A few years ago, my friend Alex introduced me to the blockchain and crypto world. Though it initially took me some time to understand its potential, once I finally did it opened up a whole new world. The concept that really helped me understand what this technology was all about was this notion of “the Internet of Value”- an open network with unstoppable apps that could hold actual value in the form of tokens.
I was convinced there was a use case that could improve traditional online learning. The last time I had had that feeling was when I first discovered what was called then the “network of networks” (the Internet). I was doing one of my first traineeships, in an insurance company in Norway. At that time there were less around 2,000 websites – in the whole world. I was so excited about it that I proposed to my then-boss to create a website to help clients find the right insurance products for them. “A website? What is it?” she answered. However, she was brilliant and open-minded and gave me the go-ahead to try it out. This was quite probably the first website of an insurance company in Norway, maybe Scandinavia. I’m still waiting for that company’s confirmation… ? (read the story)
And then about a year ago when we first started mentioning “NFTs”, most people had no idea what we were talking about. It took us far too long to explain new terms such as fungible tokens, gas fees, crypto wallet, DeFi and much more.
Fast forward 12 months and NFT (non-fungible tokens) are close to becoming a household term. Clients are now expressing genuine interest about the role of blockchain-powered solutions in our learning products. Many tell us that we are the first to show them real tokenised solutions in learning and want to find out more.
These leading insurers are courted by the most prominent training companies in the world. And yet they repeatedly single us out for being the most innovative.
At INGAGE, our team is busy creating the next generation learning platform. Our R&D team is currently working on integrating a blockchain based incentive system directly into our course modules. Users will soon be able to earn both NFTs and fungible tokens as part of their learning journey. Stay tuned for more details on our upcoming releases!
The following article does a nice job explaining the generational divide between modern and legacy platforms:
How NFTs are creating a generational divide between platforms
Extract: “Today, let’s talk about a fault line that’s beginning to open up in the gaming world, one I suspect will soon be coming to most platforms and app stores. It’s a divide that begins with a simple question: will your platform allow NFTs? Crypto payments? You know … blockchain stuff?
Like it or not, the rise of non-fungible tokens as an engine for fun and profit has been one of the tech world’s big stories in 2021. Using the blockchain to create unique digital objects with verifiable, transferrable ownership has opened up new possibilities in art, digital trading cards, and gaming. At least for the moment, it seems likely that other forms of media will follow.”
Source: Steam banned blockchain games; Epic Games welcomed them By Casey (Oct 20, 2021, 6:00am EDT)
If you are in sales, you’ve probably learned the best practice and tips on how to be efficient and successful in the selling process.
But are you aware of the things not to do?
Despite all your best efforts, do you still sometimes fail at closing those deals?
Do you sometimes lack confidence or motivation? If that’s the case, then maybe you are doing one of the things listed below.
You speak more than you listen.
If you want to fail in selling, then be sure to speak as much as possible! Don’t ask any questions! Talk more than your prospects or clients. This way you are sure to push on them products that are not relevant and that they don’t need.
You focus on the features of your product, not the benefits.
Let’s imagine you are trying to sell a pen. It has the following features:
part of it is made of gold
it weighs 60 grams
it hast enough ink for 100 hours of writing
…
So, you list all the features. You are very factual and precise. But it doesn’t make your client dream about your product. Hence, he won’t buy it!
Instead, you could paint the following picture for your client:
Your client is enjoying a wonderful holiday, sitting at a beautiful desk in his summer house by the river, writing a best-seller or a love letter with this pen. Can you feel the energy shift? Yes, that’s right.
People don’t buy what they need, they buy what they want!
You abandon too soon.
Did you know that on average a client will raise 5 objections before he buys? But most salespeople abandon after 1 or 2 objections!
It’s not easy to feel comfortable when people express objections but, in the end, the prize goes to the most persistent one!
You have a negative attitude about your products, your company, or yourself.
What prevents most salespeople from being truly successful is their perception and attitude.
Have you ever felt that:
people you call find you annoying
it can be a drag to call your potential prospects
clients keep objecting to you (i.e., “I don’t have time to talk to you”, “I already have a provider”, “You are too expensive” …)
certain days are difficult because you are being rejected a lot
you don’t know your products or your clients well enough
Negative thoughts and lack of confidence are immediately reflected in your body language and tone of voice. Studies show that clients can pick on your lack of confidence and insecurity even on the phone without seeing you!
