Sometimes an entrepreneur must proceed with achieving sales while simultaneously seeking investors. The idea of selling without the assurance of capital seems counterintuitive. But this method worked for SurePayroll, the largest Internet-only payroll provider.
SurePayroll composed its business plan in 1999 and had its first customer by the end of that year. The rest of the story is an “overnight success” that was ten years in the making.
The company started operations just as the internet bubble was bursting and companies replying upon that technology were dropping in value. Venture capital excitement evaporated quickly. SurePayroll didn’t obtain its first round of outside capital until 2001. Until then, the company survived on self-funding. Even after obtaining investor funds, it wasn’t enough to cover all the expansion plans.
The key to the long-range growth was having some co-founders with capital to contribute. They joined the company management in addition to providing initial bootstrapping.
The founders had expected to make a big splash as an internet company and go public within a couple of years. But they didn’t stop when a different path to success was required. In fact, the SurePayroll entrepreneurs continued to swing for the fences. By bootstrapping completion of their infrastructure using personal resources, they continued selling.
The company founders took the approach that eventually more capital would flow their way. And it did when investors recognized the revenue stream the company had created from hard work over several years. Eventually, SurePayroll had cash flow that was compelling to investors.
Moreover, management experience at operating on a tight budget demonstrated a level of competence that outside investors consider essential for success. For example, at the end of its first year, the company employed 23 people in a mere 1,800 square feet working on folding tables.
There are many sound business ideas that simply require action by entrepreneurs instead of waiting for the perfect alignment of stars. The founders of SurePayroll had a business model that made them wealthy very slowly. But even a ten-year track of scraping by can ultimately lead to great success.