
Ask HN: Bootstrapper on the brink, what to do? - throw9987432
I have a small bootstrapped business. Have been working on it for about a year in my spare time. It started out as 5 hours a week, then 10, then 20.  Right now it is demanding 30-40 hours of work per week.<p>The problem? I have a fulltime job. I cannot do awesome at both. Burnout is a very real possibility. My choices are:<p>1) Continue to fight the bootstrap fight. My calculations show that in 6 months I will reach the point where I can pay all business expenses plus my salary full time, so I can quit my dayjob. If I make it through to this other side, I have my dream. 100% of a business, and full control of my destiny.<p>2) Go raise a seed round. On a few 100k, I could hire a few employees + quit my day job, and really kickstart the entire thing. I could add 2-3x the features in the next year of what I could in #1 above.<p>3) Compromise. Somewhere between choices 1 and 2.  My projections say that for 50k I could quit my day job and make the plunge (hiring no extra staff). Then in 6-9 months, I could start to hire. It would be less stressful than #1, but slower growth than #2.  I have a few options for funding. I can pull it out of house equity, I can borrow from friends and family, or similar.<p>For a brief summary of where the project is at.. it is a b2b SAAS app. Currently bringing in $1500 per month, and has grown roughly 100% for the last 3 months ($350 -&gt; $700 -&gt; $1500). Not expecting quite that pace to continue, but I have a pretty big backlog of customers I cannot fully get going with my limited time.<p>Smart people tell me #1 is sweet. To come out on the other side of a new and growing business with no debt and a profitable business. But if a seed round is going to cost me a few % of my ownership, I am right now (in the pile of work I have in front of me) having a hard time caring about 5-30% of my company. I mean 95-70% of a lot of money is still a lot of money.
======
Mz
So, some things you do not seem to have considered:

Increase your price. This may reduce the number of customers but increase the
profit margin, thereby cutting back on the hours required of you and making
the transition from job to business owner more manageable.

Find ways to somehow free up time. This does not necessarily need to be in the
form of business automation, though finding some ways to automate pieces of
the business to lighten your load would be good. You could also look at your
overall life and either do things like hire a person to mow your lawn or just
simplify things in some way.

Take better care of yourself. Eat better. Improve sleep hygiene. Join a gym or
fit more walking into your life. If you have more to give physically, this
pace becomes more sustainable.

You seem to feel a bit trapped, like the business has a life of its own and
you cannot corral it. Try to reframe the problem as one of you needing to get
this dog on a leash and teach it some discipline. That approach has the
potential to give you the breathing room you need to grow it on your own
terms.

~~~
throw9987432
Awesome thanks. Let me look one by one.

> Increase your price. This may reduce the number of customers but increase
> the profit margin, thereby cutting back on the hours required of you and
> making the transition from job to business owner more manageable.

For sure, I am not entirely sure what the right pricing move is. I could
likely do a 25-50% bump and end up better for it.

> Find ways to somehow free up time. This does not necessarily need to be in
> the form of business automation, though finding some ways to automate pieces
> of the business to lighten your load would be good. You could also look at
> your overall life and either do things like hire a person to mow your lawn
> or just simplify things in some way.

For sure. Today we just figured out "order groceries from the internet". Going
to be a process,but every extra hour helps a BUNCH right now

> Take better care of yourself. Eat better. Improve sleep hygiene. Join a gym
> or fit more walking into your life. If you have more to give physically,
> this pace becomes more sustainable.

My running has gone from 30 MPW to 5 MPW. Thanks for the reminder, I shall go
for a run in a bit.

> You seem to feel a bit trapped, like the business has a life of its own and
> you cannot corral it. Try to reframe the problem as one of you needing to
> get this dog on a leash and teach it some discipline. That approach has the
> potential to give you the breathing room you need to grow it on your own
> terms.

This is genius

~~~
Mz
:-)

Would love to hear a follow-up at some point, even if just privately by email.

Best.

~~~
throw9987432
You guys are great, wish I didn't have to write in stealth mode so I could
blog.

~~~
harperlee
Perhaps you can do it some months after this :) it would be great to hear back
with the results, so please don't lose the password ;) or safer yet, add an
email to the profile.

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kejaed
Can you get more up-front commitments from current clients, prepay for a year
for a discount? This could let you pull the plug now on the day job and focus
fully on your own project. The idea of that part of the class was that
businesses often both customer and even suppliers to fund themselves, and that
alternative and creative financing solutions can be negotiated.

