
Ask HN: Bootstrapped business is good but slow growth. Should I raise money? - 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&#x27;t ask) to validate the idea and before I realize, I have 35 payinng customers and revenue averaging $7000&#x2F;month. Cost is about $1500 for servers and ocassional freelancer work.<p>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&#x27;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.<p>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.<p>Technically, the platform being wordpress is very limiting and I have plans to revamp it but again, need a good team for that.<p>What would you do ? I know everyone&#x27;s situation is different but really want some advice here.
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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.

~~~
newpreneur
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.

~~~
davismwfl
No judgement here, I am right there with you. I live on the east coast and
have a wife, 3 kids and all the expenses that go with the family too. So I get
it. And you should really be thrilled you have done so well, that is totally
awesome.

Video's are awesome and seem to really help. Glad they are already working
well for you.

To your other point, I have trained my wife to handle our non-automated billed
clients and I have outsourced all the other details like Accounting etc. It is
amazing how much that frees up time and really does not cost much at all. I
also use an online accounting system that is integrated to our
products/services so that when a client purchases it is automatically added to
the accounting system and so it removes the need to do bookings etc. The
accountant than picks it up from there and does their thing and keeps
everything straight for me. If you haven't already done that it may be worth
your while to go there. Since you are using Wordpress there are existing
integrations to QuickBooks, even if you don't use it for accounting today it
might be worth moving to it and buying one of the plug-ins for like $100.

We just built a subscription service website for a client (they do online
training with videos and quizzes) and they wanted it in Wordpress, so we
utilized Woocommerce, Paid Membership Pro and a QuickBooks plugin that
basically allowed us to write a very small amount of code (for that part) but
let them have a fully integrated solution from signup to purchase to
accounting. Just a point, not an endorsement for any of those products, but
damn it works and it was way cheaper than a fully custom solution for them.

Lastly as to hiring someone, since you are in a more expensive part of the
country, you could train/hire someone in say the Southeast or mid-west where
salaries are a bit lower. Also, if you don't need a developer type to do the
demo's, then you can likely find someone for a pretty reasonable rate to help
you get people signed up.

~~~
newpreneur
wow. I heavily use Woocommerce in our app because we charget subscription and
then our clients sell things as well. And yes, it is so powerful and just
works. Unfortunately, I have overall issues with Wordpress to be utilized as a
scalable SAAS product. But no denying the power of these plugins.

------
saluki
I wouldn't take funding . . . stay bootstrapped . . . sounds like you're
growing things nicely . . .

You're making enough you could hire an assistant to handle some of the
support, inquiries, billing/accounting so you can focus on demo's and growing
. . . support would probably be the first thing to outsource . . . setup a
google doc outlining typical questions/responses . . . so it's pretty straight
forward and have them send something more complex on to you to handle . . .

That will free up some time for demos, etc.

You might get a bump from conversion optimization, reducing churn, etc . . .

Could you go to 4 days per week at your day job . . .

Start doing one demo call over lunch a few times per week . . .

I think there are lots of less expensive ways to gain more time/revenue vs.
losing equity.

Good luck scaling your SaaS.

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bengali3
pertinant quote from Mike Taber of singlefounder.com

>Great, I’ve built a bunch of systems… Now What?

>You have one job left: Fire yourself.

>That’s right. Once you’ve built the process and have tested it to be sure a)
it’s doing what it’s supposed to and b) has a feedback loop that lets you
monitor it’s progress, you need to fire yourself from executing that process.
Outsource it, hire someone part-time, hire an employee, use a virtual
assistant, automate it with code, etc. Whatever the case may be.

>If a process you’ve developed is functioning properly, then as the business
owner, you probably shouldn’t be doing it.

>Your job is not to build products. Your job is to build systems.

>That’s how profitable companies are built.

~~~
newpreneur
thx for your answer. Makes sense.

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gyardley
Not sure if you're talking about scaling to a $10MM exit or $10MM in annual
revenue or what exactly in 7-10 years, but that sounds to me like too little
too long for a knowledgeable SaaS investor to invest in - they're looking for
something that has the potential to be at least an order of magnitude larger.

That suggests to me that either a) you're not going to be able to raise in the
end, which is bad because you're wasting time, or b) you _are_ going to be
able to raise but only from unsophisticated investors with unrealistic
expectations, which is a hell of a lot worse.

