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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Tuesday, December 14, 2004
Guy Kawasaki on Bootstrapping
The Art of the StartRecently I received a review copy of Guy Kawasaki's The Art of the Start. I've been a big fan of Guy Kawasaki for a while. I've written about his columns and books several times in this site, and I would have purchased this newest book anyway.

The reason I admire Kawasaki so much is his down-to-earth advice, delivered with wit and bluntness. I don't have time for people pushing fad ideas -- or conceptual fluff. The more buzzwords-du-jour anyone uses, the less confidence they inspire in me.

So, that said, here is my review of The Art of the Start:

Read it. The book is worth your time.

You can pick it up and read sections of it quickly (on a plane or in a doctor's waiting room), put the book down for a few days, and come back to it for another 20 minutes. It's that kind of book. In this day and age when distractions are endless, that's the only kind of book many of us have time to read.

And don't let Kawasaki's day job as a venture capitalist throw you off.

Regular readers of Small Business Trends know I am not a big fan of venture money. I've been there, done that. I know that venture capital is available only to a tiny percentage of businesses with high growth business models, and the allure of it is fool's gold to everyone else. In fact, I have spent a lot of time trying to convince entrepreneurs not to go after venture money, but to develop their small business by bootstrapping (i.e., without outside financial help).

Despite being a venture capitalist, Kawasaki has an entire chapter on bootstrapping a business. That chapter alone is worth the book. Of course, there is a lot of good stuff in the rest of the chapters that bootstrappers can use, too.

Let me give you a preview of some of what he writes about bootstrapping:
  • Understaff and Outsource. This part was really interesting because Kawasaki admits he made a mistake in hiring too many people during the dotcom boom. Now he says "Do as I say, not as I did." Outsource as many functions as possible. Except don't outsource strategic functions like research and development. Outsource functions like processing payroll, which are not core to your business (unless you happen to be Paychex).

  • Ship, Then Test. What he means is for a startup to get a product out the door and into customer hands as fast as possible. That way the company can start bringing in money and start getting customer feedback. No matter what he talks about, he always comes back to what I call the first rule of startups: cash is king.

  • Build a Bottom-up Forecast. This is some of the best advice you could give an entrepreneur in a startup, but it is advice few people want to hear. Entrepreneurs have so many things to think about that it's tempting to do a broad swag for sales numbers. But unless you take the time to think through where your sales will come from on a weekly, even daily basis, your numbers won't be realistic -- I guarantee it. Kawasaki suggests a formula for how to build a bottom-up forecast, by calculating how many sales a sales rep can actually close in a given day, week, month, year. It's a handy formula -- and great advice.
I could go on, but for the rest you'll have to read the book.

And as Guy Kawasaki said when I emailed and asked him for the one piece of advice he would give any bootstrapping entrepreneur over all else: "Double the time you think it will take to ship and divide your sales projection by two -- this is what is most likely to happen."
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