Value Chain in Bootstrapping

In 1998, author Seth Godin published the book, “The Bootstrapper’s Bible.” A few years later, he posted a manifesto based on the book. Here are the takeaway lessons I picked up from reading the book.

Seth Godin suggested that bootstrappers not have to invent a new business model.

Instead, the successful bootstrappers often look at what works and adapt.

There are some advantages of this approach.

  1. You can be confident that the business model can work for you if done correctly.
  2. You can learn from other entrepreneurs’ mistakes.
  3. You can find a mentor who knows the model and doesn’t mind sharing her knowledge.
  4. You are not alone in trying to figure everything out by yourself.

After you get clarity on the business model, defining the value chain that can add value from inception to the final delivery of your products and services.

The critical questions to answer for the value chain are:

  1. Define the audience by answering “who’s going to buy your product or service?”
  2. Figure out the worth by answering “how much are they going to pay for it?”
  3. Determine the distribution mechanism and value added by answering “where will they find it?
  4. Define the base costs by answering “what’s the cost of making one sale?”
  5. Identify the real costs of making, packaging, shipping, and store the item.
  6. Calculate the profit for one sale.
  7. Know the margin by answering “how many sales can you make a month?”