The result? No sale!
You don’t contact enough leads.
You may have heard the adage saying that selling was a “numbers’ game”. This means that you need to contact many leads to sell to a few. Out of 100 leads, you might only acquire 10 clients…
How many clients have you contacted yesterday? Last week? Last month? … if your answer is “Nearly none”, you are clearly on the right track to fail to sell your product!
On top of this, finding leads is not enough. You need to build a real relationship and trust, educate them about your services and your products. Your leads need to be organized in a sales funnel and “matured” to bring them to the decision to buy from you.
You want to finish what you’ve started!
How much time have you worked to prepare that smart, beautiful, and well-written PowerPoint presentation with 50 slides? Three, four hours, or probably more?!
Now that you finally have that meeting with the client, you deserve to be listened to and to go through the entire PowerPoint presentation you prepared!
Why would you waste all that amazing work just to adapt yourself and answer the clients’ questions? You could drift away from your slides! No way!
Selling is not easy. It demands a whole set of different skills.
Want to kick start your sales career or brush up on your existing knowledge? Would you like to have a comprehensive, yet short and effective methodology that will take you from A to Z of the selling process? Then check out our Sales Academy. We’ve got you covered!
Good stories are one of the best ways to engage people, and in our case, our learners.
Therefore, as you might have noticed, at INGAGE, we enjoy good story-telling and always keep an eye for films or books that deal with at least one of our 3 core topics: 1) Education, 2) Insurance and 3) Technology.
Indeed, they are the 3 “pillars” that support our niche offering of “Effective Training for Insurance Professionals” based on cutting-edge technologies!
In this case, the present book is about technology, more precisely, the Metaverse / virtual world, as this is where we conduct some of our training.
A bit of background
The story opens in Los Angeles in the 21st century, an unspecified number of years after a worldwide economic collapse. Los Angeles is no longer part of the United States since the federal government has ceded most of its power and territory to private organizations and entrepreneurs. Franchising, individual sovereignty, and private vehicles reign supreme. Mercenary armies compete for national defense contracts, while private security guards preserve the peace in sovereign gated housing developments. Highway companies compete to attract drivers to their roads, and all mail delivery is by hired courier. The remnants of government maintain authority only in isolated compounds, where they do tedious make-work that is, by and large, irrelevant to the society around them. Much of the world’s territory has been carved up into sovereign enclaves known as Franchise-Organized Quasi-National Entities (FOQNEs), each run by its own big business franchise (such as “Mr. Lee’s Greater Hong Kong”, or the corporatized American Mafia), or various residential burbclaves (quasi-sovereign gated communities). In this future, American institutions are far different from those in the actual United States at the time the book was published; for example, a for-profit organization, the CIC, has evolved from the CIA’s merger with the Library of Congress.
What if you could onboard your new recruits and teach them about insurance thanks to Hollywood films – and others?
Would you think that insurance is a hot topic for Hollywood or Netflix? Probably not… however, insurance has been a great source of inspiration for movies. Here is a non-exhaustive list of films and series where insurance plays a role:
Spain is used to long working days. It’s normal for employees to start at 9 or 9.30 and finish around 20:00 – It does include a nice lunch break from 13:30 to 15:00 though. This also applies to the insurance industry there of course.
Today, I would like to speak about Liberty in Spain. As you know, Liberty is a traditional US insurance company. Not exactly a startup! They have a very long-standing experience in the industry and could be considered quite conservative.
Now, things might be on their way to change. Indeed, Liberty Seguros (Liberty in Spain) will allow its 2,000 employees in Europe to telecommute permanently. They are investing heavily on technology to adapt to the new normal and improve their employee’s experience. This will allow their workforce to become ‘digital nomads’ around Spain. You can expect to hear about engagement and training platforms that they will be deploying to address their new needs.
However, some senior managers around the world still doubt the remote working model. It is a great model, but it is not for everyone.
At INGAGE, we have been a ‘digital-first’ company from the start. It is in our DNA. We help our clients digitize their training, their academies. We address their needs to generate content in a very dynamic way that will be available on demand for their employees, clients and salesforce. We look forward to seeing Liberty Spain’s result at the end of the year.