It would be a real shame to give up a lot of control and attach yourself
permanently to unsophisticated investors with unrealistic expectations - just
so you can quit your job a few months sooner.

If I were you, and if I really thought my business' potential was $10MM in
revenue in 7-10 years, I'd gut it out and do what I needed to in order to
continue to bootstrap until I could safely quit. You've got the potential for
a great personal outcome - if you can just keep it personal.

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helen842000
If it were me I would rather be bootstrapped but take a little longer to get
there. To me there's no point in swapping a boss for an investor.

I see you mentioned that you already have videos & training materials for
users. I would start to document how you do the onboarding in person so you
can teach it to someone else. Don't underestimate the value of high-touch
sales. It shows that it's working for you.

With you currently having a job, you could invest your current income into
rebuilding a new (non-WordPress) version. If your current version is on WP -
do you really need a team to create your new version - or just someone
contracted for a few months & then on retainer.

Once the new version is up to the same feature set as the current version -
migrate users over. Then pour your income into streamlining your business,
hiring employees etc.

~~~
raminassemi
Here's a great podcast on high-touch sales
[http://www.kalzumeus.com/2014/07/24/kalzumeus-podcast-
episod...](http://www.kalzumeus.com/2014/07/24/kalzumeus-podcast-
episode-8-high-touch-software-sales-with-steli-efti/)

------
debacle
I would recommend you contact patio11 or read up on some of his materials
about passive marketing. Why not provide a free/demo tier of your software
that is rate or context limited (or returns junk data). If they want to
discuss over the phone, do it, for now, but work aggressively on a
comprehensive FAQ.

That said, if you're clearing $5500 a month from your side project _and_
working fulltime, why can't you save up for 6 months then quit your job? That
should give you close to 6 months of runway for your project, which should be
enough to allow you to extricate yourself from WordPress and hone your
marketing strategy.

Finally, I mean if the angel is someone you trust who is offering fantastic
terms and isn't looking for a huge chunk of your business, there's no reason
not to go for it.

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rxm
In general it is not a choice, but a question of numbers. Software businesses
tend to benefit from having many customers, which requires growth and capital.
A consultancy that develops and uses software tools might go the bootstrap
route. Do the numbers and then decide. What does it cost to add and maintain a
customer? Would you get more customers with a better feature set? How smooth
is the API, interface, and documentation?

I have a nice consultancy that developed many unique software products. Over
the years I have not been able to maintain them. If I had taken outside money
I could have taken those tools to market and probably grown beyond my current
stagnation point.

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jbverschoor
How about getting a loan from a bank? That way you don't have an angel
breathing down your neck, so have some air to scale the business, which then
should be big enough to pay for your salary

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infinii
See if your company allows for a sabbatical. If they do, save the side revenue
for a few months to prep for the sabbatical. Then devote yourself 100% to it
to push it to the next step. Afterwards, you have a job waiting for you and
you should have done enough work to see whether the future of your business is
viable.

Employees and/or partners is also a good idea.

------
rajacombinator
If you have to ask others, you're probably not ready to jump ship and go 100%
on this business. I don't mean to discourage you because in your place I would
probably do it, but it will be very stressful especially with your family
situation. If you already have doubts going in it will be very hard on you.

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schutzsmith
You don't happen to be in the Hudson Valley do you? We've got the Hudson
Valley Tech Meetup second week of December and there's several folks just like
you at that. Several now have distributed workforces.

Happy to introduce you.

PS. I'm totally intrigued now to find out what your WP app is!

~~~
newpreneur
sure where exactly is the meetup ? I will try to make it. How do I signup ?

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seanccox
I'm looking to relocate to NYC/DC and I have a passive income stream that
supports me. I've been looking for jobs that would utilize my journalism/sales
experience, but with a focus on technology.

Care to chat?

~~~
newpreneur
Hi sure. how can I get in touch with you ?

~~~
seanccox
You can reach me with an email to this address: mr.sean.cox@gmail.com

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tbrooks
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?

~~~
newpreneur
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 ?

~~~
tbrooks
2.5 years. Yeah I think I could be at $1mm ARR in 3-4 years if I was full-
time. I'm just too risk averse to make the jump from my current gig.

I've tried hiring a full-time salesperson to grow the business, but it's just
really hard to find the right person.

[edit] email me at my HNusername at google's mail service.

~~~
general_failure
It's hard only if you are being very stingy about the money. Have you
considered taking them in as a partner (which they are as employee < 3)

~~~
tbrooks
Not stingy, just picky.

