Episode 1 – Show Me The Money: Financing Your Business

Episode 1 – Show Me The Money: Financing Your Business

 
 
00:00 /
 
1X
 

In our inaugural episode, hosts Michael Lunt, Matt Adams, and Matt Byrne discuss how you can finance your business through bootstrapping.  Drawing on past experiences each of these fearless business owners help their listeners to navigate the difficult but rewarded world of entrepreneurship and how to finance your dream venture.

Show Transcript:

00:06
The Fearless entrepreneur podcast team
00:09
are a group of business owners sharing
00:11
their career experiences successes and
00:13
failures to help other entrepreneurs
00:15
build a strong business foundation
00:17
welcome to episode 1 financing your
00:19
business
00:24
have this kind of issue with their
00:26
podcast there was another company
00:27
another podcast did like 30 minutes and
00:30
forgot to hit the Save button or the
00:32
record button so we’re in good company
00:34
right as long yeah we just got to keep
00:37
making sure that burn does what he’s
00:40
supposed to do yeah yeah absolutely yeah
00:45
is this is this gonna be part of the
00:47
podcast because I would like to say my
00:49
piece
00:49
what’s your piece well my piece is this
00:51
is our fourth recording of this podcast
00:55
yeah for anyone who’s listening this is
00:59
the second time that we have recorded
01:00
this no this is the fourth time – no the
01:07
first whole show and I said the immortal
01:12
words okay hit stop record and bang goes
01:17
I wasn’t recording we did a 35 minutes
01:22
of podcast gold and I did not hit record
01:28
that’s just gonna make this one even
01:29
better the first time we did it we did
01:31
it all in the same room and the
01:34
microphones bled on each other yeah that
01:37
was bad and then the second time we did
01:39
it what happened to that one but we
01:41
thought that one sounded fine it’s just
01:43
we wanted to refine it with you gotcha
01:44
so the content was a little undeveloped
01:47
the third time I forgot to hit record
01:49
and this is the fourth time of the
01:51
inaugural podcast I think we should call
01:54
it episode one and point four well since
01:57
we’re already at four o’clock on the day
01:59
let’s get this thing started Matt thanks
02:01
from the top no no Game of Thrones
02:03
lead-in no names have done you know what
02:07
game I’m gonna say my piece about Game
02:09
of Thrones real quick you know we
02:11
followed this show was it been on on the
02:13
air now ten years eight years eight
02:17
seasons yeah I think it’s nine years
02:20
okay so it was two years it was two
02:23
years between season seven and season
02:26
eight you guys been watching it there’s
02:29
you know you got coffee cups showing up
02:31
in the scenes and stuff you hear about
02:33
all this money being spent all this
02:35
production time I think all the money
02:37
and for
02:38
time was spent on the opening animation
02:40
sequence and not so much on the story
02:41
and what we saw in each episode yeah I
02:45
yeah it’s I mean I I said it after the
02:49
last episode where I was like well
02:51
they’ve obviously been setting this up
02:52
for the last five episodes that she was
02:56
gonna turn that was obvious but why you
02:59
chose this season to do it why not just
03:02
do it at season six when they weren’t
03:04
even involved with the writer anymore
03:06
like Martin like he wasn’t they weren’t
03:10
basing it on a book like you had an
03:11
opportunity right then and there to set
03:13
it up but you didn’t you just did it now
03:15
so personally I’m getting more of a
03:19
thrill from watching all the die-hard
03:21
fans just lose their over it but me
03:23
personally I’m just like that’s fine and
03:26
then they all died the end yeah well and
03:29
you know to say what you’ve seen it from
03:31
a mile away I mean until Jon Snow found
03:35
out he was a Targaryen Danny was on
03:38
board she was gonna be a benevolent
03:39
queen and then you know like anybody who
03:43
has their authority challenged buildings
03:47
must crumble and people must die
03:49
it was almost comic though how the
03:51
dragon was just like lawn mowing I mean
03:53
it just it wasn’t you know killed you
03:55
know 60% of the city you need to
03:57
literally mow down every human do I get
04:01
one row here oh I’m gonna get a little
04:03
bit of overlap so we got good striping
04:05
lines yeah we’re gonna get them all baby
04:07
in the Midwest we do a lot of uh taking
04:10
those little trials and scraping our
04:13
windshields you know it’s just like well
04:22
welcome to Episode one of the fearless
04:23
entrepreneur podcast this week we’re
04:25
gonna talk about financing your business
04:27
my name is Matt Byrne I’m along here
04:30
with Michael Lunt and Matt Adams we’re
04:33
joining you today from the Dublin entrepreneurial center in Dublin Ohio
04:36
which is the home base for each of our
04:38
respective businesses yeah it’s more
04:40
commonly known as the deck around here
04:42
as we put this podcast together we came
04:46
up with the name the fearless
04:47
entrepreneur podcast and we feel like
04:49
fear is what
04:51
Rives success in in any business really
04:55
we came up with the the concept of fear
04:58
which is failure educates actual reality
05:02
and how if you have fear you can
05:07
actually use that to your advantage and
05:10
learn from it and and use it to drive
05:13
you in a certain direction that actually
05:15
brings out a positive outcome in your
05:17
life and in your business so what I want
05:21
to do is start this episode by talking
05:24
to first off my a my Adams and ask him
05:27
how did fear and failure help you to set
05:32
up your business to what it is now I
05:35
kind of stroke actually I’ve never
05:36
really told this story before so I was
05:39
working for another agency I was a
05:41
creative director and we had done some
05:44
great things but this is right at the
05:46
very beginning of a you know an economic
05:49
downturn cars we primarily were working
05:54
with car dealerships and no one was
