn't require any extra work off the bat, but it can lead down a challenging road later on in the project life cycle if one is not too careful. Costs are low during the initial few months of a projects. You'll be designing in your off times and won't have many clients to take care of, which is a huge plus.
Bootstrapping a startup can work fantastically well, but only under the right circumstances. Or it can end up how many startups end up, and slowly fade away before the first year anniversary. And much of that comes down to the team that you have set up and their capabilities.
teamwork makes the dream work
The more work can be done in-house, the more versatile your company is. Time to market on new projects is much faster and development cost are kept to a bare minimum.
There are a few scenarios that are ripe for bootstrapping your future company. The main one being, that your team of co-founders can handle the entire work process without too much external help. With Renly, we have that exact situation. Our entire founding team consists of Designers, full-stack programmers, growth engineers and data scientists. So we have very little development cost, which is what many startups struggle with.
This only works of course, if the co-founders have a means of self-funding. That is to say, if they can the work done after their normal work hours without too much in the way of hesitation. For us, this came down by-weekly online meetings followed by once a week in person meetings in which the week was broken down and analyzed. After the first few months, the momentum and energy are there to continue forward without too much hesitation.
If you're a solo founder then bootstrapping is probably going to be the toughest route to take, and it will have to happen during your off hours. The toughest route probably, because it's the slowest and because it has the highest burn rate. You'll definitely need a high level of energy and motivation to continue forward in this scenario. Not to mention the fact that you will be wearing many hats during this entire process and never really owning any one.
Keep an eye on your burn rate. That is the amount of funds that you're spending per month in order to finance your startup. For this, keep your receipts, an excel sheet, notepad notes, etc. Whatever gets you an idea of how much you'll be spending. This is an incremental number usually, as each month you'll be adding more features and growing your client base. Emil marketing might be just a few dollars during the first few months, but all of a sudden require you spend several hundred. Which is a good problem to have.
Know your runway. Or at least have a general idea of it as these things cannot be predicted. But don't go all in on a startup if you have 1 month of savings and a wife and child and no job. How much time can you dedicate to this endevour at your current burn rate and still be able to sustain a livable life? That is the question that you should be asking monthly.
When not to bootstrap
If you or your team are homeless, then maybe you should consider looking for funding, whether through friends and family or through the good old fashion method of looking for investors.
If you're team isn't 100% all in on this project. A startup isn't normally just 1 persons idea. It's the combined effort of many folks and their creativity. If at some point down the line a member decides to flee, for lack of a better term, the entire project has to be recalculated, leading to an even higher burn rate and a shorter runway.
In the end, it all comes down to how much work you and your team are willing to do, and how well it fits together. If you stay on top of your development work and prioritize accordingly, then creating a startup as a secondary job should be no problem without starting capital. In the end, it should be an adventure for everyone. You should wake up every single day with no idea of how the day is going to go, but with a desire to make it better.
As a fully bootstrapped company, we have had our ups and downs this past year and a half, and with that many lessons were learned and much knowledge was brought to light. In the next post, we'll discuss some tips on how to save cash and keep your burn rate low and runway high for when you start your company.