Transformify CEO Lilia Stoyanov shares her personal experience as successful company founder and points out some valuable advices.
By Lilia Stoyanov, CEO of Transformify, Professor at Zigurat Business School, Entrepreneur.com; September 6, 2019.
Bootstrapping is hard, I am not the one to deny it. However, to me, it has many advantages.
When I founded Transformify, everyone around me was in disbelief asking questions like, “You are a director at Coca-Cola and already have it all. Why do you need to take risks and leave your comfort zone?” or “You know so many investors, raising funding will be a piece of cake. Why for God’s sake you opt-out of it?”
Frankly speaking, back then, I had no ready answers. What I knew for sure was that I wanted freedom and peace of mind.
Getting them via an early pre-seed funding round at a low valuation was highly unlikely. Instead, I opted to apply the knowledge gained at Oxford University.
Despite the widespread belief that founders are college dropouts, I have to say that the executive degree in Financial Strategy is one of the best decisions I have ever made.
Our market entry strategy helped to expand Transformify globally on a shoestring budget and it can help your startup, too.
Product roadmap and budget
Study the products of your competitors and their marketing strategies. There is lots of information no matter if these companies are public or private.
Youtube is the first step on your road to success. Watch all competitors’ demo videos and read the user comments. They will give you an idea of what is working and what’s not for your competitors and where your sweet spot might be.
Once you have an idea what your competitive advantage and USP (unique selling point) may be, draft your product roadmap.
Which features are essential to release an MVP (Minimum Viable Product) and how much time is this likely to take? Discuss it with experts in the field to validate your assumptions.
Otherwise, you may run out of money much earlier than expected. Budget comes next. Try your best, don’t cut any expenses. I would even advise to multiple your first estimate by 1.5.
Once you have the numbers, compare them to the cash you have. Do you have enough cash to cover the costs of an MVP and at least 3 months of sales and marketing costs after that? If the answer is “no,” now it’s the right time to secure more cash.
Secure more cash
There are more sources of funding than you think. In many countries, there are government-backed startup loans and the interest rate is low. You will not be required to provide personal guarantees, secure the loan with assets, etc.
In the UK, there are startup loans backed by the government and the interest rate is about 6%. The SME Instrument of Horizon 2020 is another fantastic option.
There are two phases – Phase 1 is up to EUR 50 000 and Phase 2 is up to 2 500 000. These are grants covering 70% of your costs and you are not expected to pay the money back.
Overdrafts on personal bank accounts and family and friends are an option in some cases.
Marketing and go-to-market strategies
Again, it starts with your competitors. Understanding where the traffic to their web pages comes from is the first step.
Why is this important? That’s how you can identify potential partners and affiliates.
For example, I saw that Indeed was referring lots of traffic to one of our competitors and checked why. It turned out, that Indeed accepted rss feed and referred interested job seekers on a PPC ( pay per click) basis.
Needless to say, Indeed were more than happy to take one more partner on board.
Often neglected, affiliate marketing is actually the way to expand to new markets risk-free. The reason is simple – you pay a commission per sale or per lead.
If compared to standard PPC, Facebook, Instagram, etc., it is times cheaper and more efficient. You pay only if there is a result.
How to find affiliates? Ask yourself the question ‘’ Who has my clients?’’. Transformify offers an integrated solution comprising of HR Software, Freelance Platform, ATS, billing and payments.
Our solutions are free for the job seekers and freelancers, but we charge the recruiters for using our services. Hence, our potential affiliates are companies having many B2B customers. Ideally, these companies offer products that complement our offering.
So far, our top-performing affiliates are co-working space providers like WeWork. The reason is simple – there are many companies using their co-working offices that need to hire.
The more these companies hire, the better for WeWork as more desks and office space will be needed. It’s the perfect synergy.
No employees. Long-term arrangements with freelancers, instead.
Early on, it is the headcount and marketing costs that can sink the ship. Since the very beginning, my strategy was to rely on remote work and freelancers.
It’s simple – you can hire the best person for the job no matter the location, and in my case, there was no need to pay rent in London. Over the years, we’ve built a core of 200 freelancers we reach out to when we have work for them.
It is a widespread misconception that freelancers are not loyal and less motivated. In fact, we encourage our freelancers to work with other clients and even help them to find new clients.
Often, Transformify’s freelancers can propose a solution super fast as they have already encountered the same problem with another client. I strongly believe that everyone needs to secure more than one source of income.
In the past, I was involved in business transformation projects, and as a result, lots of people lost their jobs. For many, their paycheck was the only source of income.
Industry 4.0 will cut more jobs and even those having a job often need to work extra to make the ends meet. In the US alone, a fourth of the workforce is already a part of the freelance gig economy.
It’s simple – achieve full utilization and secure all the skills you need. Work with the same freelancers and reach out when you have work for them.
For example, I have a fantastic graphic designer, but I don’t need new ad banners every day. The same is valid for video editing, PR, etc.
Paying per task or per hour saves lots of money and keeps us covered as I know that I have the right people when I need them.
Entering new markets is much easier, too. Each time Transformify enters a new market, I have someone locally who knows the culture and has the network.
Doing it the traditional way by incorporating a subsidiary, renting an office and hiring employees is slow, extremely expensive and not needed at all.
To help startups with rent costs, Transformify even arranged for a special discount with WeWork. Now, not only they can hire freelancers fast but also, they can have an office in no time and without a long-term commitment.
Testing new markets is cheaper and less risky than ever before. Transformify expanded globally while bootstrapping because we always had access to the right people when we needed them no matter how rare their skills sets were.
Studying the strategies of our competitors to build our own and always having local people on ground when entering new markets delivered great results.
Can you imagine what our travel, accommodation and administrative costs would be had we followed the traditional approach?