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Another Plug for Bootstrapping

Posted on | June 9, 2010 | No Comments

An interesting article came out this week from Techcrunch.com on the benefits of bootstrapping a business to stay lean and hungry.  Guest writer, Vivek Wadhwa, an entrepreneur turned academic, talks about his experiences starting companies with venture capital.  He found that his decisions were about pleasing the board members rather than pleasing the customers.  Wadhwa states, “Pleasing board members became an unnecessary priority.“  In the long-run the focus should be on building customer relations for long-term growth.

Research conducted by David Townsend, NC State University and Lowell Busenitz, University of Oklahoma,  also showed that acquiring investment capital did not  guarantee success.  Is venture capital wrong?   By no means, no.    Venture capital can be a breath of life for a cash-strapped company that has huge manufacturing or other start-up costs.  Each entrepreneur should research and critically assess their need for and type of capital investment that would best work for their business.

Wadhwa’s article reminds me of an interview I conducted with Derrick Eells last fall.  Derrick and Jeffrey Eells own TenDot Travel, a Lincoln-based corporate incentive travel company.   Bootstrapping was the name of the game to getting this business started.  If what Wadhwa states is true that “capital starvation leads to innovation,” then TenDot Travel is the epitome of innovation.  Derrick and Jeff started their business the day after they quit their jobs.  Living out of their house, the Eellses began cold calling and competing against the industry giants.  They had new innovative products that were making the industry clients rethink their prior relationships.  Through determination and persistence, they won businesses over.  To ramp up and keep costs down, they hired contractors instead of employees.  They also looked to family and mentors to help with the business operations and decisions.   As the business continues to grow, now reaching over the $1 million sales mark, the Eellses continue to stay lean and hungry for new opportunities.

Check out the Eellses’ videos :  Passion, Culture and Sales,  and Sales Tips for the Service Business and let me know your thoughts on bootstrapping the company, the pros and cons, and how you best bootstrap to save costs.

Until next time,

Marilyn Schlake, Associate Director, NebraskaEDGE Program, University of Nebraska-Lincoln

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