I started Sure Dividend back in 2014. Sure Dividend currently has annual recurring revenues of more than $1 million annually. We grew from $0 to $1 million without any outside funding.
When a company starts with no outside investment, it is called being “bootstrapped”. The word ‘bootsrapped’ comes from the saying: “pull yourself up by your bootstraps”.
This saying – often said sarcastically today – means to motivate yourself rather than rely on outside help. Bootstrapped companies don’t have excess funds, so they must be careful with how the spend money.
In the case of Sure Dividend, I started it with very little capital, so it needed to be cash flow positive almost immediately. 3 important lessons I’ve learned on my journey of growing Sure Dividend are discussed below.
Lesson #1: Focus On Cash Flows
One of the most important business lessons I’ve learned is to focus on cash flows. It sounds almost obvious, but many businesses focus on ‘feel good’ metrics like views, subscribers, or downloads.
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At the end of the day, the purpose of a business is to provide value to its customers while generating a profit for its owners. Without profits in the form of cash flows, a business is not viable and cannot continue (for long) to serve its customers.
For a bootstrapped business, focusing on cash flows means keeping your expenses as low as possible. When I started Sure Dividend, I was extremely cost-conscious. Every charge mattered. To this day, we try to keep our expenses from vendors as low as possible in order to maximize cash flows.
Lower expenses also have the benefit of improving the value proposition for your customers. Lower expenses mean you can charge less for your service – delivering more value per dollar spent by your customers.
Lesson #2: Focus On What Works
Every bit of time you spend on your business is (hopefully) creating value. But some tasks are much more valuable than others.
When I was starting Sure Dividend, my most valuable task to work on was writing quality articles for suredividend.com and other sites. That is what would grow our audience, and ultimately bring us paying customers for cash flow.
You want to spend your time on your highest value per hour tasks. And you can’t know what these tasks are unless you track both the financial benefit of the task, and the time it takes you to complete it.
As an example, if, on average, an article brought in 300 new people to suredividend.com, and 15 of them opted-in to our email address, and then 2 of those people joined our newsletter which has a lifetime value of $300 per subscriber, then each article would have a value of $600 on average.
If that article took 2 hours to write, then it values my time at $300 per hour. On the other hand, if spending an hour interacting and sharing content on Twitter only generates 0.75 emails on average, then it’s worth only 10% of the value of my time.
Note: The above numbers for Lesson #2 are hypothetical, not actual Sure Dividend numbers.
To track the value each task is worth, you must know your conversion rates and the profit you get from each sale. There are many tools today that can help you track this information.
And of course there are some things you must do, even though they don’t provide any real value to customers (or potential customers) and therefore don’t grow the business. Keeping accurate accounting statements falls into this category. You want to minimize your time spent on these tasks, especially at first, to focus on the things that are most valuable.
Lesson #3: Know Your Customer
When I started Sure Dividend, my goal was (and still is) to help people invest in high quality dividend growth stocks for the long run in order to generate rising passive income, and ultimately financial freedom.
When I started Sure Dividend, I was in my 20’s. I thought that my customers would be people in their 20’s and 30’s looking to start their portfolio to compound over time. This was an incredibly naïve view.
My thought process was that compounding is most beneficial the longer you have, and on average, the younger you are, the more time you have to compound your wealth. It’s simple logic, and true, although not really the relevant question or line of thinking.
The people who have the most to gain from investing in high quality dividend growth stocks for rising income are not people who have little money to invest and who are just getting started in their careers… It is people who already have an established portfolio with which to invest.
And those people tend to be older – in or near retirement. It took me far too long to realize who my customer was – who I was writing to and for. When you know your customer, and why they are using your service, you can better serve them. This is better for your business, and better for your customers.
Bonus Lesson: Start Collecting Emails Immediately
When I started Sure Dividend in 2014, we were able to acquire a decent amount of traffic (and get paid to do so) by writing on Seeking Alpha. Years later, that same strategy won’t work due to changed policies at Seeking Alpha.
Facebook’s algorithms and cost to advertise (as well as Google’s for that matter) were very different in 2014 versus 2022. Tik Tok didn’t even exist.
The platform that you think will work for you may not exist as long as your business, or may change its policies so that it no longer serves your business.
The key lesson here is you do not own your followers or traffic that starts from a different source. If you don’t own the platform, you could lose everything you get from that platform at any time, through no fault of your own.
On the other hand, you own your email list. And with email, you don’t have to pay to ‘boost’ your messages – you just send them through your email provider. Yes, having an email provider costs money (though many are free to start), but it’s typically a small amount compared to what you’d have to spend to actually reach the same number of people on social media.
And people on your email list likely want to hear from you, because they gave you their email. This means you can build trust and provide value to these people over time, before they become customers – and after.
Emails are incredibly valuable because you own them, and can contact people on your terms. For Sure Dividend, an email is worth many multiples of what a follower is on any social media platform. And I believe that’s true for most businesses.
Starting your own business from scratch without funding can be both exciting and extremely difficult. The downside is that there’s less room for error without outside funding. But on the upside, you are free to grow and make decisions at your own pace and on your own terms.
While it’s difficult, bootstrapping an online business can be rewarding, both psychologically and financially. The 3 lessons (plus the bonus lesson) in this article encapsulate some of my more impactful learnings since starting Sure Dividend.