Do you know the biggest barrier first time business owners face?
Money is cited as the biggest barrier to starting a brick and mortar, but lack of capital doesn’t have to stand between you and your dream.
The Milton Schoolhouse is filled with success stories that began with budgets under $10k. What follows is a case study of our favorite bootstrap story of 2017- The Rogue Theatre.
The Rogue Theatre is a nonprofit startup. It was completed in six months for just $7.5k. What’s even more impressive is that, from their very first show, The Rogue Theatre has been a successful, full-fledged entertainment center for the Alton community. It not only operates in the black, but provides paid opportunities for actors and entertainers.
Are you interested in learning non-traditional funding strategies that can get your business started and operating in the black in under a year?
Join us on February 11th for our Business Plan Class (link to Class Sales Page). This class has been fully updated for 2018. When you attend, you’ll get access to our brand new expansion- The Guerilla Capital Guide.
In this class we'll cover:
- How to tailor your business plan toward non-traditional funding
- Creative ways to find and save capital
- And the nitty gritty behind planning and executing a start-up that grows without crippling debt.
Does Non-Profit have to mean No Profit?
When Jay and Chantel Harvey decided to begin The Rogue Theatre, they wavered between starting a for or non-profit structure.
Using a non-profit structure would cement their brand as a true community-focused organization and make it easier to acquire grants and gifts. However, for-profit structures are easier to manage. If they organized as a for-profit business, they wouldn’t need worry about potential vision-clash between a Board of Directors and the paid staff of the organization. They make decisions for the business without strings, including major financial decisions like their salary.
Although they wanted to affect their community in a way that fit the character of a non-profit organization, two things bothered them about the non-profits they had been exposed to:
Being forced to compromise their brand and vision to appease donors
Terrible financial waste
Non-profits have bad reputation for making ineffective financial decisions. A Board of Directors can have clashing personalities, egos, and motives that make it difficult to utilize funds wisely.
Jay and Chantel did decide to organize The Rogue Theatre as a non-profit, but they mitigated the potential for impassable financial stress with great habits from the start. The lessons behind this theatre’s start-up are a smart move for any entrepreneur looking to create a dream on a dime.
Lesson One: Start with Good Financial Habits
If you take away only one thing from their story, let it be this:
starting with good financial habits is critical to the growth of any business.
If you are like most entrepreneurs you are accustomed to balancing our personal or household budget, but not much more. When you add multiple zeros to any budget it’s easy to lose perspective on how spending practices affect the bottom line. Cultivating money management skills from the start will not only grow your business faster, it will also put you leagues ahead of the competition when the time comes to make next-level growth decisions.
Good financial management can be tricky for a non-profit. Jay and Chantel dealt with this by carefully vetting, curating, and editing their decisions for their Board of Directors by looking not only for skill and network, but financial acumen.
This led to a high level of collective accountability that allowed them to build a fully operational theatre on such a small budget. In one conversation with me, Chantel recalled scrutinizing everything from envelope purchases to props, “triple thinking everything that was purchased”, to make the most of their limited funds.
A for-profit start up doesn’t have a board of directors or volunteer force putting pressure on your purchasing decisions, but you do have friends, family, and staff who all want to be a part of your start. It feels great when people are excited about your new business, but remember how you run your business is your decision. You are responsible for making this business viable, and that means saying “no” or “not right now” to expenses that don’t progress your business’ initial launch.
One key thing Chantel recommends, and I second, is limiting access to the business account. If you are starting a business with a partner, copy this strategy by keeping your cards in a desk- not your wallet.
If you authorize multiple people to make purchases, set firm boundaries of what is and isn’t allowable as a business expense at the start.
Lesson Two: Begin with the Long Term
Like most entrepreneurs, Jay and Chantel had a list of reasons that drove the decision to build The Rogue Theatre. Yes, they wanted to provide entertainment that pushed beyond the limited opportunities available in their small town.
But….their reasons for starting were also personal- and financial.
The couple has a big family, nine children under the age of eighteen. They took an honest look at the market and realized if they want support their family and pursue their passion, they would have to set out on their own.
In its first year of operation, Jay and Chantel Harvey plan to balance their day jobs with their roles at The Rogue Theatre. But their ultimate goal is to create an organization that can afford to hire them both full-time for their work.
You need to outline your long-term goals. Outlining your long-term goals will make it easier to keep your decision making grounded during the glamor of starting up. Goals keep you accountable to your spending practices.
Spending an extra $300 for props may not add much to a single stage production, but spending that $300 to reach a new market could have a huge affect on growth. Interested in knowing how you can grow your business’ market for such a small amount? Here’s how we do it with our brick and mortar.
Do you dream of starting a small business?
If so, what for? Do you want more time for family, travel, the freedom to choose your course? Or do you want your business to fund your retirement or provide a safety net?
Think about what your business needs to earn to achieve those goals. Use this number to guide your business forward and base your spending decisions off of them.
Lesson Three: Work at Night and Borrow Like a Rogue
The Rogue Theatre had little personal capital to invest in their project.
The organization had $5k from a no-risk loan gifted by a private investor and about $2.5k through community fundraising. Despite their small budget, they were able to renovate and furnish a space for their theatre without overspending.
How? Two things: Volunteer labor and donated materials.
For six months, Jay, Chantel, and their 15 year old son Gabe, worked nights and weekends renovating the commercial space. Other members of the Board of Directors pitched in hours, too, alongside friends and family.
I’ll be honest: the work is not easy. But you can lessen the capital cost of your start-up by building and investing your time.
I explore this approach in depth in the Guerilla Capital Guide you get when you attend our Business Plan Class.
The Rogue Theatre built out their operation on less than $10k. We started a $200k coffee shop with only $60k in capital- and still came in underbudget. You would be surprised how little your dream business could cost if you’re willing to invest your time.
Chantel became a master at coordinating The Rogue Theatre’s needs with community collaboration. By making specific needs known, she was able to find awesome seating, props, and construction materials below cost if not free. In doing so, she saved the organization thousands in their startup.
Specificity is key. Large or vague requests are difficult to respond to. The lack of expectations or clearly defined limits makes people anxious to help, donate, or pitch in. When you narrow your request you make it easy for people to either say ‘yes’ or refer you to the person who can.
Starting or expanding your brick and mortar will always require capital- but the barrier is not be as high as you think. The best way to determine what you actually need is to write a business plan.
A business plan will help you lay out the financials. Having a clear view of the financials makes it easy to weigh real assets against real costs.
Want to learn more? Join us on February 11th at Build a Kick Ass Business Plan. The course includes the start up costs, projected income statements, and entire financial plan behind Maeva’s Coffee, The Guerilla Start Up Guide, and personal instruction on the step by step process you can take to go from dreamer to doer.