In 5 years of bootstrapping, I've tried a lot of things, and I've found that there are many ways to create complexities that take time and energy. As a result, you have to deal with them instead of doing business and building up the value of your product.
It is very important for a startuper not to create difficulties. In the early stages of buttrapping nothing happens until you, the founder of the project, move. Therefore, it is critical to keep your time and energy.
If you want to completely minimize the difficulties when starting a software business, follow each of the following rules.
Rule #1: Organize a stable income
If your product can work with a subscription model such as SaaS, use this: Even if you need to add a little more to it to apply this business model.
But in this case your income can be predicted. In a nutshell, your monthly revenue will be equal to the previous monthly earnings minus the departed users, and taking into account the new arrivals this month.
Starting a business with revenue that is mostly growing and very rarely falling significantly, once a hundred times lessens your stress level compared to a situation where revenue changes on a "thick-to-empty" basis.
Rule #2: Follow the monthly plan clearly
Many experienced SaaS-personalities will advise you to offer a year with a high discount instead of a monthly subscription. Although it may work and pull more money out of customers' pockets at the moment, this option has its drawbacks:
The total amount you earned will be less in the end due to a large discount.
You will violate Rule #1, making your revenue unstable.
Get rid of your headaches and follow the monthly plan.
Rule #3: Don't worry about invoices
Make your customers pay on a "money-ahead" basis. As a payment method, offer a small list of cards that your processing system supports. Do not worry with invoices: You can waste a lot of time dealing with accounts and destroying cash flows.
Rule #4: Outsourced billing
We use the Braintree payment gateway and Chargify subscription management platform. It's a good option, but if I started over today, I would choose Paddle or a similar "reseller" software. He will take care of everything related to billing and sales taxes / VAT. Every month, the service translates your earnings. Yes, they take a larger percentage than when using a payment gateway (such as Stripe or Braintree) directly, but this is an outsourcing option that will make life much easier for you:
A one-time payment per month makes your accounting much easier;
You do not support customers on billing issues.
You don't have to worry about repayment, they do it for you;
They process subscription plans, coupons, offers, reminders, and more.
Get yourself out of billing trouble by putting a couple of percent on top of your expenses and ending it.
Rule #5: Down with freemium!
Using the freemium model means that your sales will be delayed. After all, users' appetites tend to grow gradually, and it will take a long time before they want to talk to you about expanding functionality. This makes the cycle of feedback accumulation and changes to improve conversion at different stages of the funnel very long, you will have to wait a long time for the result of these changes, and this will complicate optimization. Moreover, you will have to use more sophisticated systems to track conversions.
You'll also have a lot of expenses to support freemium users of your product. I love all our users equally and we like to provide them with high quality service. However, the burden of supporting this category of clients can increase the stress level of the team, especially when it is not growing and the work becomes only more.
Get rid of the extra headache and follow the standard, free version with a fairly short trial period, and then demand payment under the threat of blocking your account or product. You will have fewer potential buyers, but they are more likely to become (a stronger intention to buy), which means that (a) you will be able to spend more precious time of the founder (or seller) to communicate with the user during the trial period, and (b) you will be able to invest more in paid advertising to attract new customers.
Rule #6: Don't try to do today what you have to do tomorrow
I myself fell into this trap on previous startups, making not the easiest choice for the short and medium term. Instead, I was counting on a far-off bright future, where the best and smartest decisions to be made today do not seem tough enough.
A typical example is the premature complexity of the project architecture with a high-scalability focus. The point is that you (or your technical team) should have chosen the simplest architecture that can work for your first few tens of thousands of users. Usually, it will be a relational DBMS, such as PostgreSQL on Amazon RDS, multiple instances or EC2 containers and a little routing.
Initially, there is no need to make a deployment system or a brilliant architecture that will scale to support tens of millions of users and/or groups of dozens of developers. This will slow your progress and reduce the likelihood that you will break even before your business begins to grow.
Get yourself out of trouble. Be simpler and make the most sensible decisions to achieve your short-term goals as quickly and efficiently as possible, perhaps with a small look at your medium-term goals. Ignore your long-term goals if it saves your time now: You can always make the necessary changes later. You'll have more resources to do it just when you actually need it.
Rule #7: Choose simple, boring technology
By definition, the goal of bootstrapping is to create a viable business. You may have a secondary goal: learn something in the process. It's all good, but don't put the study of new technologies in the process unless there's another way to implement your idea. Of course, this adds significant technical risk that would be avoided.
So use databases and programming languages that you (or your technical team) know well. Use the frameworks you have already used. Focus on what business risks and competitive advantages your new project has.
Rule #8: Choose a stable, multi-vendor platform
If your project is linked to a single vendor, such as Apple App Store, Google Play, Chrome Web Store, e-commerce platform Shopify and Magento, or CMS like WordPress, you'll likely have problems with it over time.
