Everyone knows what bootstrapping is-- but
what about "extreme bootstrapping"?
This is a methodology that was tested via the
"Hundred Dollar Business" experiments
Here are the basics of how it works...
A: Set A Time Limit
Most entrepreneurs are good at bootstrapping cash. But,
completely horrible at bootstrapping "time".
They'll work indefinitely, putting in long hours, for
undefined periods of weeks, months, and years, on losing
projects. Many days are spent not accomplishing much of
Extreme bootstrapping caps the amount of time you can
spend-- 30 days to "get shit done" and get results, or shut
the project down.
This approach puts the pressure on you to take strategic,
proactive action with the resources and project at hand!
Example: 30 Days
The original HDB project began as an idea on Saturday,
The business opened at the mall on the next Friday,
December 2, and closed December 31.
It was an extremely intense month-- I slept all day on
Christmas, my only day off-- but definitely an intriguing
way to see the startup process on a short time table.
B: Cap Financial Resources
Extreme bootstrapping pre-determines a dollar amount
you "can" spend on the project, and restricts spending
anything else. This limits the potential financial losses of
the project, and forces you to be resourceful in putting the
Think you can't start or run a project until you have
That's completely false.
Try limiting yourself to an extreme budget, like $100. How
much revenue can you generate on that amount?
The original HDB project, a mall kiosk, used $40 to get
started, and generated $10,000 in revenue within 30 days.
We spent the $40 on:
2 locks to secure the kiosk's tarp at night
Paper print-outs of our agreements with vendors
A DBA for our business entity
We did not spend any startup capital on:
Business cards. A logo. An office. Salaries. Inventory.
Uniforms. Months of business planning. Fancy kiosk
C: Set Success/Failure Indicators
Every entrepreneur is in love with his/her idea. It's a
career hazard, unavoidable, and potentially toxic to the
viability of the project.
Before starting the project, set success/failure indicators--
clear, measurable results that will indicate whether or not
the project is worth your continued effort & resources.
It's too easy to put 3 years and $500,000 into a project
that won't pay off. Why take the easy route? It's much
more difficult, and smarter, to determine you will shut
down a project after 3 months because the $3,000 you put
in isn't panning out to generate any momentum.
There were two sets of indicators for success for the HDB
1. Financial success: $100 in profit after covering
operational expenses during the 30 day period.
2. Having a well-run project in which operational
processes were done smoothly, and all participating
parties (volunteers, vendors, the mall, customers) were
D: Clarify The Project
To The Essentials
Establish a clear set of deliverables you HAVE to
accomplish in this time frame.
1. Develop and launch the prototype.
2. Refine and test the business case.
3. Make $X in revenue.
4. Maintain your sanity as a founder.
If you hit those milestones, you made it. Keeping it very
simple increases your likelihood of success.
Good ops, cover costs, make $100
The overall deliverables for the HDB kiosk were:
1. Set up a well-functioning business.
2. Pay all business/personal expenses for the
3. Make $100 in profit.
E: Do a Complete Cost-Benefit
Analysis of the Project
At the end of your time period, make an appointment with
yourself to review the project and answer the following
questions according to factual data, not your opinion--
A. Did we hit the budget?
B. Did we meet the deadlines?
C. How did we do in meeting our success/failure
D. How accurate were our project deliverables, and what
percentage of them did we meet?
E. Is it financially feasible to continue this project?
F. Does a truth-based "gut check" confirm we should
continue to pursue this project?
Example: C/B Analysis on HDB
A. Did we hit the budget? Yes: $40 spent.
B. Did we meet the deadlines? No: it required an extra month to finish up.
C. How did we do in meeting our success/failure indicators? Not very well, here's
the financial breakout: http://docs.google.com/View?docid=dhc755r5_18gqxhss
D. How accurate were our project deliverables, and what percentage of them did
The goals sounded good in there-- here was the original goal--
01/the-hundred-dollar-business-experiment. In reality, it was a different story-- here were
E. Is it financially feasible to continue this project? Not at all, so I took a job. See
So, the first HDB was a "failure", but it only cost me 2
months and $4,000. Awesome.
I was able to test my idea and learn a ridiculous amount of
startup life lessons in a short period of time, and without
any long-lasting financial liabilities that prevented me from
moving on to other, more interesting & viable
That is without question, the most interesting and positive
result of taking an Extreme Bootstrapping approach to
doing a startup. You find out fast whether or not a project
will float, you get to test the idea, and you can move on
without racking up serious baggage. :)
Ten Tips On Extreme Bootstrapping
1. Set a time limit. (30 days!)
2. Set a dollar amount you will not exceed. ($100!)
3. Set an indicator of success or failure, in terms of project results or revenue generated. ($100 in post-
4. List every possible item/resource/"thing"/equipment/staff you could need to pull off this project, along with an
estimated dollar amount for purchasing each item.
5. Take the list and cut every single item you can do without.
6. Prioritize every item from #5 according to whether it is critically necessary in order to reach your revenue
goal (need) or whether it would make reaching your revenue goal a little easier, but isn't mission critical (want).
7. Identify 2-3 non-cash alternative ways to acquire the items listed in #6.
8. Pick the very cheapest way, and go after that option first.
9. Clarify the project to a very bare set of deliverables to accomplish, and do NOT go beyond this.
10. Realize that this type of entrepreneurship is very, very stressful because it requires a high intensity, high
time commitment, and it leaves you naked with your project-- if it fails, it's probably because it's just not a good
idea, and this approach requires you to be okay with that.
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