Also, as others said, you might be able to find a small business loan since
you already have cash flow, via traditional or other methods (online lending).

~~~
throw9987432
I actually have a yearly discount advertised but not have not spent the 10
minutes to code it. Stupid of me, I bet I could get several people to commit
to paying a year for 2 months free.

------
saluki
Congratulations on your SaaS Success . . . hang in there.

Doubling MRR each month + reaching your day job exit in 6 months, keep at it
bootstrapping.

Use some of your SaaS revenue to hire a support person/developer, what ever is
taking the most of your time. Start delegating, even if it costs some of your
income. Basically you're self funding and getting things setup to run without
so much of your time. You could even push out quitting your day job beyond
your target goal amount (SaaS expenses + salary) once you have some contract
employees to free up some of your time.

Spending some money to buy back some of your time sounds like what you need.
So start hiring some contract employees/freelancers to handle what you can
delegate to free up some of your time.

Congrats, go with option 1, do NOT take funding, do NOT hire full time
employees, focus on growth/marketing, delegating and only features users
really need.

Good luck, circle back around and let us know how it works out.

~~~
throw9987432
Any more tips on why you feel so strongly 1, or strongly against 2-3?

I do have a part time support person I am paying with "profits" (I am
profitable as long as I keep working for free). So yes this is 100% where I am
putting my money for a while, not for development.

~~~
saluki
You won't regret bootstrapping as long as you can and owning 100% of your SaaS
not sharing your profits with others.

Reading your other comments it does sound like you could use cash/credit to
increase your google ad spend and onboarding more customers faster that would
be a good use of funds. Could you hire another contract employee to speed up
getting people on board?

If you can get signups from your adwords spend who sign up as paid in less
than 30 days you could increase your spend in adwords on a credit card paying
the balance each month to avoid interest charges. Stream line your on-boarding
process to get customers on board.

Adwords can go from printing money to shredding money pretty quick so use
caution of course. But I think funding extra adwords with a credit card would
be a nice way to grow signups if you can speed up your onboarding process.

On bootstrapping . . .

Being able to set your own pace, call your own shots, don't give that up.

Inspiration: DHH Startup School Talk
[https://www.youtube.com/watch?v=0CDXJ6bMkMY](https://www.youtube.com/watch?v=0CDXJ6bMkMY)

He also talks about limiting your work hours each week, give yourself blocks
of time to work on your SaaS so you make the most of your time when it's
available.

Feel free to email me if you want to bounce ideas around through email . . .
HNusername at gmail.

------
Toly
First off congrats!! would love to see another post of how you were able to
achieve this: '$1500 per month, and has grown roughly 100% for the last 3
months ($350 -> $700 -> $1500).' imho #1 brings you quite close to the dream.
i'd make a calendar to remind yourself that each day you're closer to it ie 6
months of 'X' for each until you hit your goal of 50k to quit your job. should
push you thru the tough times you're going thru now. Whichever you choose,
just keep a positive mindset because your progress is amazing thus far. kudos.

~~~
throw9987432
Thanks for the support! I don't think I need 50k to quit my day job, depending
on how much staff I have I should be able to quit closer to 10-15k MRR. If I
can get people to prepay yearly as others have suggested, would be even
sooner.

Has been an interesting journey for sure. Have not really planned it to
happen, just did my best at each phase, and it has always been "enough". We
will see how long this baby goes...

------
qwrusz
Congrats.

Hard to say which to go with but I think it's worth taking a deep look how
feasible each is.

#1 sounds good, it seems to be less risk with highest reward. And you say this
is the one option that is a dream. But if choose this how likely is burnout?
If it truly is very likely, then take that under consideration. Burnout is
real.

#2 The appeal of #2 depends on your background. Do you know a few investors
you can relatively quickly and easily meet with that could give this
business/you flying solo a few 100k seed? If yes, maybe just take a coffee or
two and see what they say. No harm in that and you will get feedback and know
the cost of this option. If you don't know investors, then raising a seed
round will take some time and energy. You would have to put other things on
hold while you spend time doing this and without knowing what the outcome will
be.

#3 Could you hang on 3 months and go with #3? You say 6 months to get to cover
expenses. Is keeping the current pace going for 3 more months, evaluate again,
then borrowing a small amount just for the final few weeks possible?

Best of luck.

------
mswen
First, I just want to compliment you on getting this far with customer
acquisition. And, getting some customer traction before considering talking to
investors is great!

