The start-up
Colin Thornton, Dial A Nerd
Forget loans and business plans. All Colin Thornton needed to get his IT support business, Dial a Nerd, off the ground was a screwdriver.
After a few failed attempts at securing a bank loan, he had to find another way to get money into his start-up. He had already been charging people to fix their computers and had managed to raise around R5 000. He spent every cent on marketing. With a box of around 15 000 black and white A6 flyers printed and his sister – a student at the time – to hand them out at a local mall (which she was soon chased out of), he then resorted to putting the remaining flyers on car windshields.
“I only got about four or five phone calls from those flyers, but made enough money to print more flyers,” he says.
Luckily, Dial a Nerd was the kind of business Colin could start small. With three or four screwdrivers and a couple of floppy disks, he started working out of his parents’ garage to avoid office overheads. He didn’t bother with business cards or fancy invoicing software, choosing rather to pour all of his earnings into marketing. “I just wanted to make sure that my phone was ringing.”
The first big step
For the first year Colin kept the business as lean as possible, and did not even consider renting an office. Hiring staff was his first step into the real business world. As a one-man show he was unable to get to all his customers quickly enough, and risked losing clients. “I had no option but to hire staff, I hoped they would pay for themselves.” While he was still working out of this parents’ garage he started interviewing technicians, but when they saw his garage set-up, they made it clear that they weren’t interested in the position. He had to take the business “up a notch” to hire staff who would take it seriously.
Colin’s strategy was to always have enough money to survive for three months if business got bad. “I needed enough in my bank account to pay the rent for three months even if the phone didn’t ring.” Colin didn’t find it necessary to scale back on anything to bootstrap his business. “I didn’t have anything to scale back on. I drove a beaten up second hand car that was good enough to get to jobs. I did what it took to keep the business going.”
Part of the streamlining was to either do everything himself or have someone in the company do it. Colin adds that he relied heavily on friends for furniture and signage, which he secured at lower prices.
“If I knew someone with a skill, I would ask them to help.”
Growing from inside
In 2002, Dial a Nerd went national with the opening of its Cape Town branch. Colin sold shares to existing employees. This gave the business the capacity to open more branches. “Having shareholders on board meant that it wasn’t just me on my own anymore,” he explains.
Bootstrapping pays off
There is less risk in starting your business with your own money, says Colin, adding that banks can be ruthless. “If you can avoid taking a bank loan, it’s the best situation.” Colin advises entrepreneurs to focus on what’s important to get the company going.
While Dial a Nerd grew slowly for the first four years by ploughing profits back into the business, Colin says he wouldn’t change anything. “The mistakes we made helped us make decisions later. Also, mistakes cost a lot less back then,” he quips.
Colin says he was more focused on cash flow rather than profits in the early stages.
“I didn’t understand accounting and just wanted enough in my account to run for three months. If I got enough for six months then I would be really happy.”