Scott Mcculloch is editor of Families in Business.
Bootstrapping your business: start and grow a successful company with almost no money
by Greg Gianforte with Marcus Gibson, Adams Media
In a quandary? Find yourself wondering whether daughter number one is better equipped than son number two to take over – or even join – your business? Perhaps they should read Greg Gianforte's book Bootstrapping Your Business for at the end there is a diabolical 10-question aptitude test to determine whether they are natural 'Bootstrappers' and indeed have the wherewithal to run a business.
What is bootstrapping? Gianforte, a Montana entrepreneur, answers this in the opening paragraph of his mass market US business book. Bootstrapping, he explains with co-author Marcus Gibson, is the art of starting a business with little or no money. This statement will resonate with any first generation family business member. How many haven't rolled up their sleeves and got on with the job of starting a business on a shoestring?
The fact is that the vast majority of people starting businesses can attract neither venture capital nor traditional bank loans. They need to start and grow their companies with no external funding as Greg Gianforte did with his company RightNow Technologies. I met Gianforte in 2003, before he wrote his book. In hindsight it's easy to see why his company has had quarter upon quarter of sales growth. As he listens intently to your questions you can't help feeling that he is mentally filing away ideas emerging from the conversation. Gianforte is big on ideas and equally big on testing them to see if they hold water. Consider question number two of his multiple-choice Bootstrapper aptitude test. "You have an idea, what should you do next? Do you A. Implement the business plan; B. Rent office space and buy used furniture; C. File for a patent or D; Fax your idea to 300 people and then call each one?"
The answer is D but it's not uncommon for many would-be bootstrappers to circle A. I did and scored 8/10 when I undertook the test. That meant I would need a mentor in Bootstrapping before going any further. Gianforte says scoring 9-10 means you're natural bootstrapper. "You've got what it takes," he says. The test is unforgiving, and rightly so. Business is unforgiving, which is what every successor should know before stepping into the ring.
Make no mistake, Bootstrapping Your Business is about launching businesses. But its subtitle, Start and Grow a Successful Company with Almost No Money, will resonate with both established entrepreneurs and tight-fisted family business successors searching for a reference book to remind themselves how a badly managed enterprise can go bust in the twinkling of an eye. Bootstrapping or at least chapter two – Make sales job number one – should be on the required reading list of any junior family member about to enter the family business fold. This is arguably the most pertinent section of the book. Here Gianforte begins with an anonymous but provocative quote: "Nothing happens until somebody sells something." How true.
He writes: "As an entrepreneur, you might have a great product or service that you have worked hard to develop. You might have hired a fantastic staff. You might have cash in the bank, a logo and letterhead, a beautiful office, computers on the desks, and all those things that come to mind when we picture a business. But that's not a business. Only sales can do that." No sales means no business.
Gianforte insists sales is the only way to tell whether or not you have something of value. It's a compelling argument quite simply because it's true. One wonders then if Sir Anthony Bamford, the millionaire head of JCB, imparted such wisdom to his son Joseph before he was parachuted in, at age 26, to head up the UK industrial machinery group's fledgling Groundcare unit. When I interviewed Sir Anthony two years ago he said rather cryptically that his son was joining the company in an area where he would "not affect other people".
Fresh-faced Joseph Bamford was fortunate to have a h1 billion manufacturing multinational behind him. For the true bootstrapper, says Gianforte, it all starts with a piece of paper. In one exercise, he tells readers to draft a single page description of their proposed product or service. Now, Gianforte says, call or visit 20 prospective customers and ask them to buy it. "Yes, really do it!" he says. After considering their responses, update your description and call 20 more, he insists.
Greg Gianforte's book offers the most brutally honest reality-check any would be entrepreneur can ask for – with almost no money required.