05:57
buying cars my agency at the time or my
06:00
agency I worked for was a media buying
06:03
agency so no one’s spending money and I
06:05
was about to be out of a job so I got
06:07
clever and came up with some things that
06:09
we could do this was gosh 15 years ago
06:13
and started thinking of some interesting
06:17
unique ways that we could be leveraging
06:19
digital so he did that fix that turned
06:22
out to be quite a shot in the arm for
06:24
our agency right they made a ton of
06:25
money and this was about the time when
06:30
we were expecting the birth of our first
06:32
child and my boss at the time gift wraps
06:38
a brand-new laptop computer I’m like wow
06:43
that’s pretty cool yeah a laptop that’s
06:45
wonderful she says and that way when
06:47
you’re off those two weeks with your
06:50
wife if you need to jump in and take
06:52
care of anything you could get you could
06:54
get it taken care of right then oh man
06:57
and you know here you know we’re we’re
07:01
I’m making I’m probably doing a million
07:04
two million dollars of revenue
07:05
a quarter for them and faced with the
07:12
the prospect of working for somebody the
07:14
rest of my life truthfully truth be told
07:16
you don’t know if you’re gonna have a
07:18
job the next day if I could make this
07:20
person that kind of money and I have to
07:25
work those kind of hours I might as well
07:27
be doing it for myself
07:28
and if I’m gonna have to have my laptop
07:30
with me on family moments like that I
07:34
wanted to benefit me and my family not
07:37
somebody else so the fear of that life
07:40
drove me I am going to start my own
07:43
business I had done some other
07:45
businesses before that they didn’t
07:46
really work out so well and they failed
07:48
certainly but this one I made sure I did
07:53
my due diligence because I was here I
07:56
have a new baby girl we now have four
07:58
children three girls and a boy and I
08:01
wanted to make sure that I did
08:04
everything right before I took that leap
08:05
it took me six months to write my
08:07
business plan so the fear of not being
08:09
able to control my own destiny being
08:11
with my family that drove me to my my
08:15
entrepreneurial story my journey if you
08:17
will cool I might be what about you like
08:21
what was the the fear that took you into
08:23
your business you know I don’t know the
08:26
fear got me into it but fear is
08:27
definitely kept me in it you know you
08:30
you wanna the fear of letting your
08:32
employees down by not you know being a
08:34
good entrepreneur not being able to
08:35
provide a thriving environment people
08:38
have mortgages and car payments
08:40
you know fear to cover my own you know
08:43
household expenses and needs you know so
08:46
I you know I think fear can be very
08:48
liberating you know because it’s a
08:50
motivator it’s a teacher you know so you
08:55
know in the fear of the mundane fear of
08:58
working for somebody else I mean I’ve
08:59
never had a resume I’ve never been on a
09:00
job interview and I’ve never taken a
09:02
paycheck from from anybody every
09:04
paycheck I ever took I wrote my own hand
09:06
and I always joked it sometimes it was a
09:08
number with lots of zeros at the end of
09:10
it and sometimes it was just a zero such
09:13
as the fate of the entrepreneur but you
09:15
know I think fear is a great teacher and
09:19
it shouldn’t be something we’ve run from
09:20
it should be something we try to
09:21
understand embrace and grow from about
09:23
you Mike so for me I think the fear that
09:30
I experience starting my own business
09:32
was a lot less than I then probably most
09:36
people would have mainly because I’m
09:39
already done the most terrifying thing
09:41
in my life at that point which is I
09:43
moved from Britain to goes to 11 so we
09:49
have a rule every time he mentions
09:51
Britain Great Britain London England
09:54
you must speak in a hello okay Gumnut
09:58
could tell you oh it’s like being with
10:02
dick Van Dyke’s yes I’m originally yeah
10:08
I’m gonna say it and hopefully we’ll get
10:10
could I forget but yeah I’m originally
10:11
from Britain so I moved over here six
10:14
years ago and went to work for an agency
10:16
in town and right around the same time
10:20
my wife and I bought our first home I
10:22
decided that it would be a great time to
10:25
start a new business
10:26
so I’d already like I said done the most
10:29
terrifying thing at that point and this
10:31
was more of a okay’s if this doesn’t
10:34
work we’re gonna have to figure some
10:36
things out but I I just was given a
10:40
great opportunity a friend of mine who
10:42
lives still in Britain was wanting me to
10:45
work with him on a big project and there
10:47
was no way I could do both of that and
10:49
my full-time job so when I went home I
10:52
told my wife that this opportunity had
10:54
landed on my lap and she was like okay
10:57
go make a business plan and we’ll see if
10:58
we can make it work
10:59
and Harim her words were pretend I am
11:04
the bank because let’s be honest I am
11:08
the bank I was like yeah that’s actually
11:12
a good point because if this doesn’t go
11:13
well you are funding everything until I
11:16
get employed again
11:18
so I basically spent four days putting
11:22
together a business plan it was brief
11:24
but it was enough we realized that yeah
11:28
this this could actually work for us so
11:29
I did that about four years ago
11:33
onde parasol video which is a video
11:34
production company for small businesses
11:37
here in Ohio and also around the world
11:39
our client that’s farthest away is
11:41
actually in Hong Kong so we are yeah in
11:46
a great place now and I’m glad I took
11:48
that plunge but fear much like Matt be
11:50
said that’s kept me hungry it’s kept me
11:53
on a steady path and yeah I’m grateful
11:58
for that opportunity that got me started
12:00
so the three of us decided to get
12:02
together and start a podcast and we all
12:05
have different reasons for that being
12:08
here you know with our offices in such
12:10
