Building a successful startup can be tough. Do you really need investors? Or is it possible to bootstrap it on your own? We wanted the freedom that came with the latter, and this is how we did it.
The world of entrepreneurship is an uncertain one. But with the right planning, the right strategy, and the right mindset, you have the opportunity to build something that solves your clients problems while creating real profitability for your business — not to mention the freedom and sense of accomplishment that comes from working for yourself.
When we decided to build Formada, we knew a few things for certain: We were done working for other people’s companies, and we wanted to create something that was ours. We have zero qualms about anyone who seeks out funding for their startup. There are a number of practical reasons why people seek out funding, but for us one of our motivators was seeing how we could create and grow and stabilize this business in a lean way.
Garrett and I had a ton of great experiences, learned an immeasurable amount of practical business knowledge, and had the opportunity to work with some incredible people. But, professionally speaking, we knew that in order for us to feel accomplished, we had to take on a bigger challenge.
This is something that on an individual level we had been preparing for for years. In my personal life, our family is pretty financially frugal. We’re savers. Don’t get me wrong, we like nice things, but we’d rather have the freedom to take a spontaneous trip or invest in our home vs. investing too much energy into “things,” and so we’ve structured our lives around achieving that flexibility. Garrett’s family’s philosophy is similar, so in that sense (among others) we’re a pretty good match as far as business partners go.
So, when it came time for us to finally take the plunge and start our business, we were nervous and excited on an emotional level, but we also knew that we had a little bit of a financial runway in front of us, which made taking the plunge a little less nerve-wracking.
What else were we lucky to have? Partners who supported us and completely believed in the vision of what we wanted to accomplish. We didn’t start this business to prove it to someone else that we could do it, we’re doing it because we know we have something to offer. Having a support system didn’t completely erase our existential anxieties, but it certainly helped knowing that we had a few cheerleaders out there.
We’ve learned a lot over the last two and half years, and we know for certain that we’re going to learn a ton more, but for those of you who are curious how we’ve been doing it in order to get to know a little more about Formada or are readying to start your own business, here are some of the most important things we’ve learned:
Make peace with the leanness
Launching a startup with no funding — and a mission to not dip into personal savings to keep it afloat — means things are gonna be a little tighter financially for a little while. No question about it. Them’s the breaks. But with the right plan, this leanness will pass. Periods of leanness can be refreshing. And I learned from it. It forced me to reprioritize what I really cared about and to determine what I want out of business and out of life.
Dial back personal spending as much as possible
Depending on who you are and what your situation is, this is going to look very different. I’m not suggesting you live in misery. But my husband and I drive 14 and 20 year old cars. We love to find deals at Grocery Outlet and treasures at thrift stores. Point being, we’ve made an effort to keep our personal overhead low (by eradicating things like car payments, credit card debt, etc.) so that I could focus our energy on building Formada vs. being distracted and stressed by financial commitments that weren’t giving us anything back.
Find a business partner who has a skill set you don’t
In a broad sense, I focus on client relations and Garrett focuses on operations. They’re natural fits for our personalities and our abilities, and we see our differences as an asset. It means we’re looking at things differently and in a more comprehensive way. But where our professional skills divert our personal values are actually quite similar. I trust Garrett implicitly, and this is a crucial element to building a business. We take care of each other. We believe in each other. We learn from each other. We focus on the right things because of our different perspectives. If this dynamic didn’t exist I’m not sure we’d have done as well as we have.
“You’ve changed.” Maybe! And maybe that’s a good thing!
Expect that some people who used to understand you will think that you’ve changed. And maybe that’s true. But maybe that’s not such a bad thing. Perhaps it means that you are growing. Do you best to not agonize over this! You can’t control what other people think, you can only do your best to be a little bit better today than you were yesterday. Focus on that.
Create a mission, vision, and operating plan — together
Sure, this feels like “business 101” to a lot of people, but you’d be surprised how often folks go through this exercise but never really refer back to it as they’re building. We don’t want to compromise our mission or our vision or our values in the pursuit of profit. What do you do? What do you want to do? Think big. Feel embarrassed by how big you’re thinking. And create an operating plan that makes it all possible.
