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Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

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Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#1

Post by newpreneur »

hi all. I run a 100% bootstrapped SAAS business and I am solo. Part time right now and I have a fulltime job as well. I literally built it on top of wordpress (dont't ask) to validate the idea and before I realize, I have 35 payinng customers and revenue averaging $7000/month. Cost is about $1500 for servers and ocassional freelancer work.

Here is the issue. The application is not a very simple thing and a lot of potential clients want demo or discuss things over phone. I am getting a lot of interest from potential clients but being solo, I don't have much time to entertain all queries. So in short, I am growing but very slow and not able to yet quit my fulltime job because I have high family expenses (2 kids,mortgage etc). And just to confirm, the profits from this business is not yet enough for me to do it fulltime and support my family.

I have a potential Angel investor who I could talk to and may be get some funding so that I could quit my job (which i really want to quit) and do this fulltime ? That way, I could scale it faster and may be hire an employee or two as well. I also have plans to revamp the entire app by getting rid of wordpress and building it properly now that I have validated the idea.

Technically, the platform being wordpress is very limiting and I have plans to revamp it but again, need a good team for that.

What would you do ? I know everyone's situation is different but really want some advice here.

Re: Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#3

Post by newpreneur »

kayhi wrote: post #2

How long did it take to reach that revenue?

Well When I started, it took me abouta year to get first 20 clients. But since then, on an average, just with inbound marketing, I am getting about 6-8 clients per month (this includes clients leaving on an average as well). My motivation to do this fulltime has many reasons:

1) Quit my job (very high paying btw)

2) I love this business and really want to spend all my professional time only on it for next few years.

3) Really scale this business because I have seen the potential. i could be delusional but based on my experience so far , I think this could be a $10 Million business in 7-10 years if done right with scale.

Re: Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#6

Post by newpreneur »

partisan wrote: post #4

First, congratulations. And good on you for not putting the cart before the horse (quitting before having revenue). Could you hire an employee, part-time, using the revenue you are currently bringing in?

Thx. Very difficult to hire someone locally. I am in NYC area and with my profits before taxes being 5K (give or take), I doubt I can find someone even part time here in the US. I could go offshore but I dont' want to because of timezone and communication gap issues. I know this because my current freelancer even though good, is offshore and I am not able to drive things forward with him as smoothly as I want to. Btw, I noticed on your profile that You do C# .NET MVC. I am revamping the app in exactly that :)

Re: Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#7

Post by davismwfl »

Why not hire and train a part time person (or friend) that can help cover demo's and help you grow a little faster and stay bootstrapped. It would mean that you would need to add more customers before you can go full time but it is a way to stay bootstrapped and not take others money. You could even pay this person per lead closure, so for every client they get signed up you pay them $200 (or $400 whatever).

You could also work to simplify/automate the on-boarding, spend some of your monthly revenue on creating some videos that cover the features/questions people seem to ask the most about. You can make a few videos, 45 seconds or less, and have those on the site for users to view without registering. Then record a full demo that is say 5-10 minutes and if someone registers for more information then send them a link to that video and then follow up with them. You may help shorten your need to be involved in every sale, and decrease on-boarding time. This doesn't mean you can necessarily make a sale without jumping on the phone, but it does mean you may be able to minimize those conversations more and therefore make them more scalable and even possibly easier for you to train others to help you close deals.

In the end, raising money takes way more time and effort than you initially think, and even with friendly investors it can change your ability to go the direction you want. Lastly, remember a lot of investors try and minimize founder salaries, and if you need 10-14k a month to survive then you may struggle to find an investor that will commit when 85% of his investment is just paying for you. If you are thinking you just need 50k to make it for 3-5 months, you might be able to get that more through friends/family/bank to help bridge the gap until you get more signups.

Re: Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#8

Post by newpreneur »

davismwfl wrote: post #7

Why not hire and train a part time person (or friend) that can help cover demo's and help you grow a little faster and stay bootstrapped. It would mean that you would need to add more customers before you can go full time but it is a way to stay bootstrapped and not take others money. You could even pay this person per lead closure, so for every client they get signed up you pay them $200 (or $400 whatever). You coul…

Excellent points. I already have a detailed video demo of the app and quite a few marketing materials. In fact, the videos are the reasons I get a lot of inquiries because people love it. For existing clients, I have a lot of training materials in the form of videos and FAQs as well that they can go through. In fact, that is the first thing I ask them to do when they signup. That keeps the number of support tickets much smaller.

But overall, I can only give it so much time. There is support tickets, presales inquiries and a bunch of other things (billing/accounting). So I am always choosing (and struggling) on what to do when.

You nailed it perfectly about my financial situation. I need about 10K cash per month for family expenses (dont judge, my kids daycare costs 3K total and my mortgage+taxes is 3K being in the East Coast).

I could always sell my house and scale back but I really don't wanna do that because I wont save much in rent anyway.

Knowing that this business model is solid and if I had the right team and time/money, I could scale it a lot faster, I am leaning towards the funding option but want to be very very careful of course.

Re: Ask HN: Bootstrapped business is good but slow growth. Should I raise money?

#10

Post by newpreneur »

tbrooks wrote: post #9

Are you me?! Wow this described my situation exactly . Same revenue, same costs, same lifestage (2 kids, mtg), same high paying job, etc. I've found some ways to make the process even more self-serve than it already is, maybe we can compare notes?

wow. That is a coincidence. But every word is true :) How long you been doing this ? And yes, would love to share notes. How to contact you ?
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