close proximity we’re always sort of
12:12
bouncing ideas off each other helping
12:14
each of our respective businesses grow
12:16
we’re always trying to learn something
12:19
but I think each of us respectively have
12:23
a lot that we can offer each other and
12:27
and hopefully to our listening audience
12:29
so I’m doing this podcast because hey I
12:33
want to hear from you the listening
12:34
audience with your questions advice man
12:37
certainly made some mistakes in my
12:39
entrepreneurial journey so I want to be
12:44
able to educate folks with the mistakes
12:46
I’ve made so you don’t have to so that
12:48
personally that’s that’s my reason for
12:50
this podcast Matt be why don’t you tell
12:53
us your reasons you know one thing I
12:56
discovered being an entrepreneur and
12:57
I’ve you know owned my own business for
13:00
the last thirty years and I’ve had
13:02
several different opportunities and I’ll
13:04
tell you more about those later but
13:05
being an entrepreneur can be very lonely
13:08
and isolating right there’s nobody on
13:10
the planet who understands your struggle
13:14
more than a fellow business owner and so
13:18
I feel very strongly about being in
13:23
collaboration and interaction with
13:25
fellow business owners because you can
13:28
learn from each other we can learn from
13:30
you you can learn from us and we’ll
13:31
learn from each other one of my favorite
13:33
quotes is what was hard to learn is easy
13:36
to teach you know so something I might
13:39
have discovered in the school of hard
13:40
knocks you know we I call you when you
13:42
make a mistake or have a big setback
13:43
it’s tuition it’s it’s it’s part of your
13:45
education it makes you bad
13:46
stronger and you know if I can learn
13:50
from you about something you’ve done a
13:52
mistake you’ve made that helps me avoid
13:53
it that’s an invaluable piece of
13:56
information and or you know if there’s a
13:59
best practice that I’ve discovered a
14:00
technology or I have a best practice or
14:03
you can share something you’ve done
14:04
that’s innovative and revolutionary that
14:07
can help me supercharge my business so
14:09
that’s kind of why I’m involved in this
14:10
podcast I’m excited about moving forward
14:13
together on this what about you Mike I
14:17
mean you kind of you touched on it in
14:20
your point might be the you know being
14:22
an entrepreneur is it can be quite
14:25
lonely and for me it’s this is a way for
14:28
us to reach an audience that might be
14:31
looking for advice that ordinarily like
14:36
the three of us we would all be saying
14:39
our home officers for example in that
14:42
same situation because of where we are
14:44
we are able to collaborate we’re able to
14:47
just have an impromptu meet up and talk
14:49
some of these people out there who would
14:52
who were doing business at home don’t
14:54
have that ability and so this is a way
14:57
for us to communicate with them and give
15:00
them like some of our you know our
15:04
tidbits that we’ve learned over over the
15:07
years and just kind of reach that that
15:11
that singular individual that audience
15:15
of one bought on them on a multiple
15:19
scale so you know we can actually start
15:21
to build an audience that hopefully we
15:24
can then start getting these people and
15:26
in either in the same place or in the
15:28
same kind of online forum where they can
15:30
really start to engage with one another
15:32
and this podcast is at the center of
15:34
that to really get people to talk more
15:36
about why being a business owner and
15:40
being fearful and being not afraid to
15:42
fail he’s a good thing that’s for me
15:45
it’s like kind of the big thing about
15:47
doing this podcast yeah and you know in
15:49
that theme you know if you have a
15:51
question a topic something you’d like us
15:53
to review a comment you like what we’re
15:55
doing you don’t like what we’re doing
15:56
you agree or disagree please put that
15:57
into the comments some of the topics
15:59
we’ve been you know brain store
16:00
we’re gonna bring you a host of
16:01
different things things about funding
16:03
forecasting finding clients legal and
16:05
compliance you know human resources and
16:08
winning the war for talent and dealing
16:10
with people and culture so we really
16:12
look for your suggestions and feedback
16:13
on upcoming topics so we can build out
16:15
our calendar this week’s episode of the
16:25
fearless entrepreneur podcast is
16:27
sponsored by Metro data center Metro
16:29
data center would like to invite
16:31
multi-tenant building owners and
16:32
businesses in Central Ohio to get lit
16:35
with their hundred gigabit fiber optic
16:37
connectivity Metro data center has over
16:40
200 miles of fiber optics laid
16:42
throughout Columbus and Dublin Ohio many
16:44
office buildings have already been lit
16:46
and several more are being added
16:47
regularly with 100 gigabit fiber you’ll
16:50
have the fastest most reliable
16:52
connection possible for your business’s
16:54
cloud colocation servers and blended
16:57
Internet to learn more go to WWE tree
17:00
datacenter comm to get your business
17:02
moving at the speed of light that’s
17:04
Metro data center comm you know we each
17:07
financed our business in different ways
17:08
and that’s today’s topic you know how
17:10
did you get the ball rolling
17:12
you know bootstrapping is a term that
17:15
basically means you know you’re kind of
17:17
being very frugal very diligent and kind
17:20
of on a shoestring you’re trying to do
17:21
it with the minimum amount of time
17:23
energy and effort with the maximum
17:26
result but each of us kind of starts our
17:28
business in different ways and I just
17:30
wanted to kind of take a moment for each
17:31
of us to go through that and and Matt
17:33
Adams why don’t you start us off and
17:34
tell us you know how you got started and
17:38
and some of the the challenges and
17:40
things that you learned early and some
17:41
of the things you did to bootstrap and
17:43
kind of avoid running out of gas too
17:45