I have personally been an early employee at a venture funded start-up that
ultimately didn't succeed soon enough at paying customer acquisition and ended
up selling intellectual property for only a bit more than it cost to develop
it. And, then I took a go at the solo bootstrapped thing like you have been
doing. I developed an enterprise type web app for a particular industry and
have had potential customers tell me that is really cool and premium but their
felt need wasn't sharp enough to make room in the budget and spend meaningful
money. So I know what it is to build something and not get to a good market
fit with paying customers.

In looking at your situation it would seem critical to understand the backlog
of customers that you mention.

Are these customers who have already committed money/signed contracts? Or,
would these be considered more like warm prospects?

How long are they having to wait between decision and implementation? Do
customers in this backlog know what kind of wait time they are facing under
your current solo part-time commitment? Are they willing to wait? Or, are you
losing customers to other competitors or internal solutions because of the
wait time?

What is the dollar value of your current backlog? If for example it was
another $2000 in monthly revenue that is committed but at risk if you don't
deliver fast - I would encourage you toward greater commitment try for a small
business loan or take on your more personal sources of investment that you
mention in option 3. On the other hand if the backlog is something more like
$500 in monthly revenue I might suggest that you continue with #1 because your
growth curve might already be slowing down.

~~~
throw9987432
These are good questions. Let me hit them up in order.

> Are these customers who have already committed money/signed contracts? Or,
> would these be considered more like warm prospects?

Say a customer I have talked to on the phone or otherwise convinced to sell.
Need to do a little discussion and a little work, and get them set up. I
vetted them as a real customer, and they vetted me as sounding interesting.
Historically at least a 75% chance to pay at this time.

> How long are they having to wait between decision and implementation? Do
> customers in this backlog know what kind of wait time they are facing under
> your current solo part-time commitment? Are they willing to wait? Or, are
> you losing customers to other competitors or internal solutions because of
> the wait time?

1-3 week range. I don't think I am losing a ton.

> What is the dollar value of your current backlog? If for example it was
> another $2000 in monthly revenue that is committed but at risk if you don't
> deliver fast - I would encourage you toward greater commitment try for a
> small business loan or take on your more personal sources of investment that
> you mention in option 3. On the other hand if the backlog is something more
> like $500 in monthly revenue I might suggest that you continue with #1
> because your growth curve might already be slowing down.

Closer to $500 in backlog. Here is the part of the story that perhaps I did
not express fully.

1) I am spending like $20 a month on google adwords. I have some very hot
words. I could up it to $20 a day, and probably get 2-3x the new customer flow
I do now. I do not, because my backlog would go insane. Perhaps I should do it
anyway though :)

2) I have some complex customers I am turning away. They would be good for
pretty good money (perhaps $500 MRR each), but I cannot yet deal with them. I
know part of a young business is turning away things that are too much work,
but if I scaled up and had money - I totally know I could deal with them.

So I think more than the raw backlog leaving money on the table, is #1 and #2
above leaving money on the table.

~~~
mswen
If you really have a 75% conversion rate once you start talking to people that
is outstanding.

Next you should validate your intuition that spending relatively modest
amounts of money on adwords will double or triple your flow of customer leads.
If that hypothesis holds up under real world testing then you have a business
and need to transition as quickly as possible! Even if that means taking on an
investor.

In most b2b environments I have been exposed to a 1 to 3 week wait time is not
a deal killer if you have something they want/need.

I think I might deal with customers in the wait time transparently. I would
tell them something like the following.

We are growing like crazy and our backlog for setting up and training new
customers is about 2 to 3 weeks. Please be patient with us. We believe each
new customer needs some personal attention up front to make everything go
smoothly and ensure that we are set up to serve you well over the longer term.
Obviously we won't start billing you until you are completely set up. If for
some reason it takes longer than 3 weeks to get you set up we will give you a
free month of service at the end of your first year.

~~~
throw9987432
I am not a sales guy, but I guess I say the right stuff? Not sure.. I am not
having to force people to use my product, they are generally beating down the
door to find ME. One guy last week found me on page 17 of google. I didn't
know google had 17 pages....

~~~
mswen
Clearly you have built something that has some product market fit. Hope you
find your path through the next few months without falling hard into burnout.

------
tptacek
I think your expectations of a seed round might be a bit optimistic. It's
realistic to take funding so you can quit your day job --- especially if
you're growing reliably month-over-month. It's a little less reasonable to
think that you'll be able to hire multiple people with a small seed round
_and_ execute on your business so well that you'll be off the funding
treadmill after that seed round.

