Ask HN: Bootstrapper on the brink, what to do?

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.

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

:-)

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

Best.

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

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.

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).

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.

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.

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.

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

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.

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.

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...

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.

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.

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.

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.

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....

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.

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.

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.

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.

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.

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".

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.

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.

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?

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".

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?

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.