quickly on your this startup of your
17:47
business yeah yeah so when when I
17:49
decided you know going back to my
17:51
earlier story I’m gonna start a business
17:53
now with the story I described earlier
17:56
it was probably three years after that
18:00
experience that I had had been thinking
18:03
about starting a business for a while I
18:04
was talking to a to a friend of mine a
18:08
very successful business owner in their
18:11
own right completely unrelated field
18:14
and was complaining about it you know I
18:19
wanted to change my circumstances and I
18:21
was very fortunate in that and he said
18:23
to me he’s like well you know when
18:24
you’re ready to start a business talk to
18:26
me about it
18:27
and that kind of opened my eyes like
18:30
wait a minute
18:30
so someone else believes in me write
18:32
this there’s something here I so I went
18:35
down the path of it was six months I of
18:38
working on a business plan had my
18:42
benchmarks I knew industry wise I all
18:44
this stuff was great all this wonderful
18:47
data I knew I was gonna probably compete
18:49
with my previous agency brought this you
18:54
know had another conversation with him
18:55
said this is kind of what I’m thinking
18:56
it’s like okay that looks great but
18:58
you’re gonna need to drive a real wide
19:00
berth around your non-compete agreement
19:03
so you’re not going after those
19:06
customers now just stay away from that
19:08
customer type we don’t want to get
19:09
bogged down in legalese so went back to
19:13
the drawing board presented to him again
19:16
with his advisory board and ultimately
19:21
decided yep we want to support you in
19:23
business we’re gonna be your business
19:24
partner and we’re going to extend at the
19:28
time thanks weren’t loaning we’re gonna
19:30
extend up to $100,000 is what we’re
19:34
going to invest in your business yeah I
19:37
was blown away I was great and it came
19:40
to me in the form of here’s a ten
19:44
thousand dollar disbursement spin that
19:48
on what you need to know so you didn’t
19:51
get the full the full amount Oh Londo
19:53
got it in pieces I did I did and looking
19:58
back on that I am so thankful that
19:59
that’s the way that that came out
20:01
because I had I had you know 25 grand in
20:05
my pocket I’m gonna rent the nicest
20:08
office I’m gonna you know buy the
20:09
fastest computer and just spend money
20:13
and and not really focus so much on the
20:16
fact that I knew from day one I needed
20:18
to pay myself and that $10,000 was going
20:23
to that was my paycheck I can use it
20:26
however I want
20:27
but that was it so I knew there’s a lot
20:30
of things I had to get done and I needed
20:34
to rent a good space need to get a good
20:36
office I needed to because you know in
20:40
this town there were a bunch of graphic
20:42
designers a lot of freelancers lots of
20:44
lots of competition out there I couldn’t
20:46
go and meet you know at a table at
20:49
Panera a new client that’s going to
20:51
spend ten thousand dollars with me on a
20:54
new website just yeah I needed to land
20:57
that plane faster by them either calling
20:59
in and my receptionist I mayor quoting
21:02
receptionist I had a calling service
21:03
that pretended they were me and then
21:05
routed my customers to my desk and my
21:08
cubicle was just that it was a cubicle
21:11
it was like a four foot by five foot
21:12
space and I started making money right
21:16
out of the gate and it was probably
21:18
three years before we were cash positive
21:22
I never had to go down the route of
21:26
borrowing all of that money and then so
21:31
flash-forward to eight years into the
21:35
business I was able to buy out my
21:37
business markers they recoup their
21:40
investment made a little bit of money
21:41
we’ve got a successful business we’re
21:44
growing that’s been my financial journey
21:47
but if anything the big takeaway from
21:50
that is being real diligent and how
21:53
you’re spending your money I’ll use the
21:55
word frugal but sometimes you have to
21:58
pay for things that are of value right
22:00
you can’t always buy it the cheapest you
22:02
know you get what you pay for is they
22:05
say right well mine is buy cheap buy
22:08
twice that’s that’s excellent cut once
22:12
measure twice but so that that was my
22:17
financial journey I had an angel
22:19
investor not so silent partner because
22:23
they acted as an advisory board they
22:24
really were invested in me and that was
22:28
a great kindness that I had there
22:29
because yeah they saw the value and what
22:33
I was doing they knew I did great work
22:34
but it was a huge risk on their part not
22:37
many people have that I mean you know
22:39
Mike Lunt you you
22:41
your wife supported you on your business
22:44
journey I don’t think I could have been
22:48
successful had I not a had the funds and
22:51
be the advisory services that they
22:55
provided with helping me get my accounts
22:57
payable I mean I draw pictures for a
22:58
living I’m not an accountant I’m not an
23:01
attorney I had a little bit of business
23:03
acumen but what I did have was I could
23:07
provide solutions for customers and I
23:09
could show those results and they
23:12
believed in that that’s what propelled
23:14
my business forward and we would do
23:17
cashed withdraws every once well I think
23:20
in the entire time we were maybe 30 days
23:23
late on payroll to myself everyone else
23:26
got paid we didn’t even have to put the
23:28
vendors names in a hat and draw names no
23:30
everybody always got paid and yeah and
23:32
that’s a great tip right there if you’re
23:35
growing your business
23:38
don’t make your contractors or people
23:41
wait for their money because you’re
23:43
never paying for that job you’re paying
23:46
for the next job and if you rely on
23:48
those people definitely take care of
23:51
your people as best you can
23:52
yeah yeah I know companies that won’t
23:56
pay vendors until they get paid so now
24:00
the vendors are waiting for you know the
24:03
slick and if it’s a company that earns
