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In the startup world, venture capital is often viewed as the penultimate goal, yet for many startups bootstrapping is often the reality. Your CPA can advise you on the best legal structure for your particular situation, as your choice in entity can have some pretty significant implications on your taxes.
Luckily, we also discovered that certain other metrics, like LTV and CPA were much better than we initially projected. This model of joint accountability is at the heart of the lean startup, and is just as applicable to venture-backed, bootstrapped, and enterprise startups.
Most people who bootstrap their business do it on their personal credit card and if yours are maxed out from the day you start your business you’re going nowhere fast. You got to be strategic especially with your time, with the partners that you align yourself with and even with the hires that you make. You are your own secretary.
When do we hire that new person? You don’t need a CPA. I strongly endorse bootstrapping, and I will tell you I speak from experience. We had three mortgages and $65,000 in credit card debt at one point doing this bootstrapping. Another thing really important in concrete specifics is just the way humans work.
If you’re bootstrapping, use bottom-up.). If you can convert 1% of your visitors to customers this means you need 100 clicks for each purchase, making your cost per acquisition (CPA) $400. your CPA jumps to $800. 40, your CPA will be $40. Hint: if you’re looking for funding, use top-down. If you convert 0.5%
We were bootstrapping the company’s funding, so we could not afford to hire a firm to help us come up with a company name. This might sound stupid, but I simply named my company a combination of my name and my job description: “Micah Fraim, CPA”. He hired my new firm to get more media attention. Image Credit: Ron Johnsey.
Seriously, this is not an exaggeration I think people throw around the word “bootstrapped” too casually. I hate to break it to you, but raising 500K from a friends and family round is not being a bootstrapped startup. I got my taxes done by a CPA while I helped him redo his website.
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