October 28th, 2008 Sean Murphy
The question of focus is an important one for any entrepreneur. [...] But in a bootstrapped company without outside financing, this becomes a particularly tough issue: the question is where to focus and for how long? And what to do if the focus isn’t working? And is the current focus (the one you started with) blinding you to where the real opportunity is? Or is your real problem a lack of focus? [...]
1) you need enough cash and profits to keep the company going, and
2) you have very limited resources so it’s important not to spread yourself too thin.
In fact, these two demands are at the core of what I call the Bootstrapper’s Dilemma: If you have limited cash and need to keep company going you are likely to take any sales/revenue you can get, even if it’s not in the area of your focus. Furthermore, you may discover that the real opportunity is in a market/area that is adjacent to what your first guess was. But if you don’t focus, you are not likely to make much headway in any of the areas that you are attacking.
Shawn Hessinger acknowledged this dilemma and added his “Five Thoughts on Bootstrapper Focus” late last year
- In bootstrapping, reality determines your focus.
- There is no growth without survival.
- Cash flow always remains key.
- Concept is nice but execution is everything.
- Focus on the business not the idea.
Michael Gerber in the E-Myth Revisited identifies three key roles or functions in a company
- technician or expert who develops and refines a practice that constitutes a core competency of the business
- manager who manages and orchestrates the set of practices needed for the business to succeed
- entrepreneur who understands how to find opportunities for the business and scale it
So, put these together and what do you end up with. I think Rizwan Virk identifies a clear challenge for may bootstrapper: how do I keep the lights on but develop a focused set of problems and customers for my business. This is the entrepreneurial challenge: how to identify and pursue opportunities where you can create value for customers.
The management challenge is, given this set of problems and for a target group of customers, a niche market, how do we orchestrate the delivery of our product or service across the set of practices (e.g. development, testing, marketing, sales, support) that are necessary to create full value for the customer.
The technician or expert’s challenge is how do I engage in deliberate practice to improve skills and methods around a key process that will result in more value for the customer.
Since most bootstrappers start out as “technicians with an entrepreneurial spasm” to quote Gerber I think you end up with the following conceptual picture for a bootstrapping startup (or any small business that is relying on organic profit for growth for that matter).
- Technician must answer “What are we good at?”
- Manager must answer “How can we tell, how do we measure it?”
- Entrepreneur must answer “Who wants it, where can we create value, is this the most valuable problem we can solve?”
- All have to answer: How long should it take us to know? Do we have enough time/cash to get good enough to create differentiated value.
Another way to look at it:
- Do we have the right expertise or what are our core competencies?
- How do we orchestrate and measure results end to end for our customers?
- Are we pursuing the right opportunities?
- Do we have enough time and cash to run enough experiments?
- Do we have sufficient control of our internal practice to understand how to add new staff productively?
- Do are have realistic expectations for how long it will take to succeed and enough gumption and wherewithal to see things through together.