Bootstrapping vs VC: Make the $1M Call That Could Make or Break Your Startup

Foreign. What do you do when you get a new idea? You want to start your company and you want to race out to the start. You want to hit 1 million in revenue right off the bat as soon as possible. Well, you've got two roads. You can grind it out on your own dime or strap a rocket to your back with investor cash. One's lean, one's loaded. One gives you control, the other gives you speed. So which one is right for you? Welcome back to the Big Hitter podcast. I'm Larry Wydell and today we're going to crack open one of the most critical decisions you'll ever face in business. And that is do you build your business brick by brick, doing all the work yourself, providing all the money yourself, or do you pour gasoline on it and light the match with venture capital so bootstrappers build it with their own hands. Bootstrapping means you funded your savings, your side hustle income, maybe a little bit from friends and family, but pretty much you fund it, you get started, you create the business, you create the sales, you pour everything back in it, you reinvest any of your profits because you're the bank. Now the pros is you get to keep 100% of the equity. You don't have any investors poking their nose in your business or making unwanted suggestions. Kind of like aunt Bertha out there telling you how to raise your kids. You know, some they mean well, but maybe they don't know your situation or maybe it's the wrong time. And mainly you got other things to think about with out arguing with them about why that's not a great idea. But the deal is if they've got money in the game, you gotta pay attention to em. And so it's nice not to have investors telling you what to do. No strings, no suits to deal with. Like in the Hollywood business, they hate the suits, no pressure. And so the challenges there are slower growth. Every decision is a dollar out of your pocket. You got high risk, you have high stress, but it can happen. There are huge companies out there. Mailchimp basecamp. They built monster empires without a single venture capital check. But if you're bootstrapping, you need patience, you need grit, you need a clear cut focus. It's not for the faint of heart, but you'll own everything you build. Sometimes it's the greatest thing in the world because if you have a lot of money, as soon as you get an idea, you, you know, you spend the money and you find out, oh, if, if, if we had a little less money, we Spent more time thinking and tinkering. We could have gotten this thing done a whole lot quicker and with a whole lot without accumulating a whole lot of debt. The other thing about venture capital money is a lot of time. You know, in fact, most of the time, you're going to have to get it off the ground. You know, if you're the Wright brothers, you're going to have to prove this plane. You know, your, your concept is going to work. They're going to say how many sales? It's like shark tank, you know, they're going to say, how much have you sold? Where did you go? How did people respond? They're going to want to know what your systems are, how long it takes to make it, how much it costs to. To making it. And see, the great thing about when you do it yourself is, you know all these answers and by doing it yourself, you know the fundamental systems that you put in place. You figure out how to build this thing, how to buy this thing, how to deliver this thing, how to communicate this thing. But then all of a sudden, the demand, you know, they get these contracts, you know, they've got, they pick up a big box outlet and they want 100 times more supply than they've ever done before. They got to go build another factory, they got to hire another hundred people. I mean, it's really tough. I've got friends all over the country, they're going through that. It's tough. It keeps the stress on. You know, after you've been in it for several years, had success, you'd like to be able to sit back and not have that stress. Well, if you bring in venture capital, you can take some of that stress off you take, but you make up your mind that you want it to go bigger. You know, you can afford to mentally say not only are going to bring in more money, they're going to bring in more contacts. We're going to be able to get exponentially bigger and so better than, you know, smaller percentage of something that's going to be monster huge than own everything, you know, the way I could build it. And so sometimes that comes into play. So it's a timing thing, but it's going to come down to either your bootstrapping or you got venture capital involved. If when the venture capital comes in, big money, fast growth, powerful connections, resources that you would have taken maybe a decade to develop on your own, they're instantly available. But you're going to give up control, your growth expectations are going to skyrocket. Now you're on the clock. Investors want results fast. Now one thing you learn when you go out and make presentations to get the money to venture capitalists is it makes you a better business person. Because when you go out, you're going to go out and you're going to make the best presentation, professional presentation about your business that you know how to make. Then you're going to get in there and you're going to find out, oh, they ask about this, they ask about that. They really dug into this because they're going to bring some of their best financial people along for the ride and you're going to be grilled. But part of that grilling is you're going to learn things that are important to people, that are professionals in the world of investing money and getting returns. So it's going to make you better. Just that process of raising venture capital can really transform you. If you have your eyes open and you don't take every, every suggestion or every criticism or every thing they questioned personally, you look at it as a chance to, to move ahead. You know, this is something that, you know, that's a hole in my story that I need to fill. It's going to make you better whether you get the money or not. And if you go and you make a presentation and it doesn't work, you can go back, regroup and then go out with a stronger presentation next time. And you're increasing your odds every time you make the presentation. And the venture capital people, they don't care about your dreams. You know, they've heard dreams before. They get ideas a dime a dozen. They want results. I know that one of the guys who worked at our company made a fortune, Bo Adams. He retired out to his farm in Arkansas and he hired Tracy Byers son, who had just graduated in finance from Yale. And his son, I forget his name right now, but his son's job was to bring 40 new opportunities to Bo a month. 40 new opportunities. He researched. And Bo would pick one, he picked the best one, low hanging fruit. And that's why you could be, if you've got the money, like Warren Buffett, if you've got the cash, you can cherry pick. And that's what the venture capital people have done, that's what they're looking to do. And then when they're grilling you, they're telling you the kinds of things that need to be involved in your business for you to be one of the low hanging fruit, to be one of the ones that can be cherry picked, the best ones out of 40 promising opportunities. But they're not caring about your dreams, they're caring about the bottom line and how solid it's built. They're probably going to poke some holes in there. So what you're learning and so if you be ready for the spotlight, pitch, make, make a presentation, be confident. You know they're, they're not going to be funding your ideas. They want momentum. They want to see that you've made this thing work and you've got momentum. They want to see growth, they want to see that you've made your mark, you've got traction. You know, you're on the mountain, you found a market that wants you and there's a hunger for this product, this service and they want to see that the potential for growth is there. So know your numbers, know you know your persistency, how, how many people stay with you, know your cost of acquiring, have that doubt, how you're going to acquire new customers, what it costs to acquire new customers and the, the long term value. Live and breathe these numbers. If you don't know them, you're not ready. And so what if you're not ready? You can be ready. You know, you can be more ready next week, next month. But know your numbers. Be a pro at knowing your numbers and be confident. They can tell if you've got skeptics. You know, you're, you're, you're questioning, you're wondering. They can see doubt. You don't, you don't want to show doubt when you go in there. You want to know this is, this is the real deal and where they want to be able to read your face and is at while they're reading your numbers. So know your numbers, be convinced of your numbers. Be the first person on the planet who's the most sold, that this is the greatest opportunity in the world and that these guys would be out of their mind or these people would be out of their mind not to get behind you. And so that's how you, you got to go in there and make that presentation. You got to be that convinced and you got to show how the money, you know, you hear this question on Shark Tank and all the other type shows, it's like, what would you do with the money? How would that make difference? It's going to take you from where you are now to where you want to be. And have you thought that through? Because I'll promise you, when the venture capital people are listening, they're listening to your plans, but they're also listening, how can they add their expertise and their contacts into what you have shown them to, how they can even multiply beyond what you're thinking about. And so they want to get, you know, when they're asking those kind of questions, they're already in the boardroom with you and you want to be able to have something to tell them. You know, you've thought through, you know, you look down the road, you know what you're going to do with it, you know what the potential is for this thing. And start looking around for investors early on. Make friends with people in that community, you know, socialize in there if you can. You know, because friends invest with friends first, you know you can. What it does is if they know you, you can get the appointment. It's, it's much easier to get the appointment if you know a person or directly or if you know a person who knows the person. So don't wait till you're desperate. You know, it's like they say in the bank, you know, we've always said the way you go to the bank and get a loan is to go into the bank and make a presentation where they know you don't need it, you know they know you don't need it, and then you can get the loan. But if you need it, if you're desperate, the desperation shows. They don't want to invest in people that are desperate. So don't wait till you're desperate. Build your trust and relationships with these people way before you ask. And so you can get to know them and you can get to know what they're looking for and you can tailor your offer to be in line with what you know they have done in the past and what direction they're on. So going back to which path you should take, you're probably going to have to do bootstrapping to get started anyway. But it's a matter of if you ever want to go the venture capital route, how big do you want this thing to be? How big can it be? Would you be satisfied with a smaller slice of the pie and in terms for faster growth and being able to bring in more high quality help? And so the path you take depends on your goals and your tolerance for risk, also your need for control. There's no way, you know, are you going to be able to work with other people on these things and you know, what's your personality? So there's no right answer. And the answer again will change, can change over time, but there is a smart answer for you and that's what you're looking for. What is the thing that I'm most comfortable for our approach I'm most comfortable with at this moment? Continuing to bootstrap myself Continuing to go it alone or is it time to bring in some heavyweights and some more funding allow us to get more resources to get some more high powered people more contacts so we can grow faster? You know what is the moment? Is this the moment to go on that rapid expansion thing or we got enough momentum now bootstrapping it ourselves that we're going to be just fine? So that's your decision. I bet if you trust your instincts it's going to be a right one but it's good to look down the road. It's good to know your options. So thanks for turning into big hitters. If this helped you get clarity subscribe, leave a review and you might send this to a fellow entrepreneur trying to make that million dollar move themselves. I'm Larry Wydell. Now go build something big. Let's win.