24:05
millions of dollars a month well they’re
24:08
probably not gonna chase down the job
24:10
that you worked on right with them and
24:13
you know cash is important obviously and
24:16
sometimes you have to do that you have
24:17
to have the arrangement set up where
24:19
look I can’t pay you until we’re paid
24:20
but as long as everybody understands
24:22
that yeah getting getting it out there
24:24
in writing before hand is one thing but
24:27
I also think then it’s not on you know
24:30
as a vendor I speaking to vendors out
24:32
there and if that’s the kind of thing
24:35
that you do don’t be afraid to then
24:37
change the terms of the agreement a
24:39
little bit you know if you’re typically
24:41
working on a 30-day contract so you
24:43
invoice and then 30 days later you
24:45
expect to be paid well if the vendor is
24:48
now saying that they won’t pay you until
24:52
they get paid well maybe you want to
24:54
negotiate
24:55
a quicker payment when they get paid so
24:58
30 days it might be seven or you know
25:01
ask for a deposit up front if you don’t
25:02
typically do that just remember that it
25:05
is an agreement it’s not it shouldn’t be
25:08
one side that’s a strong point you know
25:10
getting favorable terms you know as matt
25:12
said you got to take care of people you
25:13
got to pay people on time you can’t you
25:16
can’t string people out but but in
25:18
recognizing that you know there’s a term
25:21
called two percent ten at thirty which
25:22
means it’s a net 30 in Boise you got to
25:24
pay me within 30 days but if you pay me
25:25
within 10 days you can take a 2%
25:28
discount right that’s the way to
25:29
accelerate your cash flow payments in
25:31
advance as Michael mentioned is a way to
25:33
accelerate your cash flow you know just
25:36
having the contract be very clear about
25:38
how you’re gonna be paid because you
25:39
cannot be out 60 or 90 days and have
25:42
your business function you’re already on
25:44
a shoestring you’re already unlimited
25:46
money you know if they start thinking
25:48
that you’re their bank and so my
25:51
recommendation is is you know in the
25:52
spirit of this podcast is do not fear
25:56
recognizing your own worth your own
25:58
value and expecting to be paid
26:00
appropriately and fairly and timely for
26:03
that that’s a huge part of success early
26:05
it’s just know that you provide value
26:08
don’t feel like because you’re small and
26:09
new that you need to discount your price
26:11
to to the bare minimum or wait for your
26:13
money for longer than is appropriate and
26:15
talk about that going advanced because
26:17
if you deal with a partner who wants you
26:18
to behave that way it’s a bad partner
26:20
and be better off waiting for a better
26:22
one yeah right guys it might sound like
26:25
we’re talking about cash flow and
26:27
finance and stuff like that but don’t
26:30
forget that any money that comes into
26:32
your business if you are bootstrapping
26:34
this thing this is all part and parcel
26:37
of it you have to sort out your cash
26:39
flow in order to bootstrap your business
26:41
going forward so I started my business
26:44
with $300 believe it or not and that was
26:47
to file the Articles of Incorporation I
26:49
used equipment they already owned for
26:52
that I brought over from England it goes
26:54
to 11 joke
26:56
[Laughter]
26:59
but you know to buy business cards and
27:01
things like that so I was actually able
27:03
to start my business relatively cheaply
27:05
but I think a lot of people that are
27:07
even able to do that they often think oh
27:11
why I started my business with hardly
27:14
any money and look at me now it’s like
27:15
well yeah but look at who was supporting
27:18
me at the time you know there was always
27:20
someone in in the background in this
27:22
case my wife who was propping me up the
27:25
entire time if my business failed which
27:28
fortunately it didn’t she was going to
27:30
be the one that had to catch me
27:31
so bootstrapping whether it is ten
27:34
dollars or ten million dollars you know
27:38
if you happen to be extremely wealthy
27:39
when you start now that there’s likely
27:43
always going to be someone there to
27:44
catch you if you fall so like say in my
27:48
case I started my business from home so
27:51
I was able to start again relatively
27:54
cheaply and right off elements of my of
27:56
my home in my taxes and it was only as I
28:01
started to grow I realized that I was
28:03
outgrowing my home I was taking on work
28:06
from all over the world and I was like
28:08
okay I’ve got to move all my equipment
28:10
somewhere more stationery because I’m
28:12
keep moving it from bedroom to the
28:14
living room to garage and back and forth
28:16
and I was driving my wife crazy so I
28:20
came over to the Dublin entrepreneurial
28:21
Center we actually Adams introduced me
28:26
to the guys that run it and so coming
28:29
over here allowed me to increase my
28:32
business intake even more so but I still
28:36
have in my mind that bootstrapping
28:40
mentality I haven’t changed haven’t all
28:42
of a sudden gone out of the bank and
28:43
took on a big loan and added all that my
28:48
shoulders I’ve just stuck with the way
28:49
that I’ve done it and I’m happy because
28:51
I feel like I never have to look
28:53
backwards I’m always looking forwards
28:55
because I know behind me is a strong
28:57
foundation that I’ve specifically built
29:00
in my business like a lot of companies
29:02
they they get in and they grow so
29:05
quickly so fast that I feel like their
29:08
businesses are built on matchsticks
29:09
and if it’s so quick to crumble if it
29:13
fails because there’s no procedures in
29:16
place for what that looks like and they
29:18
built it so fast and now it’s down my
29:21
business I feel I could survive a
29:24
recession or something like that because
29:26
of the way that I’ve run it so that to
29:29
me is like a good lesson in how to like
29:32
run things it’s like don’t don’t jump in
29:34
both feet and then just start running
29:36