Organisations innovate, change, transform, reform, and most importantly go through a life cycle from creation through different stages to maturity and finally through a rebirth or death. In the course of all these stages lies the employees; and the impact of the employees on the organisation either positively or negatively is defined by their skills, knowledge, competence, attitude, diversity in thinking and personality. The success of any strategy, planning or growth is dependent on the quality of the employees.
The inspiration to write this article came as a result of the experience of the year 2020 (The year I call –“the missing year”). Having stayed at home for months, it looks like everybody’s KPI seem to be on the downward trend. The questions that immediately came to mind are, what would the 2020 annual appraisal look like? Would you truly say that you have achieved anything or everything? How would you even appraise what you have achieved?
Training is a commonly used term which has various meanings to various people, yet it is a very important concept to all society. Some scholars regard training as simply taken to mean impartation of ‘knowledge’, ‘enlightenment’ or ‘wisdom’, another school of thought, defines training ‘as the process of teaching and giving instruction, the process of Improving’. Similarly, training can also be seen as ‘the activity of educating people, and all the policy and arrangements concerning this’.
Trainings are tools used by organisations to upgrade and equip employees with the knowledge and skills needed to deliver the vision of the organisation. It is the process of developing employees’ skills and learning new concepts, rules or attitudes in order to increase effectiveness on a particular job. Management training is defined as the process of developing managers’ knowledge, skills and attitude through instruction, demonstration, practice, and planned experience to meet the present and future needs of the business. In other words, training refers to teaching employees required skills and knowledge to perform the assigned tasks effectively and efficiently
The validity of these statements would be a point in focus as I try to unravel the what, why, when, how and where of training, with a special reference to the Risk management and Insurance industry.
Training vision
In everything in life, there must be a reason, a purpose and a desire to achieve something; and the tools to achieve such end are knowledge and skills, however, the knowledge and skills in itself as a tool must have a direction. So what is the purpose of training? What are organisations looking to achieve? How will training be customised to fit the peculiarities of each industry or need? What should organisations look for in providers to ensure that they are the right solutions provider to support their needs?
Competencies vs Training
Competency may be defined as the knowledge and skills that individuals must have to perform effectively at work (CII Competency framework), competency can also embrace those knowledge and skills that individuals must acquire to perform effectively.
Employees performing a task or a role may be doing so without complete competence, but they are unaware of these deficiencies until, by a variety of mechanisms, they may be made aware of these; and pass up the steps to the area of conscious incompetence. Through some learning action, they become capable and competent in the process, but have to perform it consciously and deliberately. Continuous implementation, practice and performance at work raises to the level of that of unconscious competence, where learning has been achieved, and the task is performed effectively without too much thought. However, without reinforcement, unconscious competence can easily slip back to unconscious incompetence.
Training as a function and as a set of activities is concerned with improving or changing behaviour. It is often said that training can influence skills, knowledge and attitude change or modification.
The employee training needs required by organisations are functions of training needs assessment carried on skills gap, qualifications necessary for jobs due to changes in product or services and operations problems emanating from organisation change. Recent evidence established the investment in training with the improvement on productivity, profitability, and stock market performance. A recent review highlights six specific studies that most strongly support this general conclusion. Accordingly, argued that training increases employees’ performance which in turn improve organizations productivity positively, and will further check and arrest the several human and financial costs involved with employees’ turnover. Furthermore they argued that training enable employees in organisation to enhance the potential contribution to the performance of organisation.
Components of Training
Training involves showing evidence of knowledge and breadth of understanding. The two terms are being used together here to establish that Training depicts more than just mere recitation of information and the acquisition of skills (which is the reality of training). It is generally believed that the Principle and Methods of training stated that the general aims of Training as given by O’ Lenorare is:
a).To provide men and women with the minimum of skills necessary for them to take their place in the society and to seek further knowledge.
b).To provide men and women with vocational training that will enable them to be self-supporting
c).To awaken an interest in and a taste for knowledge
d).To make people critical
e).To put people in touch with and train them to appreciate the cultural and moral achievement of mankind.