I have an offer at for $60k base with $100k on-target earnings. I wouldn't say
that's stingy at all.

~~~
phantom_oracle
Depending on whether or not you need a "localized" sales guy and where your
location is, isn't $60K a lot of money for Americans too?

I would think that finding "one perfect guy" may be the ideal tactic in an
ideal world, but when one wants to scale a business to go from $7000 p.m
revenue to even a modest $21,000 p.m, then even 'mediocre' sales people that
speak well enough in your chosen language of your market could sell your
product.

$60K could probably hire 3 people from East Asia?

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partisan
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?

~~~
newpreneur
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 :)

~~~
partisan
I understand. I guess it depends on the level you are hiring at. If you need
someone who has specific knowledge then they are probably too expensive, but
if you can train someone, then you can probably hire someone with very limited
experience and willing to grow with a company.

Good luck on your venture. Exciting times ahead for you and it's inspirational
for the rest of us. Feel free to shoot me an email if you'd like to discuss
the C#/MVC aspect.

~~~
newpreneur
Would love to chat. Coffee or lunch on me too since you are in NYC :). How do
I get in touch ? I don't see your contact info in your profile.

~~~
partisan
Hmm. I thought it would show my email in my profile. You can email me at
partisanyc at gmail.

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mrfusion
I'd be happy to help with moving it away from WP into something
stable/scalable. Feel free to drop me an email if you're interested.

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kayhi
How long did it take to reach that revenue?

~~~
newpreneur
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.

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fananta
i'm curious, what is the business (if you don't mind sharing)

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zackmorris
Gut feeling: that's a high revenue for one person. It can be easy to take for
granted if the growth took a long time. But just wanted to offer another data
point, that my old partner and I only managed about $1500 a month on our best
month selling shareware games 15 years ago (this was before app stores, we
were high on sites like download.com, but never saw anything approaching
exponential growth).

It’s straightforward to make more than that consulting. The catch is that
consulting businesses generally have no intrinsic value. Their value is in the
workers, so if there are N people and one of them leaves, they’re worth about
1/N less. In other words, the have less resale value than product businesses.

So I would say, if you want your business to be worth something, consider
streamlining it to the point where it no longer needs you. The catch to that
is that it isn’t something you do while you are still working on your minimum
viable product (MVP). So ask yourself:

1) are you still getting established? \- then bootstrap, nobody will lend you
money other than credit card companies

2) or are you at a point where you have some breathing room? \- consider
funding from family and friends because even long tail decline can pay them
back

3) or is everything in place to the point where you are ready for exponential
growth? \- raise big money

I started writing a big spiel about brick and mortar stores and getting loans
in exchange for a stake in the business but it wasn’t something that couldn’t
be gleaned from watching a few episodes of Shark Tank.

The way I see it is, you’re probably still a consultancy, still in phase 1,
but on the threshold of phase 2. But congats, because most people never make
it that far. So are you familiar enough with promotion and branding to get new
business on your own? Or can you find a partner somewhere who is as
established as you in some way (having either skills or cash), who will help
you rather than hinder you? Or do you have a family friend who has experience
running a business and more importantly, has the cash you get you to phase 2
in a short amount of time?

Concretely, it sounds like you need money so you can give your full attention
to refactoring and hiring for growth, and you know an angel investor. Don’t
hold onto the job. But don’t go and borrow more money than you need either.
You’re in a unique position where you could borrow 6 months or a year’s wages
without having to work for and save that money yourself (which takes 10 times
longer - so if you wanted to save $10,000, you would have to earn $100,000,
which most people don’t have the means to do, and that’s the actual thing that
stops people from starting their own businesses, not dedication or talent or
the things that hackers tell themselves to feel special). As a general rule, a
bank might lend you what you have in savings. But an angel investor might lend
you a lot more for some percentage of the business. A partner would want half,
but maybe there’s a sweet spot where you could borrow more and give up less,
because you have enough cashflow to survive on your own without the money. I
made the choice to give up my job and go it alone a couple of years ago, but I
don’t have 2 kids to support, and now it’s not so much about the money as
missing the interaction with smart people. So now ironically having a great
team and a sustainable income would be more attractive to me than any amount
of money, because the sky would be the limit. Maybe thinking about what you
really want, and accepting that you’re being given a special opportunity
rather than merely weighing risks, will help you decide how to proceed. Good
luck!

