When I founded my software company so many years ago, I was fortunate to have an immediate client who actually paid me well for my time. As my company and my relationship with this client expanded, we were also able to get paid to develop our software product. In essence, our software was customer funded and required no more outside capital than a line of credit to get us over certain growth spurts. We were able to parlay revenues from our services into the areas of our business we needed to grow. We bootstrapped.
Although we sold software, the majority of our revenues came from services, so we determined our budget based on how many hours we might bill and projected out from there. Borrowing or raising capital never entered my mind. Oh, I remember stating early on that I wasn’t looking to be the next Microsoft, but I also remember distinctly the reason: I didn’t want to lose control. Even though our company grew to multi-millions in revenues from what I considered being scrappy, I honestly think I was afraid of too much success.
I don’t know if I’ve always been that scrappy, but looking back I realized I needed to be to get through college. I had to work 3 jobs at one time to pay for college myself (eating Ramen Noodles in the tough times) because my parents didn’t have the means at the time. But at least then, I filled out every application for a scholarship I could find and opted for all the student loans possible. So why didn’t that translate into my business years later? In my first business, I never really thought about what I could do with someone else’s money.
Over the past couple months of co-founding a nonprofit, the Path Forward Center for Innovation and Entrepreneurship (the first nonprofit for both me and co-founder Renee Lewis), I’ve been building our financial models from what I thought we could make for our efforts – teaching the ACTiVATE program at UMBC, consulting, training, speaking, and license fees for rolling out the program. How can we make this happen by being scrappy? As we’re getting things moving, I’ve been working 24/7 and pulled in a million directions as happens in any type of start-up and have honestly never worked harder in my whole life nor enjoyed something so much. I can’t NOT do it. And then it hit me.
I was stuck in bootstrap mentality.
Although we have big ideas and visions for the Center, I kept coming back to ‘how can we earn the money to fund these great ideas?’ until I got my own boot in the butt. I kept seeing the signs – from the recent Kauffman study, to the Equity Matters seminar I helped run for Springboard, to the SBA focus group I participated in. This is also where it pays to hang around people smarter than you. All these events, the people around me, and especially the continuing success of our ACTiVATE participants and alum collectively and indirectly helped me realize that what we’re doing is SO powerful and the timing is SO perfect that it can’t wait to be bootstrapped. Bootstrapping isn’t good enough. We need to raise money from the outside.
I know this is contrary to what most people are thinking in this economy. And in fact, outside capital isn’t always the right answer for every business. But when the timing IS right and the idea IS powerful and the market IS ready, waiting to bootstrap can kill an opportunity’s momentum and chances for success as a result. It is a risk, though, as raising money isn’t easy and can consume a lot of time. It is an option that should at least be weighed by entrepreneurs when they start so they can build in the right infrastructure and value to get where they want to go. Neither fear of success nor failure should be among the limiting factors.
The transformation of my thoughts and, as a result, the vision for the Center was so incredible, yet so painful (as all growth is) I realized that many of the women who come through our programs are likely stuck exactly where I was. And now that I’ve gone through it, I am better at recognizing the symptoms in others and developing strategies to address this attitude head-on. If we’re ever going to help women reach the levels of success they are fully equipped to attain, this has to be a part of it (see friend Dr. Sharon Hadary’s recent article in the Wall Street Journal as backup!). And now I know better how to get there! I’ve always believed that pain can have an upside. And I know that ACTiVATE, the Center, and the women we touch will benefit from this pain of my thought evolution as well.