It can be nerve-racking to launch a brand on your own with little to no funding, but it’s far from impossible.
In 2019, nearly 60% of successful businesses launched with less than $25,000 and more than 30% with less than $5,000, according to a Kabbage survey.
Ryan Hogan, CEO of Hunt A Killer, was among those who had less than $25,000. He took $6,000 from his 401k to launch a murder mystery subscription box that has since grown into a multimillion-dollar company and even won the ‘Best Customer Experience’ SUBTA Cube Award in 2021.
On the list of those who launched with less than $5,000 is Ellyette Gheno, founder of BootayBag and a SubSummit 2022 speaker. She launched her business with just $300 in 2015, which has since also become a million-dollar business.
There are hundreds of stories like Hogan’s and Gheno’s. Now, it’s time to write your own.
Read on to find out whether it’s time to bootstrap your subscription business and how you can do it successfully.
To Bootstrap or Not to Bootstrap?
The idea of bootstrapping first came up in the 19th century when people referred to being faced with an impossible task as pulling themselves up by their bootstraps.
Some days, however, bootstrapping your subscription might feel like the hardest way to grow the business. It requires a lot of hard work, confidence, determination, and perseverance.
Bootstrapping was Gheno’s business school crash course. She was able to negotiate favorable terms with vendors, figure out how to use credit lines, and maintain a positive cash flow within a few months due to her hustle and work ethic — all without a business degree or financial backing.
Rather than seeking investors or capital, why do entrepreneurs like Gheno or Hogan bootstrap their business?
“You’re in control of your own destiny,” Hogan told SUBTA. “You don’t have anybody to answer to.”
“You have full control over your choices; the wins and losses are yours,” says Gheno.
As your subscription grows, there may come a time when you’ll need to relinquish that control. Eventually, you might consider bringing in investors as you scale your business with intentions to sell, according to Hogan, or if you face financial difficulties.
So, how do you bootstrap?
Work With the Finances You Have
If you can’t secure a business loan, or pull from your 401k, the best — and only — thing you can do is use the funds that you have on hand.
For Hogan, that was using the funds from his 401k to first launch an immersive event called “Run for Your Lives” — a zombie-infested-obstacle-course race.
The event was a success for three years, he told SUBTA. One of the last immersive themes was a live crime scene. With 600 people waiting to play, Hogan realized that this business model wasn’t scalable.
“We knew we had to pivot,” he said. “How do we take this thing in which we have found or discovered product market fit, put it in a box, and distribute it?”
With that, Hogan founded Hunt A Killer, the interactive subscription box that has allowed more than 100,000 customers to play detective from home. Hunt A Killer ranked No. 6 on Inc. Magazine’s 5000 list and has shipped more than 3.5 million boxes.
In the subscription fashion world, Gheno started BootayBag “from a personal desire to solve a problem I was facing with my underwear shopping experience,” she said.
With limited funds, Gheno became scrappy.
She never invested in anything financially risky, including BootayBag’s underwear products.
“I was going to the clearance racks because of a lack of funds and knowledge,” Gheno told SUBTA. “However, I found that in reading the various tags over and over, I was starting to recognize manufacturers within the labels.”
Gheno learned to pay attention to details through her scrappiness. She spent months identifying reputable manufacturers that fit her liking and began contacting them. From there, she started to buy off-season liquidations or private labels until it was time to turn the tables and bring BootayBag to her new partners.
The SubSummit 2022 speaker suggests staying away from big-ticket items you can’t afford in the early stages of your business and “always be mindful of where [your] cash is sitting.”
Fake It Until You Make It
Your bootstrapped business requires you to wear many hats and to “fake it until you make it,” as Jason Raznick, Founder and CEO of Benzinga, would say.
In 2010, Raznick discovered a niche in the financial stock market that no other news and media outlet was covering: small-cap stocks. This prompted him to bootstrap Benzinga in his basement.
Because the name was unrecognizable and his team consisted of a few remote workers, he would call different distribution places and pose as someone else: Adam Lewis, Todd Rosen, and Karen Johnson were his preferred aliases.
“You could have the best product in the world, but people don’t take you seriously if there’s just one person there.”
Raznick’s strategy paid off over time. In 2021, Benzinga was acquired in a $300-million deal by Beringer Capital.
Additionally, DIY (do it yourself) tools are going to be your best friends in the early stages of your bootstrapped business.
