Bootstrapper’s Cascading Cashflow Case Study

Tuesday, November 13, 2007 at 11:45pm by Site Administrator

Bootstrapping - cascading cashflow engines

It’s true that some niches are more monetizable online than others. But what if you are not an authority in one of the more lucrative niches and can’t afford to hire someone? Being a generalist, I tend to fool myself into believing I can write about anything, but there are only a few niches that I can write about with a level of passion – which is key for a successful blog, but not necessarily a static site.

Now if you’re in the position that you feel your knowledge is not that monetizable, you still have a few options. I’ve been exploring a business model I like to call “cascading cashflow engines”. It is all theoretical, but applicable both online and offline. The gist of the whole exercise is to leverage what you do know into distributed projects that will collectively raise enough capital for your true startup goal. Applied to online publishing, this is an alternate financing method than blogging for startup money.

Cascading Cashflow Business Model:
Basically, I start with a few small projects that I can manage or can find volunteers for. The revenue for these projects (whether websites or something else) is used to fund the next level of projects. These second-level projects usually have some hired help – freelancers. Part of the revenue from the second-level projects is recycled, in hopes of producing more paid work for other people. The rest of the revenue is used to fund some third-level projects, which might have half-time or full-time people.

The revenues keep cascading down the project levels until there’s enough capital generated to launch the real startup goal.

Previous Entrepreneurial Mistakes:
Again, I’ll emphasize that this is a theoretical business model. I’ve been exploring it for years, but I made some serious mistakes before:

  1. Didn’t focus on a few areas of interest.
  2. Overcommitted resources and had to stop short, making collaborators angry.
  3. Bought too much equipment too soon. That is, I didn’t really bootstrap and suffered stunning financial losses as a result.
  4. Didn’t consistently apply kaizen.
  5. Didn’t take on partners (couldn’t find suitable ones).
  6. Over-relied on credit cards, and not even business cards with good rates.
  7. Didn’t plan to pay contributors/ hires a share of net monthly revenue.

Summary:
I’ve rectified these problems on what might be termed my third phase of entrepreneuring, which is currently purely online, as a digital entrepreneur. I’m also replicating the successful online business models of some of my colleagues/ partners who are earning between $5-50K/month. I’m also exploring, with partners, web mashup tools and subscription sites.

While all this doesn’t guarantee success, early indications are that the success will come over time, now that I’ve learned from previous mistakes. My cascading cashflow engines will be harnessed over the next three years, in hopes of producing enough capital to bootstrap a film production company (complete with funding of my entry into film school). I know. I don’t like doing things the easy way.


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2 Comments »

  1. Thanks for sharing your insights. As a non-digital entrepreneur, just entering the digital space, I find your suggestions (especially applying kaizen) to be very helpful.

    Comment by C. Worrall — November 14, 2007 @ 2:52 pm

  2. Thanks for dropping by, C. Worrall. There’s a lot to learn here, and I hope to keep expanding on these topics.

    Comment by Raj Dash — November 14, 2007 @ 2:59 pm

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