Ivan Seselj, co-founder of Promapp, the web-based software business founded in 2002, which helps companies communicate their processes and systems, talks to Gill South about the sacrifice and challenges of setting up.
Preparing for launch
We didn't do much other than tighten our belts a bit in the exciting period of the lead up. I personally work best to a timing deadline. So we worked out the expected costs for the start-up, assumed my income would be zero, and figured that we could survive six months max. We set some targets that HAD to be met in the first 6 months.
It was really a decision between my wife Nicky and I, and so the main sacrifice was quite an extended period of zero / low income, from what used to be our higher income. Nicky continued to work and have three kids. We also bet the house, a lot was funded by our growing mortgage. We were fully prepared to walk away from the business and the house if targets weren't met, and start again a few years later.
Nicky gave me heaps of confidence - in a weird way I felt less threatened by defeat every time she casually said: "So what, we can walk away if we have to and start again a few years later." I also took a lot of heart from Bob Jones saying that he'd gone bust three to four times, believing that was all part of the learning process. I kept positioning the business as 'my second attempt'. I failed my first entrepreneurial venture at 22.
Earning an income
The first six months my income was about zero. Anything I earned went back to pay software developers. After about six months I was lucky to have a friend, Richard Holmes, join the fray with me, ( he is co-director). We bootstrapped to earn an income. We did consulting / implementations for clients ourselves to pay ourselves, and to fund the business costs.
When we got busy enough we hired a contractor for the implementations.
For about two years we worked on cash-flow based system. If we had the cash, we'd pay ourselves $5k for the month, if not we didn't. We took the provisional tax payments as cash flow hits later on, which was a bit crude and risky, but we didn't have enough money to set anything aside as we earned it.
Our first feeling of success was the earliest clients actually paying us for the software, we felt we'd made it then! It was probably after about year three or four of business where we could step back and see that we'd created something that would last.
We haven't brought in external investors or shareholders. We've basically kept funding growth by paying ourselves sub-market rates for the first seven to eight years. We didn't want to spoil a good thing.
We all work hard but also have a pretty casual atmosphere at the office. We didn't want to kill the business by 'getting serious' - the shift to keeping a whole group of stakeholders happy, with different ideas, objectives, investment goals. We really only considered external capital as a fall back option.
After a few years we started running board meetings. They were in our local café, with an external experienced board member mentoring us on strategy and growth tips. It was only an hour long and once a month, but we kept formal minutes, and it was great for making us think more strategically and to look at the business. I wish we'd started them earlier. We now have three people on our board to keep us honest.
Don't chase the gold
We fell for that attitude for a while after a couple companies starting courting to invest. We started to hate our 'jobs' as they'd become. Do it because you'd love it.
Set aggressive targets to be the best you can be - Think like the All Blacks! Number 1 in the world. Why not? Let the money come as a bonus.
It is all about the team you build. We work really hard to ONLY recruit if we think they are the best, and once we've got them, we're super loyal. It's a no-brainer to pay above market to keep them happy.
What's in a name? The name you are going to give your business and your products is crucially important. Chances are, you'll be explaining how you went about the naming process to customers and staff for years to come. Tell us how you went about coming up with your company name and how this relates to the name of your products. Email me, Gill South, at the link below: