By Kim Folsom
This is Part 2 of a two-part series where we talked to a couple of our Founders First bootcamp graduates on the challenges and successes they’ve had building their businesses. We cover adding recurring revenue, getting funding, filing the gaps outside your expertise, and what they’d do differently given what they’ve learned so far on their journey. See Part 1 here.
Do you need to get outside funding?
“Intuitive Edge has been 100% self-funded,” said Lisa. “I was trying to figure out ways that I could make money without investing too much and without having to go out and get investors. I just didn’t feel like I needed to go through that path, that I could do this on my own.”
The problem with entirely self-funding your business, she said, is that some people might think it’s slow. “It took a long time to get a large contract,” Lisa said. “I would say, three years before a project actually started for a large company and that type of revenue started coming in.”
It’s a lot of work and effort funding your business that way, but along with that also comes a huge amount of learning, trying different things, trying to figure out what customers are going to pay for or how.
While Lisa avoided bringing in investors, she actively sought out partners, which helped her secure more customers.
“As we developed strong relationships with more and more companies and more mid-market and large corporations, we were able to figure out some other ways to get some revenue from those companies, including developing more IP around my OASIS Cycle,” she said. “We’ve developed a method and process as to how we deliver our services as a team that is very collaborative, very cost effective and very efficient.”
It’s a different way to deliver legal services, she said. “But once the customers experience us, then they start to trust us, and they start to want us to work with them all the time…. We’ve already gotten repeat business, we’ve gotten additional clients because of the work we do.”
For Paul, the decision to seek funding is very different. It’s a necessity in the airline industry.
“For us, we are going to be looking for investors on a longer horizon,” he said. “We have some orders in for brand new electric aircraft. Zero emissions, all electric aircraft. We’re waiting for them to come off the assembly line. They’re brand new, first of their kind. So, in about two years, we’re going to be looking really hard at ways that we could bring in investors somehow because new aircraft are expensive.”
He’s also seeking partnerships with banks because Flex Air works to help students get funding. Their students need student loans. The problem is flight training is vocational and doesn’t give you a college degree. So, the big federal collegiate loan programs aren’t available for flight training. Consequently, affordable loans are something the company seeks for its students.
“We now have two banks and two different loan programs plus an income share agreement program with a FinTech company,” Paul said. “I don’t think any of these folks would have looked at a small business like us and seen anything but risk if it hadn’t been for the fact that we had a more mature sales system and recurring revenue that was being stood up around it.”
It’s never too early to bring in an accountant
Both Lisa and Paul went through Founders First program and have used mentors and networked with other CEOs to get guidance and sometimes just to commiserate about the ups and downs of running a company. But both of them also flagged the need for getting accounting help early on.
“I did bring on a CPA/CFO from the very beginning,” Lisa said. “I invested in that myself because I knew [I’d need it from] the beginning. I’m glad I did.”
Paul said he’s definitely a “plus one to the whole idea of bringing somebody in to help you look at the financials very early.”
That’s a mistake he said they made with Flex Air. “We never quite got out of the side hustle way of doing bookkeeping until it was too late,” he said. “And so, we had to invest a lot of time and sweat and money into correcting the books and rebuilding some bookkeeping systems and just getting a robust accounting close procedure in place.”
He says if he had to do it over again, he would have sought finance and accounting mentorship right from the beginning.
What would you do differently?
If Lisa and Paul were starting their businesses from scratch, there are some other things they would do differently now, too. Hindsight is brilliance in business and in life, but the lessons they learned can help entrepreneurs not make the same mistakes.
“I would say that the biggest one for me would have been to ask for help earlier,” Paul said. “We get caught up in this mythology of entrepreneurship where it’s all about the Steve Jobs entrepreneur who’s this solo genius who just is a visionary, and they know how to do everything, and they can just do it all. Of course, the reality of it is really different than that.”
Instead of expecting to become an expert in everything overnight, he would have reached out a sooner to ask for some help from friends and other people in his business network.
“If you’re asking for help, it doesn’t mean that you don’t know how to do it or you’re a failure necessarily,” Paul said. It just means that you’re good at your thing, and as it turns out, running a business is really hard and you need to know a lot of stuff.”
For Lisa, avoiding the expectation game would have made life easier when she was starting out.
“I would say, don’t have too high of expectations about how quickly you’re going to make money and how persistent you have to be,” she said. “I’ve had my business for over five years, and we’re doing really well now. But when people say that it takes persistence when you’re building a business, it means be persistent on steroids. I mean, you just literally cannot ever think that you cannot get to the goal that you want to get to. You have to lower the expectation as far as how long it’s actually going to take.”
Lisa said she was “down in the trenches” for three years, thinking she never was going to make any money. But she just kept going. “I was like, it’s either this or I have to go back to a corporate job,” she said. That really wasn’t an option she wanted to consider, though. Then once one of those big projects came in, her business was transformed.
“It took a lot of effort, and I don’t think everybody has a personality or stamina to do it, to be honest,” she said. “You got to have the right expectations when you’re going in.”
When we asked our entrepreneurs what was next for them, both had a similar refrain: double revenue and get the business to self-sufficiency so that it can run without them.
“I’m pretty confident that we can start doubling [revenue] every year,” Lisa said. “We’re very close to doubling it this year from last year. That’s a goal.”
She added: “Another goal would be to be a company that is very self-sufficient, so I’m not involved in everything. And then, I’m going to look at what to do after that.”
Paul agreed on creating that self-sufficiency. “I’m enrolled in a Ph.D. program while I’m running this business, and there’s only one of me to go around so there’s definitely that,” he said. “But also, for us, it’s all about the growth of the individuals who come in through our pipeline.”
He also looks forward to a year without the impacts of COVID. “Yeah, we want to double our revenue, get back on track for that. We were doing that year over year. With COVID, we went up by 15%, which is still pretty good for COVID. Well, still being in business after the pandemic, I say, is a gold star.”
Kim Folsom is the founder and CEO of Founders First CDC, which has helped accelerate the success of hundreds of small, service-based, business-to-business companies since 2015.Visit our website to learn more.