In respect of the bootstrap: Start-up surprises and business projections

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I have a single-minded focus on mind these days: Turning the start-up Ontario Construction News into a business success. This focus is necessary, in part, because we’re running the business on a shoestring — there’s no debt financing, virtually no third-party or added expenses, and not a whole lot of free time (since the phrase ‘sweat equity’ truly applies here.)

We’re now (as the three month-post launch milestone looms) beginning the transition from bootstrap basics to more regular operations, but everything is done with a miserly budget.

For example, last week I handed off order processing tasks (essentially keyboarding and data entry work) to a new contractor who works from her home (or presumably her laptop if she is away), keying the new orders at $15.00 per hour. It will take a bit of time before we generate more than an hour’s work a day for her — but it saves me needing to process each order myself, one by one. (In the first month, we were lucky to get an order in two or three days, we’re now usually receiving three or more orders a day).

The bigger (and much more expensive) challenge will be to delegate the editorial tasks.  While I own the business and hold the publisher’s title, I’m also the writer/editor for the daily newspaper, which in most publishing businesses would be crazy. Of course, I enjoy journalism but one person cannot sustainably fill a tabloid newspaper with excellent content each day, all alone. So at the outset we budgeted a single third party expense, a part-time contracted freelance writer who would be paid for generating two stories a day; one serious and one light.

And this balance has worked, along with my archive of historical content and some new guest columns. For now. But in less than two weeks, I’m heading off on vacation for about a month. Not to the end of the world — though there will be a nine-day independent bicycling trip through four east European countries — but it will be rather impossible for me to write and edit the publication in my absence.

So next week, I’m patching together an editorial team of freelancers — we’re not quite at the stage of hiring a full-time staff editor yet — and a management system to ensure that the publication is produced every day, Monday to Friday.  It will be a good test for when we move to hire a staff editor.

There’s a bit of relief that this vacation is happening now, after the business overall has proven to be sustainable. The measure: Are we attracting enough new clients, and are the older clients (remember, we started less than three months ago) repeating their purchases? The answer to both questions is “yes”.

There are many things we knew but many more we did not know, when we started the business. Unlike most business start-ups, we had a very explicit and near-exact idea about the market and could (based on our pricing models) have a clear idea about potential revenues, based on market share. In the first month that was about 1 per cent. Last month it moved past 2 per cent. This month, it will break 5 per cent. Our operating viability target is 10 per cent; which seemed like a crazy dream a month ago, but now looks like it will happen within 30 to 60 days. At the outset of the business, I fantasized about 20 to 30 per cent market share — now these numbers seem attainable within a year, and that will be truly interesting when it happens.)

But at the start, we didn’t know how much repeat business there was, and how concentrated would be the market — and I certainly had no idea how much and how important it would be to allocate marketing funds to the equation. I quickly enough realized we needed to do “something” two weeks into the business, when after a flurry of initial orders generated from a strategic alliance partner, things dried up. Worse, while I thought Google Ads would provide solid leads, I truly underestimated the extremely high  initial keyword cost for this advertising.

The market concentration (and knowledge of who had purchased advertising in a competing publication) led me to decide that direct mail (postal mail indeed) would be effective, so I devised a simple campaign. It has undoubtedly been successful.

Meanwhile, after a difficult start, a Google Ads representative helped reword my ads and gave me the confidence to open the spigot on the budget to $100 a day. We’ve never needed to spend that much. More reassuring, it seems Google’s artificial intelligence algorithms have determined that the price we should pay for these ads is more in line with my original projections — and the ads are indeed generating orders.

The next stage in marketing is an even more focused direct mail campaign, which I think will evolve into a regular monthly “touch” with the key potential clients. Gradually, I expect, word will get out and we’ll attract more of the lucrative high volume clients.

There’s something exhilarating and wild about engaging in a business start-up and preparing to go overseas on vacation at  the same time. But there’s also joy. On Tuesday, we’ll publish a two-page advertising spread purchased by one of my first clients, who has been doing business with my existing publications for three decades. Ten years ago, he initiated a charity bicycle ride for the local hospital, and roped me in as a cyclist/fund-raiser/contributor.

I struggled my way through the 100 km ride on a 30-year-old bicycle, but became hooked on bicycling, graduating to a more rational $800 exercise bicycle five years ago, and this spring, my first carbon bike — a $3,500 machine. I commute 30 km a day to work each day and concerns about pre-diabetes have gone away.

The funds from the unexpected advertisement will help pay the extra vacation costs and prove the value of relationships and a long picture in business.

Things are looking good. At 66, with a healthy life and marriage, I have enough money to “retire” in reasonable comfort. But I also have this bootstrap start-up, which now looks like it will generate significant dividends (and taxes). This is the way it should be.

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