Today I had the opportunity to meet with an up-and-coming Atlanta entrepreneur, “Stephanie,” who has a growing company that she’s bootstrapped for the last three years. She recently participated in an Atlanta start-up competition and did well. Because of that exposure, local venture capitalists have shown interest in her company. Stephanie is currently evaluating if venture capital is the right path for her. It took many years, but I eventually bootstrapped CCAW to eight-figure revenues. Because of my experience, a mutual acquaintance asked me to chat with Stephanie.

I always like to start these conversations by learning about the entrepreneur’s background, business model, technology, and vision for the company. Here are some things I learned about Stephanie’s situation:‍

• ‍Solo founder – There is no cofounder or team member at her level intellectually.‍
• Scalable – Her business model is scalable—others in the market have proved it.‍
• Unique advantage – Stephanie has lived and breathed two unrelated industries for years. She’s uniquely positioned to see how linking the two can create value for customers. Others don’t realize this yet.‍
• Competition – Her business model isn’t new, but her implementation of it is unique. Highlighting this difference is critical to achieving healthy margins.

Stephanie has clarity about the destination she’s aiming for because the competition required her to pitch her destination to others. Now she has to figure out how to reach the destination quickly. She has ambitious goals, which will require a sharp team and a variety of resources. These things don’t come cheap.

In the correct situation, venture capital can help accelerate growth. Investors will also provide experience gained from prior portfolio companies, access to relationships, and accountability via a board of directors. Unfortunately, venture capitalists typically invest only when companies have the potential for outsized returns.

Everyone has to figure out what path is right for them, so my goal wasn’t to tell Stephanie what to do. Instead, I shared my bootstrapping experience—the good, the bad, and the ugly. I described the lessons I learned and the things I would do differently if I had it to do over (hindsight is 20/20).

Takeaways:

• ‍Capital source – Venture capital isn’t for everyone, nor is bootstrapping. Consider the pros and cons of all funding sources and pick the one that’s best (none will be perfect) for your company and your situation.‍
• Partnership – To build something great (a company or anything else), it’s VERY difficult to do it by yourself. Be open to partnership (cofounder, investors, etc..). Some of a lot is better than all of nothing.‍
• Timing – You can be too early, too late, or there at just the right time. Consider timing when making decisions about your capital sources or anything else.‍
• Consistent execution – When you’re executing on a growth plan, starting and stopping on the basis of cash flow—bootstrapping—makes everything exponentially more difficult.

In a previous post, I revealed that I started my first company in high school at the urging of a family friend. Today I’ll share what I learned from what became a seven-year experience.

I essentially developed and executed plans to customize customers' vehicles (think Pimp My Ride). I sourced and sold the required parts to my customers and then partnered with local shops to install them. I was pretty busy, so this was a part-time business. (After high school, I became a full-time college student and worked two jobs, one on campus and the other at a lobbying organization as an intern.)

I was a traveling salesman. I met customers in parking lots and other random places. I then brokered deals around town to get the installation work done. Looking back, this was pretty dangerous, considering that most customers paid in cash. It was also crude and unsophisticated—but it provided funds that made high school and college a little easier and it was an eye-opening, transformative learning experience.

Here are my takeaways from that first business:‍

• ‍Sales Process - I talked with a lot of people, but only a small percentage forked over money. In hindsight, I see that I was learning about the sales funnel, sales cycle, and close rates.‍
• Reputation - People did business with me because they knew I wouldn’t run off with their money. It takes years to build a good reputation: protect it.‍
• Relationships - I developed strong relationships with customers, vendors, and installers. When someone needed a favor, I obliged. Healthy relationships are bilateral.‍
• Scalability - Driving around meeting customers and installers took tons of time and wouldn’t scale.‍
• Customer Acquisition - I leveraged relationships with friends and paid commissions to people who brought me paying customers. How you acquire customers can make or break your company. Think hard about it.‍
• Information - The lack of information available to consumers was the main driver of high retail margins.
  

Today, I met with “Sam,” an up-and-coming entrepreneur who’s been working for a few years to grow his bootstrapped start-up. He’s smart, scrappy, and an overall good person. Unfortunately, he hasn’t yet gained the traction he envisioned. I was asked to chat with him by someone who cares deeply about his success.

I started by learning more about the business model, his vision for the company, how his technology works, and how the business is doing. I was able to identify these concerns:‍

• Solo Founder - There is no cofounder or team member at his level intellectually
• Multiple Hats - He’s the GM, senior developer, HR lead, customer service lead, etc.
• Alignment - He spends most of his time executing and managing operations.
• Deadlines - He has no timeline in place.

Sam is caught on the entrepreneur’s hamster wheel. A lack of capital prevents him from hiring the talent or acquiring the resources he needs to execute on his vision. He’s down in the weeds and every day looks the same. I can see this because I bootstrapped CCAW and I was on that hamster wheel too before I turned the corner with the help of others.

I was very open and honest with Sam. I was respectful of what he’d built, but I didn’t sugarcoat the situation. Things must change or his vision will never become reality. I shared my perspective based on my own experiences and encouraged him to seek the perspective of other entrepreneurs as well. I have no doubt that Sam will go on to do great things and I’m excited about what the future has in store for him.

Takeaways:

• ‍Destination. Take the time to define, in writing, where you want your company to go (revenue, number of customers, etc.). This can be simple, high-level, and change over time, but the exercise is priceless.‍
• Timelines - Set target dates for your destination and associated intermediate goals. These dates may change, but that’s OK.‍
• Accountability - Share your destination and timeline with people you respect so they can support you by holding you accountable.‍
• Alignment - Every day, ask yourself, “Does this activity move me closer to my destination?” If the answer is no, think twice about what you’re doing.‍
• Wisdom - Novice entrepreneurs (regardless of age) have a wisdom gap. Fill your gap by seeking out credible entrepreneurs with the experience you lack. If you’re an entrepreneur with wisdom (successful or not), consider giving back. It could change the trajectory of someone’s life!

Have you been on a hamster wheel (entrepreneurial or not)? How did you manage to get off?

After building a company for over a decade, I’ve recently become more intentional about mentoring new entrepreneurs (I’ll explain this decision in another post). They often want to know the story of how I started CCAW Automotive Group. Like most people, they usually don’t realize that CCAW was my second “official” company (the fourth or fifth if you count all my childhood hustles). I’ve never shared this before, but here’s the story of how I started my first company.

In high school, my dad’s close friend (I’ll call him Joe) was visiting for Thanksgiving. He saw me heads down, intensely researching, and asked what I was up to. Joe was an entrepreneur. He was super-curious about new things, and it showed. He always engaged with me differently than other adults. At the time, I was into cars and had been trying to figure out how aftermarket auto shops source their products. I figured I could cut out the middleman and get better deals for my friends and me. Keep in mind that this was 1998—information wasn’t as readily available as it is today. I learned about retail and wholesale relationships but hit a wall when wholesalers asked for my business license.

Armed with my research, I proudly told Joe, “When I become an adult, I want to start my own company selling auto accessories.”

He interrupted me. “Why wait until you’re an adult?”

The question caught me off guard. I was speechless. I assumed there was some age barrier to overcome, but I’d never taken steps to find out if that was true. Joe encouraged me to apply for a business license and see what happened. I took his advice, and two weeks later my first company was registered with the Louisiana Department of Revenue. I officially had a business (well . . . kind of).

My takeaways:‍

• ‍Take action. Take the first step. Confirm your assumptions.‍
• Stay curious. Never stop learning.‍
• Give back. Take the time to talk with anyone interested in entrepreneurship. Encourage them. You could change someone’s life!

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