Recurring knowledge Gap
Risk Management and Insurance is one industry that requires the knowledge of the operations of the other industries to be able to effectively understand the risks of those other industries and effectively underwrite the risks and price it appropriately. Hence, the knowledge required is constantly dynamic as risks changes and regulation changes. Therefore, the knowledge acquired by Insurance professionals will always be dated subject to new ideas, new ages, new laws, and new regulations; as each change redefines the limits of the insurance principles.
Understanding the needs of organisations
In view the recurring gap that exists in the knowledge base of the practitioners, how do you evaluate an ever moving knowledge gap?
Training, Performance and Change – One of the widely used term in organisations is change, organisations that do not constantly review their strategies, their products, their structures and their philosophies would soon be commuted to history. If growth is desired in organisations, a constant review of objectives and key performance indicators would help to design current situation, future situation and both possible and likely future situations. Whatever the situation is, a key determinant of possible success is the degree to which employees can perform their functions more efficiently and effectively to achieve organisational goals. Training will continually be a tool used as a deliberate attempt to modify employee behaviour and hence performance. Unfortunately, training, just like insurance, have a common misfortune of being seen as a cost rather than an investment and a security.
Transformational Learning
There are four phases of transformational learning and these are (a) having experiences; (b) making assumptions based on simulated circumstances or scenarios; (c) challenging perspectives; and (d) experiencing transformative learning.
Stage 1: Learners are directed in their use of technology
Asynchronous access to information and peer networks. Some ability for learner to select platform, technology, or even content. Traditional classroom learning begins to be disrupted.
Stage 2: This stage is characterized by powerful access to information, networks, and communities, but is mostly unable to leverage that access without supporting frameworks or planning.
Learners are directed in their selection and constructivist use of technology in the learning process, traditionally to accomplish purely academic tasks that are fully accessible without the technology.
Stage 3: Mobile technology erodes traditional classroom. Truly mobile learners should disrupt non-flexible curriculum.
Mobile learning experiences are inherently unpredictable, requiring varied communication, critical thinking, and aggressive resourcefulness. Standards-based academic work struggles for gravity working against this stage of technology integration.
Stage 4: This final stage of technology implementation necessitates learners to consistently self-direct critical, core components of learning experiences.
How does your organisation link training policies and plans to business policies and plans?
Transformative learning is a 360 degree learning impact that focuses on the employee, the downline report, the up line report and the organisation.
Individual transformation
Character, knowledge, attitude and skills defines an individual, the quality of these attributes would define the competence or contribution of any individual to any organisation. An oriental wise man once said, “The character of an organisation is determined by the character of the leader of that organisation”.
Team Transformation
As the saying goes, “a team is as strong as its weakest member”. For an organisation to reach a desire plateau, every member of the team must have undergone some form of transformation in their role to enable them contribute their best to the team. To this end, it is imperative that the focus on skills, competence and knowledge is first and foremost and individual job before transforming into the team. Easy examples of practical application of this concept is usually found in sports, football, rugby, relays and other similar team sports.
Organisational Transformation
Every organisation goes through different stages and at some point she needs a rebirth, a re-direction or a completely different focus. Whichever is the course that an organisation decided to take, the decision is, usually, either as reaction to environmental changes or as visionary step in creating a new for itself and its world.
Industry transformation
An industry that is leading in innovation and transformation is usually be led by an organisation that takes the position of at “Market maker”. This organisation usually takes the responsibility to redefine the limits of the industry, having done that, then it takes the lead in every aspect of the value chain in that industry. Such organisations would have passed through individual, team and organisational transformation, at that point, they can no longer play on the same level as the industry, hence the need to recreate the playing fields. Competitors that cannot play on this new level, would either transform, be absorbed or die a natural death.
Economic Transformation
The economy of every country is measured, amongst others, by the GDP, GNI and NI. The higher any of these are the higher the number of industries that have undergone transformation contributing to the economy. To attain a level of development as a country, these industries must not only have transformed, they must continually re-invent themselves and lead in innovation, knowledge and creativity.
Conclusion
The underlying factor in this write up is the fact that teams, organisations, industry and the economy are driven by individuals and those individuals are either employees or owners of organisations that play in the economy. The quality of thinking of these employees or individuals that works or owns these organisations usually determines the level of growth or advancement of an economy. It is then suffice it to say that the quality of knowledge they have is directly proportional to the quality of economy they play in. Training transformation is therefore, a key component of a would-be developed economy.
“In times of change, learners inherit the earth, while the learned find themselves equipped to deal with a world that no longer exists” – anonymous
Abodunrin Roberts
11th March, 2021
References
Full Steam Ahead by Ken Blanchard and Jesse Lyn Stoner
Effects of Training on Employees’ Productivity in Nigeria Insurance Industry Ofobruku Sylvester Abomeh and Nwakoby Nkiru Peace
The Analysis of The Effect of Individual Characteristics and Supervisor Support on Motivation and Learning Transfer Agni S. Mayangsari , Jusuf Irianto and S. E. Anis Eliyana
The Influence of Training and Development on Employee Performance: A Study on Garments Sector, Dhaka Bangladesh Most. Monowara Begum Mamy, Rubaiyat Shabbir and Md. Zahid Hasan
Training and Development and Organisational Performance: Standpoint from Private Tertiary Institutions in Nigeria Adedoyin Olawale Adeyi, Exodus Kehinde Apansile, Wisdom Okere and Linus Izediuno Okafor
Transformative Learning as Impact in Social Innovation. This paper is published in DESIGN AND CULTURE, Vol 11, Issue 1, 2019. https://doi.org/10.1080/17547075.2019.1567984, Pre-copyedited Version Jan 2019, Joyce Yee, Bas Raijmakers and Fumiko Ichikawa
Siguiendo con nuestro ultimo post sobre el impacto de la inteligencia artificial en la industria de seguros hoy vamos a hablar de seguros comerciales. Con agrado, vemos cada vez mas iniciativas, proyectos de transformación integral y capital fluyendo a Insurtechs enfocadas en Líneas Comerciales. Años de mercado blando han puesto mucha presión en los equipos de suscripción. Ajustes, recortes y reestructuraciones que han sobrecargado el día a día de los suscriptores al punto de comprometer su nivel de servicio a los brokers y clientes.
Desde RiskTech, trabajamos en distintas iniciativas que se adaptan a las necesidades y requerimientos de nuestros clientes como son:
. Triagge en base al apetito de la compañía al momento de la recepción a fin de definir prioridades y atender los casos mas importantes.
. Alertas de parámetros o exposiciones en base a autoridad o pautas de suscripción que se generan en tiempo real al momento de cargar la cuenta.
. Generar de forma automática la mayor cantidad de información posible. Tanto de fuentes internas (pago de prima, siniestralidad, otras líneas activas, etc.) como externas (google maps, NatCat, Nathan, noticias de actualidad).
. Estimación de la siniestralidad potencial a nivel cuenta y portafolio en base a datos históricos.
Estas iniciativas apuntan a liberar a los técnicos de tareas repetitivas para poder enfocarse en actividades de estrategia, desarrollo de negocios y suscripción pura impactando de forma positiva el resultado de la compañía.
This group aims at exchanging on each other’s experiences on how to sell insurance and how to train people who sell insurance.
How did you become the best sales person in that insurance company? How do you train your sales team? Do you have any best practice you would like to share? What do you wish you had learned when you started and what would you like to learn now?
You may have heard a lot about topics on how to make tourists love your country more. But today I’ll talk about something different, which is, how tourists help ‘me’ to love my country more?
A new trend is rising in tourism
We are witnessing a change in tourism trends – mass tourism vs slow tourism (e.g. digital nomad type of tourism). In Croatia, island hopping was very popular for the last few years. Tourists would land in Split and spend one to two days in each city or island till they reached Dubrovnik. Their holidays would pass very hectically and be rich in touristic content. Now with rising security measures, it is more complicated to travel so you cherish your time at each location even more. When you stay at one place long enough to start recognizing local people, when you find your favourite spot on the beach or best spot for coffee, you begin to identify with your destination.
Now you see how mass tourism has had a bad influence – bringing mostly consumers and a lot of pressure on the environment. That said, the new trend of tourists who stay longer in one place – that is their ‘’home’’ for the moment – goes hand in hand with rethinking the responsibility we all have to make our home sustainable for generations of local and tourists to come.
The positive aspects of the new trend
My perception of tourism is dual: the first point of view is as a small business owner who depends on tourism and its economy; the second point of view is as a landscape architect, looking out for the preservation of our natural resources and saving small-town identity – ”Genius loci”.
I feel that I have insider info from both sides that can actually be used for changes on a small-scale along with long-term big effectivity.
I’m living partly in Split now, a small Dalmatian town that had experienced a touristic boom over the last few years. That makes me feel partly like a tourist in my own country. With COVID, Split has become a go-to place for Digital nomads from all over the world and some of them I befriended. And that inspired me for this post.
They come mainly because of the weather, with the sea nearby, sunshine, feeling of safety, you can spend most of the days doing outdoor activity. So they do, Digital nomads hang out and organize group yoga, language exchange, and hiking trips. But what truly amazed me was their local actions that they are willing to participate and even organize – from beach cleaning, helping out people who lost their homes in the earthquake, volunteering in animal shelter…they give us an objective view of our daily surroundings that we are used and numbed to.
How can we continue the virtuous cycle
Digital nomads give us the momentum to act towards making our home inviting to people who will come as a responsible individual, a sustainable tourist. The one who will immerse in our laid back culture and richen our daily lives.
They are leaving us with understanding what makes us special. We should use their wide travel experience to treat our home with respect and grow it with the guidelines below:
Invest in an open, transparent community where people can engage, they want to but don’t know how to
Use ecological principles in daily lives and be proud of it. Reuse! Repurpose! Respect natural surroundings!
Walk, bike – take care of your own body, it will bring you satisfaction and you will actually see the places in your hometown they love the most and you haven’t seen in years.
Support local small food producers – help them, talk to them, find out their story and be proud to make friends with them -then recommend them to your tourist – they will be very happy and feel included.
Following just these little steps, you will see your community with different eyes – it will have a new social layer and enrich your life so you can be proud to be part of the positive change tourism will bring us. It actually already has!
We first have to note that different people have different definitions of what a digital nomad (DN) is. Therefore, it is not very surprising to see that there are different answers to the question above!
We found a first estimate about the number of DNs:
Then, we thought: most DNs look for a place to work and most of the time, this is either a coworking space or a nice café.
So, how many coworking spaces are there?
According to the Statista Research Department from November 4, 2020, there were 26,300 coworking spaces in the world in 2020. Their sizes vary a lot, but let’s assume that each coworking space can host in average 80 people.
This is only a wild guess, but if we keep this reasoning, that would lead to 2,104,000 people globally.
If you have any statistics on the topic that are more accurate, please share them with us. Thanks in advance!
The trend of having a life of a digital nomad is getting only greater by the day. Our founders and digital nomads Philippe and Patrice had an interview with RTL and talked about the daily life of digital nomads in Croatia. So what’s the government’s, business and digital nomad’s perspective of view of this relatively new phenomenon? Check this video out:)
The first Croatian digital nomad is Melissa Paul from America. She is a social media manager and blog editor. She was the first to apply and now lives and works in Istria. And who are the digital nomads? These are the ones who can work anywhere in the world. All they need is a laptop and a good internet connection. There will be more and more of them because, from this year, Croatia is giving them one-year visas.
Patrice and Philippe are living their dream now. Ever since they decided four years ago to change their lifestyle and become digital nomads. They combine the comfortable with the useful.
Patrice Séjalon I feel so free now. It’s fantastic. It’s kind of normal to be in a place which is like Split and it’s amazing. And yet, you’re also working.
They lived all over the world but Split is an ideal place for them. They have been here since October.
Philippe Séjalon There’s beautiful weather, nice people and it’s a cosy place with amazing nature. So we feel home.
Although their job requires good organization, they also like to be a part of the life of the local community.
I love picigin and we also love doing yoga. Yoga on Sustipan and yoga on the beach here. Running and doing yoga is what we really love.
Along with two brothers from France, Split is an increasingly common choice for life and work.
Toni Trivković Digital nomads from around the world. People call, looking for information. Are there co-working spaces in Split? Where we can meet locals? And what we decided in the association itself is, to here one person to help. With creating content so that these foreigners can integrate more quickly into the local community. And so that they could stay in the same community longer.
The state took care of it by introducing visas with special conditions for digital nomads.
Jan De Jong Currently, we are working with the ministry of interior and the ministry of tourism together on developing one website where all the information will be available so that digital nomads will know what is the requirement that they need to read in order to apply.
This will make it easier for travelling businessman to decide for our country.
Martina Nimac Kalcina Given that they are very grateful, given that they are very good guests. Both neat and responsible. I think it’s an extremely good opportunity to take advantage of and host such people. Visa applications should start in March.
Bootstrapping is one of the strongest forms of entrepreneurship, meaning start and proceed a business without external capitals. They will survive through very little money and no outside investments to build their business.
That makes the very difference between bootstrapped start-ups and fund-raised companies. Bootstrapped businesses expect to have slow and quiet growth, focusing on business models to offset the costs. On the other hand, companies involved with external funding or help will be expected to have a higher growth rate so that they could strategically meet the investor’s ROI.
Many of the successful companies had their beginnings as a bootstrapped company. Including,
Dell Computers
Facebook Inc.
Apple Inc.
Coca Cola Co.
In this article, I will write about bootstrapping in business, financing methods, stages and pros and cons of bootstrapping.
Bootstrapping Financing methods
Owner Financing: The use of personal income and savings.
Personal Debt: Credit card debt, personal loans
Sweat Equity: A party’s contribution to the company in the form of effort.
Minimize Operating Costs: Keep costs as low as possible.
Inventory Minimization: Requires a fast turnaround of inventory.
Subsidy Finance: Government cash payments or tax reductions.
Selling: Cash to run the business comes from sales.
Bootstrapping process
Early Stage The entrepreneur utilizes personal savings or borrowed or investment money from friends and family. Also, the founder mightberunning or working for other projects.
Customer and (or) Sales-Funded Stage In this stage, money from customers is used to keepthe business operating and, eventually, funds growth. Once expenses are met, growth will speed up.
Credit Stage In the credit stage, the entrepreneur must focus on the funding of specific activities, such as improving equipment, hiring staff, etc. At this stage, the company takes out loans or may even find venture capital, for expansion.
Companies Eligible for Bootstrapping
Early-stage companies They do not need a large amount of capital which will allow for flexibility for the business and time to grow.
Serial entrepreneur companies The founder has capital from the exit of previous companies they can use to invest could reap the benefits of bootstrapping
Advantages of Bootstrapping
Full control Founders will hold total control over the finances which allows themto maintain control over the organization’s cash flow. Equity is retained by the owner and can be redistributed at their discretion. This can ensure that the business is moving in the direction desired, according to the founders’ vision and cultural values, without any external influence, and when successful, keeping the profits for themselves.
Low barriers of entry Start with the founder’s own money means that super-efficiency is necessary. Solving problems without external funding means that bootstrappers have to become resourceful and develop a versatile skill set.
Focus on the business itself Raising external finance can be a very stressful and time-consuming task. By bootstrapping their company, founders can concentrate on the core aspects of the business such as sales and product. Additionally, due to the limited cash supply, it’s normal to have alternative options such as factoring, asset re-financing, and trade finance with bootstrapping.
Disadvantages of Bootstrapping
Personal liability – High risk of failure All financial risks pertaining to the business in question all fall on the owner’s shoulders. The owner is forced to put either their own or their family/friend’s investments in jeopardy in the event of the business failing. The founder needs to become adept at handling stressful situations that might crop up if you finance your company using debt to another person, such as family members and friends. Understanding what is expected and communicating this clearly to others can help you cope with the stress of the situation.
Limited cash flow Without the aid of occasional external sources of funding, entrepreneurs can find themselves unable to promote employees or even expand their businesses. A lack of money could possibly lead to a reduction in the quality of the service or product. One reason some bootstrapped companies are unsuccessful is due to the lack of revenue: Profit may not be sufficient to meet all costs.
Starting a business most often requires very long hours of work just to keep your business going, plus, usually, there is no stipend to go with this effort. All problems are yours, as hiring staff is not usually an option.
Bright side
Building your own financial foundations is a huge attraction to future investors. Investorsare much more confident when it comes to funding businesses that are already backed and have shown promise. Flaws can be corrected with growth, such as product and service. Therefore, perfection at the launch of the business is not a necessity.
Written by Philippe23 October 2021 
