I have run a few small businesses in the past, and I still do right now. I’ve always believed in bootstrapping, even before I knew the meaning of the word. Taking loans to start a business has always been a NO for me. But a loan for expansion, I can support.
I think that many people don’t understand “capital” and “starting a business”. Most people I speak with talk about not having the funds. When I ask their challenges, I see a “flaw” in their plan… they wanna start BIG!
Big starts from SMALL, and many people fail to see this. The Google’s and Microsoft today didn’t start out BIG. They all mostly started with nothing! ZIp! Sifir! Nada! Nothing!
Start mall, reinvest, and grow. I don’t know where I picked this from, but I’ve been studying business for as long as I’ve been coding. Since 2002, one story was a big inspiration for me.
I read this sample business plan of a children internet company. They planned NOT to make profit for the first 4 years! FOUR FREAKING YEARS, NO PROFIT, ON PURPOSE! Their plan was to reinvest and grow the business so big, before sitting back to collect profits.
If most of us correct this mindset of “starting big” and “instant gratification”, perhaps the complains about “no capital” might change.
Now let me tell you about how I started small, with 3 businesses I’ve done in the past…
VOIP Call Vouchers
I started this business by buying 5 euro voucher, 5 of them. With bank transfer charges, I spent about N5,000 naira after conversion (in 2011). I reinvested the profit the first time, then added a little more to buy 10 vouchers (50 euros total).
That was ALL the investment I did! Little expenses went into packaging… Sellers before me gave vouchers by calling them out or writing on pieces of paper. But I printed my vouchers on little mini-card shaped pieces of paper, with my phone number. It didn’t affect my profit at all.
This was how I started, to selling 10 to 30 vouchers per week. Another thing I did (which I always do in business) is to separate business profit. Business money belongs to the business, my money is my money. I can pay myself, but the business owns the profit… not me!
This concept of separating business profit from personal money saved my ass when I lost 100 euros! It was all the profit I had made at that time, so the saved up 100 euro went back into the business. Again, nothing else came out of my pocket.
After leaving Cyprus, I resorted to selling wholesale. I still sell in bulk to people in Cyprus, but for less profit. This time, I’m doing it to help and not for profit.
I started this business with a partner. My own initial investment was about N60,000 naira (after conversion, in 2011). The money went into setting up the business. We bough a second-hand deep freezer from the original business owner and the first set of 20 chickens.
I don’t know what my partner did with his share of profit, but I reinvested mine until I got my capital back. Thereafter, I started keeping aside the profits.
Again, I did something for packaging (or adding value). I would sometimes give some profit back to loyal customers in the form of “appreciation”. I would surprised them with 1 free chicken on their 10th order, but didn’t tell them it was their 10th order lol. Again, without anything from my pocket.
I also outsourced cutting the chickens to a butcher. I charged extra for cut up, chicken and paid the butcher from there. Again, costing me nothing but little extra profit since people wanted their chicken cut.
With time, we were selling 20 to 40 chickens every other week or so. The business ran down when my partner thought he was better at running business than myself. He took over the selling and ordering and managed to piss the butcher off! And then he finally sold the business to someone else… all without my consent.
But I saw the future. I was selling the chicken as Africans couldn’t get the chicken at regular markets. Shortly after my partner took over, the chicken became available at a nearby market. Soon after, there was little to no patronage for the business. At that time, I didn’t feel so bad anyway. I had made more than my investment. I had satisfied customers and the market became competitive… So I let is slide.
This company actually started out as me giving people advice on Nairaland, and correcting the misconceptions about Cyprus, where I lived at the moment. My school later discovered the thread and suggested that I apply to become an agent.
I did apply, I got accepted! My 1st student came from that Nairaland thread, and do you know what? She was the person that my chicken business partner sold our business to!
As for packaging, I setup a nice website for myself (as a website person) as quickly as possible. My investment was probably less than $100 for hosting and domain name from GoDaddy. Then including the time and effort spent in putting up the website.
Believe me when I say that website was the best investment yet for this business. A working website, email and well implemented SEO. The website right now brings in most, if not all my leads.
My website has gotten schools to contact me to represent them. It has gotten students to contact me to help them gain admission abroad. And occasional, I get job applications too! Somehow, people think DeQeo Consulting is a big study abroad company lol.
If there’s any lesson to learn here, it is this… Get a functional website and a functional email address. I can hook you up with a nice website if you need one.
From my first student in 2011, to 2 more, then 7 and then to 13 students per semester in 2013! I became among the top 3 representatives in Africa/Nigeria in quantity. Then I was top agent for quality of students.
But things started to slow down after 2013 due to lack of time. I am trying to get back up right now. Even so, schools contact me every other day, and students do too. But the quality of leads have dropped (this is where I need help right now).
Mind you, I didn’t have a physical presence in Nigeria while all this happened! I did it all 100% online, via my website, emails, Whatsapp, BBM, partners and the grace of God.
October 2015 was when I setup an office in Nigeria, for the first time. Until then I had to leverage partnerships. I had sub-agents and partners who acted as contact points for students who needed my service. Partners brought in about 40% to 60% of my students back then.
Right now I barely have 2 reliable partners as people have become less dependable. Money makes people act in strange ways. Some of my partners have ripped my students off by charging more than the amount we agreed!
Until now, I have had external support from family and from the first school that signed me up. Even so, the business actually made enough money not to need these supports. But I had invested a bulk of the money elsewhere.
From these examples, there are businesses that requires a one-time investment. Thereafter, revenue generated by the business can fund business expenses. This is how I believe it should be. But this might not work for all kinds of business, especially brick and mortar business.
What About Loans?
I do NOT support getting a loan to start a business. Unless you have tried it out and it works and you have a specific plan on how to use the money to east the business, I do not recommend it. I hate debt! I hate debt with a passion! I would rather bootstrap, anytime, any day. That will always be my first choice.
So my advice? Start in the smallest way possible. Reinvest your capital. Grow your business. Delay gratification and forget about profit for a while. When the business is well established, you will enjoy the benefits.
One of my favorite case study is the story of a former church member.
She started out buying 1 bag of pure water (it was N50 naira back then). She sold it and bought 2 bags (100% profit). She repeatedly reinvested until she started selling pure water steady in the area.
After a short whole, she bought a fridge and started selling soft drinks. With time, she was in charge of the area for soft drinks and pure water… ALL on a N50 naira investment!
For me, bootstrapping is the way. Whether from personal savings or support from friends, family, relatives, grants, etc. Loan should be the lastest option lol
What about you? How did you fund your business? Perhaps you have a tip or two to share about raiding funds to start up a business? Please share with us in the comments section below. Thanks!