Of course, there are advantages to this, such as the built-in marketplace. But once in a few months you will suffer from some changes or innovations that the platform developers implement. Sometimes it's not decided by the periodic refinements of your project, because the vendor can make such a big change to their platform that they will be a crisis for all of your business.
You can avoid this problem by relying on long-term stable multi-vendor platforms such as web or Linux.
Rule #9: Do not open your own office
It is not easy to maintain and maintain your own office. Your printer breaks down, your coffee runs out, the pipe leaks, the cleaners are fired, you need to find someone to water the plants in your absence, and so on, and so on. Most of these tasks take a little time by themselves, but if you summarize all this time...
Instead, you can find a turnkey office or co-working, where all the problems are solved for you.
Rule #10: Use Contact Center
Responding to calls between trying to program, distract from handling calls, or optimizing ads will greatly reduce your productivity. Therefore, it is much better if 80% of your calls are converted to e-mail messages or support ticketing, 19% of your accumulated and carefully selected calls are aligned to your schedule, and 1% of your actual emergencies are guaranteed to be redirected to the support team.
Such service is unlikely to cost cheap, but the game is worth a candle. We use AnswerConnect. You are required to clearly specify when the service should transfer the call to you, receive a message, or create a support ticket.
Rule #11: Choose a large, stable bank
I chose a small and flexible bank in the hope of getting better and faster service. Instead, they adopted strategic changes and refused to serve business clients. And changing a bank is a pleasure.
Choose one of the big, boring banks that will offer the same set of services in 5 years.
Rule #12: Choose a simple enterprise structure
Do you like paper work, call with lawyers and accountants, study the subtleties of company management in different jurisdictions? No? Then choose the simplest corporate structure you can, and let it evolve with increasing complexity as needed. And while the project is small, you manage one enterprise in one jurisdiction, with one bank account, and so on.
There was a time when I thought about moving a legal entity or opening a branch office in the US. I know that I saved myself a lot of trouble without doing it. And I still can't say what would have changed for the better if I had done it.
Rule #13: Find an accountant who will be your partner for years to come
Trust me: changing accountants is a painful process. Do your best to avoid it. Finding a firm that can be relied on over the next 5+ years is more important than the fact that its services cost 20% more than any other firm.
Rule #14: Do not contact investors
Investors will want a seat on the board of directors, and very often claim any special rights or privileges in your company. And once they are on the board, you cannot ignore them: These are the rules of the game. They will put great pressure on you to grow faster, very often they impose such a fast pace that it may be incompatible with your well-being, mental health, work-life balance and continued interest in work.
This is especially important if you take money in a venture fund (VC): They usually give 5 years to prepare your project for IPO or M&A. They are not interested (and cannot be interested) in a company that pays dividends, or in starting a private business in the long run.
Attracting investors and depending on the next round of financing is also a major distraction. You will simply not have time to build up the true value of your business by its direct profile. Ask any founder who has been fundraising, and he will tell you that for several months you have been entirely preparing for the round of funding.
You can avoid this trouble by financing the project development yourself or at the expense of the clients. Here too not everything is smooth, but at least you will get an incentive and an opportunity to evaluate and satisfy the initial customer demand for your product or service.
Rule #15: Don't take grants
A typical government grant for research and development often implies that you will sign a roadmap for your project for 2+ years, and then you will more or less stick to this direction, otherwise you will not get all the money. This will affect your decision-making process, especially with requirements that may not match the level and pace of your business development. Instead, find contact with your customers, making them an exclusive source of revenue.
However, there is an exception: grants that are provided without conditions (except for certain reporting requirements), such as the refund of taxes on R&D. They are essentially free money, if you can spend time preparing the required reporting, you should go for it.
Rule #16: Do not enter into partnership agreements
Any partnership is time-consuming and often requires significant investment on your part, be it a broker, a channel partner, a marketing player, a joint promotion or something else. Often your partner invests much less (in monetary or temporary terms). In this case, you definitely don't need such a partner.
Another problem with partnerships is that they tend to take you one step away from your customers. This means you'll find out more slowly what your customers want and what they need now. Therefore, to provide fast and high-quality customer support and build your brand will be one step more difficult.
Rule #17: No patents
For small companies, patents are unlikely to be of great value unless you hope to be swallowed by one of the big tech companies one day. Applying for a patent involves your direct participation in the process, at a high time. And of course it costs a lot of money. There is not only an initial deposit at the time of application, but also a couple of-three contributions of several thousand dollars necessary to promote the patent. And even then, there's no guarantee that you'll end up with it.
Okay, let's say you got a patent, and a big corporation is starting to violate it. They'll have 1,000 times more legal options to defend their "rightness" than you do, so you don't even need to sue them. Conversely, let's say a small firm is violating your patent. Then you may have the chance to defend yourself, but you also risk losing and throwing away the money spent on legal costs.