Unless you have pretty exceptional circumstances, I think you're also pretty
optimistic in assuming that a few hundred thousand dollars will only cost you
a few % of your company.

~~~
throw9987432
Well what kind of seed rounds have you seen for companies that are small but
have some traction? I have been involved in a few ( not as owner though), and
for example a company with 0 market fit or customers or tech got 250k
convertible debt for about 10% of the company (obviously depending how the
next funding round went). Using that as my mark with a fairly conservative
growth rate, 250k should fund me + 1 full time dev (+ current support staff)
until we get to profitability.

~~~
tptacek
What's "traction"? What's your month-over-month growth and how long have you
had it?

One word of caution would be that a lot of the numbers we see for seed
financing apply to companies that have gone through high-profile accelerators
like YC, or that have founders who have previously made money for investors.

The bigger concern is that if you hire, the profitability number you need to
hit can change radically. Raising to hire is a very easy way to put your
company on a funding treadmill.

~~~
throw9987432
Growth is in the OP. 3 months, but have a good sales pipeline (i.e. Dec will
be month 4 and no slowing down, if anything it is speeding up).

The funding example I gave was for a non-incubated startup. But it is my n=1,
so not totally sure that is out there.

100% agree on the hire and funding treadmill. I would only take funding if it
is reasonably sustainable. If I would end up hiring 2 people and in 6 months
we have had less than projected growth, I would lay them off to keep the
company alive. Sucks for the hires, but part of the risk of startups I think.
I would not hire 14 people that I need funding to employ.

~~~
tptacek
That is _not_ part of the risk of startups. If you can't pay someone
indefinitely, don't hire them. The word for people who risk a reasonably
assured salary to participate in a startup is "cofounder".

~~~
throw9987432
This sounds very good in theory, but if I got to the point I have 3 months
runway at current staffing level with no funding in site, or 6-12 months at
staffing level N - X, I would lay people off to improve the success of
launching the company. My job is to get the company to take off. I think it
would be absurd to say "Whelp guys that depend on me for a job.. I don't want
to lay off 2 people to save the rest of your jobs because you are employees
and not founders, so we are gonna likely go under in 2 months"

This is totally a valid thing you should bring up in an interview though. I
would pass over you, but I can totally see many others agreeing with you.

~~~
pw
I think his point is that anyone applying for and accepting regular, full-time
employment does it with the assumption that the job will continue to exist
into the foreseeable future. That's kinda the definition of "employee" in our
society.

And he's saying the alternative in this scenario is "cofounder", in which the
would-be employee takes on a job that may disappear and is compensated for
that fact by getting significant equity in the company.

~~~
throw9987432
I mean, I understand what he is saying... but if you join a startup (even as
an employee), you should be aware that your risk of your job going away is
higher.

If you want a really safe job for 20 years you would join the government or a
fortune 100 type company. Does the 2nd and 3rd employee ever think his job is
as secure as working for a fortune 100?

~~~
tptacek
Good startup managers don't hire people they're not sure they can pay
indefinitely. It's _not_ the case that people applying to startups for jobs
are aware of the risks that they're taking, and if your risk set includes
"entirely possible this job is gone in 3 months", the word for the person who
takes that job really is "cofounder".

Either way, I think you're going to find that outside funding on the scale
you're contemplating is much less magical than you think it is. It's going to
be harder to close than you think, and it's going to do less for your business
--- at least, if you really do mean to do all the things you need to do to
stay off the funding treadmill!

There's no reason you can't get on the funding treadmill and sell enough of
your company to get a "runway" to the next round of funding. Lots of
successful businesses are built that way. It's harder, however, to think of
bootstrapped businesses that have leveraged small seed rounds tactically the
way you're thinking of.

You may also find that it's difficult to raise funding when one of your "use
of proceeds" bullets is "enables me to quit full time job". People who invest
in startups are largely driven by signals, and a pretty important one is
"founder believes in the business enough to have dedicated themselves to it
full time for some time".

------
midgetjones
I don't have any specific advice, but this part stood out to me:

> I have a pretty big backlog of customers I cannot fully get going with my
> limited time.

What is it that they need that demands so much attention? Is there any way you
can automate that so you can be more hands-off?

~~~
throw9987432
Sadly that is partially my competitive edge. I am making it BETTER with code
changes when I can find the time, but I never want to be a "sign up and never
talk to a human" app ala Google Docs or something. I have 10 or 15 products in
my space that already do that. Many of my current customers quit those
products to come to me.