like jump in both feet and start and
29:38
start by walking and seeing where it
29:40
takes you
29:41
yeah you know I think bootstrapping
29:42
applies to any size business whether you
29:44
start your business with $300 or you
29:46
receive 3 million dollars for venture
29:47
capital you know if you have a very
29:49
equipment intensive business then you’re
29:50
gonna have to bootstrap on amenities and
29:53
maybe people and office space and you
29:56
have a service business maybe you’re
29:57
gonna you know spend a lot of money on
29:58
people and office space but you know
30:00
maybe get secondhand equipment so any
30:02
size and stage business you’re looking
30:04
for innovative ways to save money for me
30:06
you know my company’s spiral at group
30:08
benefits it’s an employee benefits firm
30:10
that kind of helps people with their HR
30:12
and employee benefits but but my first
30:15
business was a chemical and engineering
30:19
laboratory my father had given my
30:22
brother and I $80,000 from his
30:24
retirement which was I think the lion’s
30:26
share of his retirement and in nine
30:28
months we blew it all every penny of it
30:32
we were out I think we had like you know
30:34
out of $600 left out of interest like
30:37
what was his reaction to when he told
30:39
him that well he kind of watched you
30:42
know that the fast burn right he was
30:45
yeah he didn’t freak out he was you know
30:48
worried and not happy but I remember we
30:51
you know we were in a horrible office
30:53
with you know wood paneling an orange
30:55
carpet in a folding table and a two-line
30:57
telephone and we just started dialing
31:00
for dollars I called an association that
31:01
of DC and asked them for their member
31:03
list because we thought we had some
31:04
chemical analytical chemistry services
31:06
that we could provide to them and and
31:08
that you know people started responding
31:10
reacting really well so within three
31:11
months after losing it at all we were
31:13
cashed positive we hadn’t paid back the
31:15
80,000 loss but anyway at about $36,000
31:18
in positive revenue right out of the
31:19
gate after you know doing nothing but
31:20
spend and you know so sometimes those
31:23
crisis
31:23
those conflicts that those mistakes you
31:26
know kind of galvanize you for the next
31:27
success so in that case it was you know
31:30
a friends and family situation but but
31:34
then you know that second generation of
31:36
that same business it was it was all
31:37
bootstrap it was getting real creative
31:40
and in real lean and mean we got a
31:41
really expensive piece of equipment
31:43
donated from a former professor of
31:45
chemistry at a local university you know
31:49
we I slept on my parents couch for I
31:51
think eighteen months I made 200 hours a
31:53
month for those first eighteen months so
31:55
you know that was a way where I could
31:58
make a sacrifice to help put fuel into
32:00
the business you know my second business
32:05
by the way that first business was
32:06
started in the teeth of a recession my
32:10
second business was you know so I sold
32:12
that business in 1999 to the largest
32:15
testing laboratory in the world our
32:17
company called inner tech traded on the
32:19
London Stock Exchange it goes to 11
32:23
it’s at our new drinking game anytime
32:25
there’s a reference to London or England
32:26
we’ve got to drink or or say it goes to
32:28
11 or some do it do it drink tea or yes
32:32
yes make sure you make it correctly so I
32:37
so my second business was a marketing
32:39
consulting firm which I started in the
32:40
teeth of the recession following the
32:42
1999 tech bubble crash because I sold
32:45
that company 99 and then 2001 2002 2003
32:48
I’m starting to this marketing company
32:50
very difficult I respect Matt Adams and
32:52
the DTI creative team for all the work
32:55
they do because marking is really hard
32:56
you got to be innovative creative and
32:57
you kind of gotta earn your stripes
32:59
every project and and I just found that
33:02
very difficult so my joking I wrote my
33:03
own paychecks sometimes it has zeros
33:05
well during the marketing consulting
33:06
there were lots of zeros but I had a
33:10
nice windfall in selling my business in
33:12
1999 and so I was kind of playing with
33:14
house money at that point but I started
33:16
my employee benefits
33:18
firm in 2007-2008 and I remember I
33:22
started it we were going to regret it’s
33:23
called my health quote or calm as an
33:25
online website where people were gonna
33:27
be able to go and shop for their health
33:28
insurance this is you know a decade
33:31
before healthcare.gov and Obamacare and
33:34
so I joked when the the the
33:35
healthcare.gov website was
33:37
riddled with issues and problems I said
33:39
you know my company my website it’s
33:41
exactly like healthcare.gov except mine
33:43
works well and it’s been around for ten
33:46
years but you know what’s funny is is
33:49
that you know the business plan the
33:51
business model I did a lot of planning
33:52
and planning super-important not because
33:54
you’re gonna stay perfectly adherent to
33:56
the plan but because the plan is very
33:59
enlightening to when you’re on the
34:01
journey of the plan you can see quickly
34:03
like that we’re gonna need me to make a
34:05
turn here we’re gonna need to pull over
34:06
reverse course for a few days or a few
34:08
weeks but I know we thought we would set
34:11
up a website people would you know shop
34:13
for health insurance in their bathrobe
34:15
and we would just sit back and count the
34:16
money well very quickly we learned that
34:18
people are gonna need counseling and
34:20
help and guidance and coaching and you
34:22
know it’s a very anyone who knows the
34:23
American healthcare system knows it’s
34:24
very complicated you know many times
34:26
inefficient and and expensive and so you
34:29
need experts to help you through that so
34:30
I went back to you know my two partners
34:32
at the time I said listen we’re gonna
34:34
need to build a bigger boat we’re gonna
34:35