The only situation in which a patent may make sense (except for the above option to sell your company at a higher price) is when a company tries to sue you for violating their patent. You can try to keep at hand a well-documented source with information on your patent registration (with dates approved by any third party), but since most jurisdictions currently have a policy of primary origin, this may not help much. You must reconcile this possibility with the potential threat of such a claim.
I'll add the duty phrase "I'm not a lawyer" in case I'm wrong: So that you don't blame me later when you're on the run following my advice.
You can save a lot of effort without applying for patents at all. Think about it.
Rule #18: No takeover negotiations
As your business progresses, many may wonder if it is sold. If you want to continue this development yourself, do not enter into a dialog: Such dialogs distract and sometimes even sow doubts. It's just one thing to say, you don't plan to sell a business.
Rule #19: Do not use all marketing channels at once
If you use too many different channels with a small command, you will do everything wrong. Choose a couple of channels at a time and get excellent results or go to the next channel if the previous channel doesn't work for your product.
As soon as possible, organize the information about the channels that are running. This will allow you to increase your sales through these channels faster. It also allows you to reduce the time it takes to start the channel.
For example, content marketing is a channel that works in your case. You can create standard work procedures and increase the frequency of blog posts from once every two weeks to once a week.
Rule #20: Marketing needs to be invested, not just spent on it
If you can find a marketing channel that over time provides positive feedback on the quality of your products and allows you to pay back your investment, make this channel the main channel.
Examples of such channels include application store lists, software catalogs, and similar trading platforms. You can invest in them by requesting feedback from users. Don't forget to create a great product so your feedback is good.
Another example is content marketing, where you can invest in SEO to attract free traffic to your site. Another example is affiliate marketing, where you can invest in finding and training your partners.
Over time, these kinds of marketing investments will lead to business growth.
Rule #21: Do not make large-scale launches or presentations
Organizing a launch event at a major conference or at the Product Hunt site, as well as similar "all or nothing" events, distract you from the direct work on your project. Moreover, you may not be able to protect your business model and find the ideal target audience. The fact is that the audience at such events most often differs from the audience that you can really interest using your proven marketing channels.
Such a launch is also the best example of when you simply spend money on marketing, rather than investing in it. You can say that it is an investment because it allows you to form a base of beta testers or potential buyers. To be sure, this is more like an "investment" in a car that is rapidly depreciating. In a couple of years, you can only have 10% of the users that were originally in your beta base. It's a waste of money and time, I think.
Don't worry: Instead, simply invest in your proven, scalable, comprehensive marketing strategies.
Rule #22: Don't organize exhibitions or conferences
Exhibitions and conferences are very expensive, and they distract attention of already loaded team. A few weeks before the event, someone from the team starts spending some of their time booking furniture, creating marketing materials, working on social media, and so on. A week before the event, you are discussing how to draw attention to the event. Next week, you do nothing but go out and listen and chat with speakers and sit in a mail client. And then, at least for a week, and often for weeks, you're still living at a crazy pace, processing the leeds and the new contacts that come with the event. But if this event was not a niche, the majority of the audience involved will be useless to you.
Get yourself out of trouble and waste, and use the marketing channels you can invest in.
Rule #23: Don't be distracted by uninvited guests
Once your start-up is online, you'll start receiving a lot of emails and phone calls. Only lazy will not try to offer you your services and products.
Ignore all such sentences. As the start-up founder and team leader, you should independently manage its time and priorities. You must understand at any time which tasks are most important. Don't be distracted by uninvited guests. At best, you can put these sentences in a long drawer. Maybe someday you'll come back to them.
Recognition and Warning
I broke almost all these rules!
Not only that, I continue to violate many of them on a regular basis when I decide that it makes sense for my business. We have fantastic partners, we hold many conferences, accept annual payments and bill, we are a free product, quite heavily dependent on a single provider (Chrome Web Store), and we work with a lot more marketing channels than we might have had. In the past, we took grants, made large-scale launches, and much more.
These rules are not the truth of last resort, but rather food for thought. I want you to think about compromises: How and why can there be additional difficulties, which may distract you from your core activities if you decide to "violate" one of the "rules".
For example, if you decide that exhibitions are suitable for your business, you should understand the price you will pay for it. It's not just about money, it's about time. Perhaps it is for your product that this is the best way to find the ideal target audience.
Or for example, you can decide that your business can be successful only if you take money from VC. You should know about the tradeoffs in dealing with institutional investors, but there are certainly certain types of business that are more likely to succeed with investments than without them.
I could go on and on, but I'll give you one last example: If you think you ever want to sell your company, the most appropriate time is when your company is actively interested. So you can break this rule. Your score will be higher when there is sustained interest from several potential buyers. If there is no such interest or it has already passed, it will be much more difficult for you.