Do all the legal stuff
Seriously. Do all the legal stuff now before you’re too distracted by other things (and if you wait too long, you might be creating some long-term problems for yourself!) Write your business contracts. Use an intellectual property and business attorney because you don’t know how to do this stuff. Establish your Employer Identification Number. File your paperwork with the Secretary of State. You might feel intimidated. You might make mistakes. But don’t let those things stop you.
Also do the banking stuff
Create a bank account for the business. You’ll need startup costs for your initial expenses like CRM, hosting, email, hardware and trademark and business lawyers. Don’t skimp when investing in this stuff. Buy for where you want to be in 3 years, not where you’re at now. Garrett and I each contributed $20k and that was plenty for us.
Launch your website
Use your personal social channels to let your network know that you’re open for business. Invite them to follow and share your business’s social media info. Then stop using your personal channels to push your business—because that’s annoying. (Seriously.)
Find a mentor. Find a coach.
To be honest, I’ve been super skeptical of business coaches in the past, so this was a challenging idea for me. But as a new business owner, I quickly realized that I was in uncharted territory. My thoughts were consumed by how we could stabilize and grow and do things better and I could see that I needed someone experienced that I could share my ideas and fears and sense of accompaniment with outside my inner circle. I’m now 100% convinced that the right business coach is a game changer. When I need a nudge or a reality check, they’re there for us.
Remember: You are the brand of your digital agency.
You don’t need to become a character of what an entrepreneur is. You don’t need to become a caricature of what you think people want you to be. The word “authenticity” gets thrown around in business a lot, and I think it’s because it’s so hard to find. When people sense it, they’re drawn to it. So do that. Be yourself. Work on being the best version of yourself (which sometimes includes realizing that you’re not always the best version of yourself). You’ll draw more people to your business by being yourself. So be you.
Treat referrals like the blessings they are
If you’re lucky like we have been, your network will send you clients. When they do, thank them. Thank them profusely. A client referral comes with a subtext of “I believe in this business’s ability to deliver.” That’s a huge compliment. Such a compliment deserves acknowledgement and gratitude.
Make a promise? Deliver on it. Every time.
This seems obvious, but this is not the time to get flaky. If you’re a serious person who wants to have a serious business, then, to be frank, you gotta get your shit together. People want you to succeed. People want you to follow through on your commitments and exceed their expectations. Seriously. No one wants you to fail. But you’re only going to get so many chances to prove your worth. These are the moments that create people’s perception of your brand. So, if you’ve made a commitment — no matter how big or how small — follow through. Be vulnerable. Ask for feedback. Act on it. You’ll only get better.
Don’t pay yourself. (For a little while, at least.)
We decided that we wouldn’t pay ourselves until we established three months of operating expenses. Then we paid ourselves 30% of what we were actually able to afford. We focussed on saving as much as possible so we could hire a team as quickly as possible.
Find great contractors to partner with (eventually hire them!)
You’re going to need help before you can afford to hire a team. Hire contractors. Pay them 20% more than the going rate. They will appreciate this and prioritize you ahead of other jobs. When you have one full year of their salary saved, hire them!
Open your pipeline (but not too soon!)
Once you’ve hired a small team, we recommend focusing on really dialing in your operations. The way you worked with contractors is going to be slightly different once you have a team of FTEs. Make certain that you’re just as focused on the culture you’re creating as you are on refining your operating plan and scaling the business. In fact, make culture central to that operational plan. Once you have your engine purring, open your pipeline.
Why are we suggesting to not open up the pipeline too soon? Well, we’ve been lucky enough to get a lot of referral-based business. It’s allowed us to perfect many things we do well, as well as identify new opportunities, things we want to do better, or even things we don’t want to focus on as a business.
We’re on the verge of a whole new era for Formada. We’ve learned a great deal in the last two and a half years, and I know we’re going to learn so much more. I know I’ll look back on this blog and wish that I had included some different information, or phrased things differently, and, in a sense, that’s kind of the point — to learn and grow and push ourselves into doing bigger things and being that much better at what we do and achieving a sense of freedom that can only come from working for yourself.
Isn’t that what all of this is for?