Hi everyone. After a hiatus, I’m back to writing articles. Over the past year, I’ve been busy with some exciting projects at Dr.PAWPAW, our beauty brand, and soon I’ll be sharing updates.
Now I’m back, let’s talk about something that could help budding entrepreneurs – bootstrapping. If you decided that having that early cash injection wasn’t for you, I get you. We started Dr.PAWPAW with just £20k, and that initial capital covered 10k product units, trademarks and logistics.
Maximising bank support for your business
I know I’ve talked about this in a past article, but the role banks play in startup journeys is vital. When you pitch your business idea, remember it’s not just about what the bank can do for you. Generally, it’s also about what you can do for them. Get your bankers excited about your business idea by targeting banks that support entrepreneurs and startups. I recommend reaching out to HSBC, Metro, and Starling Bank.
Seek out a relationship business manager. That’s what I had when I first started, I sought a small overdraft so if we went in the red for a few weeks, the bank was there to support me in the early years. Since starting the business I’ve changed three banks. Don’t be afraid to explore other options if your current bank isn’t giving you the support you need.
In addition, treat your bank like you would treat the press. Keep them in the loop about your wins and milestones, because this will entice them to talk to their regional directors about you as the business continues to grow.
Owning your home market
In the past 18 months, I met with many potential investors and the one factor that stands out is that investors focus on your home market triumphs. I say this as sometimes you can have huge export success where your international business is bigger than your UK business.
However, investors always look to your home market to see your success. For this reason, really do think about your home market strategy, make sure to identify where your product is best sold, and which retailers best suit the business.
Dealing with trademarks
For startups, especially those bootstrapping, safeguarding your assets is of great importance. I was lucky to have my great wife and business partner, Pauline, working alongside me on the Madrid Protocol while pregnant with our second child. When we first went to a trademark lawyer, the cost was enormous. Utilising the Madrid Protocol in 2014, we secured brand protection across multiple countries for around £2.5k, a fraction of the cost compared to traditional methods. This invaluable tip can save startups significant sums.
Working with your manufacturer
Without your manufacturer, product creation is impossible. Self-manufacturing ensures you can keep an eye on the cost of your goods at all times. A really good rule of thumb is to aim for 10-15% of retail price as cost of goods, securing good margins for retailers or marketing expenses.
However, if you are working with a contract manufacturer, it’s incredibly important the manufacturer understands you’re a startup. Ask them about pricing based on large volume but on call off. As an example, you might say, ‘I think I can buy 20k units this year, but can I call off 5k units every three months, paying only upon each call off?’ Many manufacturers will agree to this, which will also be fantastic for your cash flow. Another crucial factor is finding a great warehouse that supports you, understands your costs and your needs.
Mastering cash flow
Learning this in year one would have put me in a better spot today, but I have no regrets. Managing cash flow may sound simple, but as an entrepreneur, especially a marketer entrepreneur, I often reinvested earnings straight into marketing to drive sales. While this can fuel revenue growth, managing your cash flow is the most important thing in business.
Thankfully, we never struggled to pay bills, but it did cause some sleepless nights. At times, I even worried about meeting payroll, and I would always pay the team before me. Implementing a 13-week forecast helped immensely. This method allows you to forecast your revenue against your bills, regularly updating the forecast week-on-week. This will show you the sweet and sticky spots of the business. It’s a game-changer – trust me on this one.
Marketing the brand
I want to end with this point because it’s been crucial to Dr.PAWPAW’s success. With 20 years of running a PR agency under my belt, I understand the importance of generating awareness.
Entrepreneurs often ask me how we achieve so much PR and marketing. The secret? Frequency and implementation. Every month, without fail, I sent products to the media, even when the brand only had one product. I valued every mention, big or small, and I feel like I was one of the first real supporters of micro influencers. This approach still guides me today. Naturally, I love journalists and celebrities, they truly make a difference to your business, but micro influencers are the ones that really helped us at the start.
So remember, send out a press story about your product every single month to a number of influencers and press contacts, and keep up that momentum. Make sure your story is engaging, relevant to the time and to the industry, and see how far it can take you.
To summarise, bootstrapping demands mastering key aspects of your business journey, with each being equally important. Despite its challenges, bootstrapping is achievable with dedication and strategic planning. Embrace the challenge and keep pushing forward.