Using resources like Canva for graphic design and marketing efforts or nailing down specific customer service language as you gain new customers instead of outsourcing to a customer service representative will help reduce some of the financial burden associated with a bootstrapped business.
If you own a subscription box, you can create your own boxes or packaging until you can outsource fulfillment, according to Matt Fiedler, Co-Founder of Vinyl Me, Please.
Seek Out Free Resources
Below are four free resources that you can leverage immediately to successfully launch a bootstrapped business:
Follow Industry Leaders
The best way to learn about running a subscription business is to learn from those who have done it before and have the knowledge and resources to help you.
Here are three organizations you should follow if you want to unlock the next phase of your business:
- SUBTA provides a network and resources to help nurture the largest community in DTC subscriptions through world-class experiences, unparalleled connections, and a comprehensive and reputable library of news, knowledge, and resources.
Not a member? Join today!
- SubSummit brings together thousands of members of the subscription community for three days filled with insights from experts in the space. This year’s conference features Gheno herself, alongside Kimberly Lewis of CurlMix, who turned down a $400,000 Shark Tank offer and raised more than $5 million two years later.
- Zuora provides a library of the subscription industry’s latest trends that you can leverage anytime, anywhere to grow your brand.
Free PR Opportunities
Never miss an opportunity to gain some brand exposure, especially when it doesn’t cost you anything.
The SUBTA Cube Awards is a great opportunity to increase brand awareness and “street cred,” according to Jill Lodato, 2021 Best Kids Subscription winner.
When your brand is associated with greatness, customers are sure to come running.
Pitch competitions are great places to get your brand in front of real investors and learn how to deliver the perfect pitch.
For example, Brittany Rhodes first pitched her subscription business, Black Girl MATHgic, while it was still in the idea stage. She’s successfully won five pitch competitions since and the marketing and visibility has changed the way people see her brand.
“You’re in front of a captive audience,” she says. “They are listening to you pitch your business and they are there specifically to listen to you pitch your business.”
To date, Rhodes has received roughly $193,000 in funding from pitch competitions and grants, she told SUBTA, all because she took that first step and applied.
Attend Round 2 of the 2022 Pitch Competition Presented by Pitney Bowes and Praella on April 21 at 2pm EST. You could win a FREE SubSummit ticket!
There are always free opportunities for you to connect with fellow entrepreneurs who have bootstrapped a business.
It can be done on social media, or it could be through a conference. And if you’re scrappy enough, you don’t necessarily have to pay to attend. For example, you could apply to get financial assistance through grants or scholarships, including the SubSummit 2022 Startup Scholarship Program.
This is the perfect opportunity for you and your bootstrapped business to expand your network and access exclusive insights from industry experts without draining your budget.
Leverage Social Media to Grow Your Bootstrapped Business
User-generated content — content that is created by the consumer instead of the brand — is a great way to spread the word for free.
You can start a Facebook, Instagram and TikTok profile to generate social buzz surrounding your brand and encourage followers and subscribers to share their products.
More than 90% of Instagram users follow a business with nearly 70% saying that the platform enables them to interact with the brand. Instagram offers free tools for businesses to use and increase brand exposure to capitalize on those relationships.
For example, Reels are becoming increasingly popular and allow you to make your subscription brand more accessible. If you’re a bootstrapped subscription box, you could create a short, sneak peek video showing the products featured in your box. This will give people something they want to share with their own social networks.
Additionally, never underestimate the power of Facebook Groups. You can create your own buzz and community around your brand, as Hogan did.
He and his team prioritized building a community very early on, Hogan told SUBTA. Not only did this create exclusivity and excitement surrounding his newly launched subscription box, but it allowed customers to interact with the brand, provide feedback, and share stories surrounding their experience.
“That wound up being kind of a growth channel,” he said. “Once you get people together, and they’re engaging and interacting with your brand on a day-to-day [basis], it becomes a big part of your marketing strategy.”
Join the exclusive Subscriptionpreneurs Facebook Group to meet thousands of people in the subscription space.
The Reward of a Bootstrapped Business
Don’t let anyone tell you that you need to have millions of dollars in your pocket to become a successful entrepreneur.
Many profitable businesses started with limited funds and you can join their ranks. If you are creative, passionate about your business, and do not fear putting yourself out there, you will succeed as a bootstrapped entrepreneur.
Looking for more ways to grow your brand? Discover the latest trends on how subscription businesses can expand by attending SubSummit!