need to put in more money and we ended
34:37
up doing a capital call where we each
34:39
had to put in forty thousand dollars
34:41
more to kind of make this thing work and
34:45
get it to where it needed to be one of
34:47
our partners wasn’t cool with that they
34:49
said you know what I didn’t sign up for
34:51
that that’s not what it’s about but you
34:52
know if you’re a 33% shareholder in a
34:54
company and that company needs you know
34:57
twenty thousand dollars to buy a new
34:58
piece of equipment or or to need to buy
35:01
a building or it needs to change the
35:03
strategy guess what you as an owner an
35:05
equity partner are on the hook for that
35:07
and the other two partners can vote and
35:09
say we need to spend this money and you
35:12
will be required to put that money
35:13
forward it’s called a capital call and
35:15
that’s why you know having a strong
35:17
operating agreement that spells those
35:19
things out is really important now that
35:21
partner said I don’t have the bandwidth
35:23
for it I don’t have the the you know I
35:26
don’t have enough free money to do it
35:27
and and we had end up having to find a
35:29
way to liquidate him out of the business
35:31
you know so that’s kind of my my journey
35:34
my bootstrapping story and kind of how I
35:36
get from where I started in this
35:38
entrepreneurial world to today so if you
35:41
I know you said that like you’ve written
35:45
some checks with lots of zeros and some
35:47
would none so in the days when you had
35:50
no
35:51
Peyman coming through was that similar
35:54
to me where your wife would be there for
35:56
you or what did you build yourself up in
35:58
such a financial way there you never
36:01
really need to borrow from the house
36:02
fund I don’t think anybody ever does
36:04
anything without your spouse the support
36:07
you know they might have a job that
36:10
provides you access to health care they
36:12
might have a job that provides a little
36:13
breathing room on the house budget you
36:17
know in my case you know the the
36:19
proceeds from the sale the first
36:21
business had enough of a runway where I
36:23
was able to kind of play with that house
36:25
money and you know I mean it took almost
36:27
I sold that first company in 1999 and it
36:30
took me until 2007 to find the net next
36:33
profitable enterprise and in the
36:35
interval I did a lot of searching a lot
36:36
of testing a lot of different ideas and
36:39
yeah my wife was patient through that
36:41
and I couldn’t done it without her
36:43
and she kept you know instead of us
36:45
having to dig into our retirement and me
36:46
liquidating all the success of that
36:48
first sale she was able to keep the
36:50
financial world afloat with her
36:51
conventional job that allowed me to find
36:54
my next success I’m happy to report that
36:56
she’s now retired
36:58
you know she’s she retired at 47 years
37:00
old and she worked really hard to get
37:03
there and and I’ve had some success that
37:05
helped that happen too but she put in
37:06
some of those hard years where I wasn’t
37:08
really helping how financially yeah and
37:10
now she has the reward of my this new
37:12
business is you know I’m been it for
37:14
almost ten years now but it has enough
37:17
success where we don’t need anymore you
37:18
know and at some point you have to say
37:20
how much is enough how much is is enough
37:22
to be happy and to take care of my
37:24
family and we felt was important for her
37:26
to be able to stay home and it’s one of
37:28
the happiest things in my life to have
37:30
her know she’s taking care of the kids
37:31
and she she’s earned her place to have a
37:35
little bit different lifestyle she she
37:38
earned that with me and without me she’s
37:41
a smart girl she would probably die
37:42
without me for sure you were holding her
37:45
back yeah exactly
37:47
well so if you’re just out there you’re
37:50
just thinking about starting a business
37:51
for me I feel like a pretty good rule of
37:55
thumb is all right you’re gonna
37:57
bootstrap it yourself how much money do
37:59
you need and obviously your own
38:01
respective business is going to
38:03
determine that but I think it
38:05
and guys you tell me if you agree with
38:07
this ten months you should have ten
38:09
months of funding in place before
38:12
starting can you do you I I mean I think
38:15
it would depend on the business me I
38:17
would say more like six but that’s just
38:20
me that doesn’t mean it’s right doesn’t
38:21
mean it’s wrong but yeah for me I would
38:24
I would personally say six and I have a
38:27
phrase or statement I’ve used a lot
38:29
whatever your projection is half the
38:34
amount of revenue that you think you’re
38:35
gonna make and double the amount of time
38:38
you think it’s gonna take for you to
38:39
make it so if you think you’re gonna do
38:41
a million dollars in twelve months
38:42
you’re gonna do half a million dollars
38:44
in 24 months budget accordingly now
38:47
that’s just a yeah smart frugal you know
38:52
rule of thumb so calibrate at your own
38:54
pace the more you can have in the war
38:57
chest that the longer the runways a lot
38:59
longer than you think it is so Matt’s
39:01
thinking 10 months Mike’s thinking six
39:03
months and I’m saying twice as long as
39:06
you think it’s gonna take right and I
39:08
think everybody I think it’s a big
39:09
mistake right everybody underestimates
39:11
the time effort cost well honestly I
39:14
don’t think that they underestimate the
39:16
cost I just don’t think they put in the
39:17
time to find out the cost they just pick
39:20
a number out of thin air and the truth
39:23
is that it doesn’t take that long to
39:26
figure out how much money you need to
39:30
get going it’s just you have to put the
39:33
time in to do it you know there’s plenty
39:35
of resources online to get you on that
39:37
path and you know it’s a bit difficult a
39:40
lot of this stuff you can just look up
39:42
on the internet and go okay well how
39:43
much is this piece of equipment how much
39:45
is it to do my articles of incorporation
39:47
that kind of thing so it’s it’s not hard
39:50
it’s just people want to dive right into
39:52
the fun stuff and and this is this is
39:55
all part and parcel of it yeah you know
39:58
one of our future episodes gonna be
40:01
about business planning we’re gonna get
40:02
deep into this topic but a lot of times
40:05
you know I think a new entrepreneur
40:06
fails to recognize their you know
40:10
pencils and photo copiers and Internet
40:13
service and phone systems and and
40:15
employees and employee benefits and
40:17
workers compensation taxes
40:19
and taxes you know you’re like oh yeah
40:21
I’m gonna make you know do a cèlle
40:23
forty four hundred thousand dollars and
40:25
I’m gonna have a hundred thousand a
40:26
profit what you don’t realize is that
40:27
thirty thousand that hundred thousand
40:29
dollars of profits going to pay taxes
40:30
you know so business playing software
40:32
kind of prompts you to think about all
40:34
those things you’re feeling to think
40:35
about taxes utilities you know so I
40:38
think there’s a lot more expenses that
40:39
you know it’s the same thing in your
40:41
household I’m sure if I asked you
40:43
where’s all your money going you would
40:44
say oh well my mortgage is this and my
40:46
car payments at this and we spend about
40:48
this much on food and this much on
40:50
entertainment and I’m like okay what
40:51
about the other half you know you’re
40:53
spending double that where is all that
40:54
going the same thing is true in your
40:55
business and maybe even more so and the
40:57
faster you’re growing the more it’s a
40:58
challenge it’s actually interesting
41:01
because I up my business finances
41:03
differently than I do my home so my home
41:05
finances with my wife we work on a zero
41:08
budget like a zero dollar budget you
41:10
know where you basically spend
41:11
everything even if it’s going into
41:13
savings accounts vacation accounts
41:15
groceries everything like that I spend
41:18
it all it’s not actually spent it’s just
41:20
allocated and in my business I actually
41:23
don’t operate that way I think a little
41:25
bit because of my business is a little
41:27
bit more fluid and so it’s a little bit
41:29
more you know it’s not hard set like you
41:33
bring in X amount of dollars well
41:34
business is a little different right
41:35
one month you might have a lot of money
41:37
coming in and the other month you might
41:38
have hardly any so it’s not as easy to
41:43
do that but yeah and now that you’ve got
41:45
you said that I can I got me thinking
41:47
yeah I do operate my finances slightly
41:49
differently depending on what it is I do
41:50
I do too you know and another of note is
41:53
that the more mature and established and
41:55
kind of stable your business is so as
41:57
you’re as you know some of the listeners
41:58
are more mature businesses like ours you
42:01
know I’m trying to think I think I have
42:03
about four months of cash flow on hand
42:07
in Bank right now because I don’t need
42:10
ten months anymore or whatever that
42:11
number is you know it’s when you’re
42:12
starting it’s things take a lot longer
42:14
you’re earning your stripes in the
42:16
market you’re trying to earn customers
42:17
repeat customers there’s a lot going on
42:19
that you need that long runway but once
42:21
you’ve repeated that for a few quarters
42:24
or a few years then you can kind of get
42:26
a little you can start reinvesting that
42:28
you don’t want to have ten or
42:29
fifteen months on reserve because what
42:31
you’re doing is you’re starving your own
42:32
business’s ability to grow and innovate
42:33
and get bigger and better
42:35
so I just you know in the Hat top of my
42:37
head I think I’m about three or four
42:38
months of residual what do you think
42:40
what’s for you Matt real quick before we
42:42
wrap it up I mean do you have any feel
42:44
for how much cash you have on hand as a
42:45
function of your overhead each month you
42:48
know we always are operating with six
42:51
months so if all of my clients today
42:55
fired us we’ve got six months to correct
43:00
the ship I don’t know many businesses
43:03
that can do that of our size but that’s
43:07
what we always try to keep that six
43:09
month gap and there mm-hmm
43:11
so I think some great great bits of
43:16
information there and obviously this is
43:18
going to be one of the threads that runs
43:21
through the entire podcast going forward
43:24
we’re always going to be coming back to
43:25
funding because it’s such a big part of
43:28
growing your business so this podcast is
43:31
available on Apple Google Play in the US
43:33
and Spotify and wherever else you get
43:36
your podcasts we encourage you to
43:37
subscribe to hear the latest episodes as
43:39
they are released and we’d also like to
43:42
thank our fearless entrepreneur podcast
43:43
episode sponsor matter Oh data center
43:46
who not only provides superfast internet
43:49
in and around Ohio but they also provide
43:51
the superfast Wi-Fi that we’re using to
43:53
put this podcast out to you guys if
43:54
you’re interested in becoming a sponsor
43:56
of the fearless entrepreneur feel free
43:58
to drop us an email or leave a comment
44:00
in our face on our Facebook page it’s
44:02
down to our sponsors that were able to
44:04
provide this podcast to our listeners
44:06
for free so thank you all for your
44:08
continued support okay and real quick if
44:09
you guys have a topic that you would
44:11
like for us to discuss please post a
44:13
comment below or on our Facebook page
44:15
and speaking of which don’t forget that
44:17
you can follow us on facebook at the
44:19
fearless entrepreneur podcast and you
44:21
can follow each of us so Matt Byrne is
44:25
at group health Ohio
44:27
I’m Michael one I’m at parasol media my
44:31
Adams is at doc di creative you can also
44:34
read more about each of us on our
44:36
website which is the fearless
44:38
entrepreneur podcast com that’s all from
44:40
us this week so until next time stay
44:42
fearless
44:45
[Music]