Bootstrapped startups and the shit I learn in therapy

At first, I thought I had carbon monoxide poisoning.

It was about 9 pm, and I was on the couch working on a blog post. As I stood up I almost fell over. It felt like I was drunk, but my head was clear… and I hadn’t had anything to drink in days.

As I walked to my room I stumbled into the doorway. I shook my head, trying to clear it. My heart began to race and I went outside hoping some clean air would fix the problem. My carbon monoxide alarm wasn’t going off, but I felt strange.

My hands and feet started tingling and I started having trouble breathing. The more I focused on it the worse it got.

It wasn’t carbon monoxide poisoning, or a heart attack. I was having a panic attack and I would eventually realize it wasn’t my first.

Quarter 1 was the best quarter we’ve ever had. But by the end, I called an emergency partner meeting. I’ve written before about the stress we’ve dealt with even as we improved our numbers as a company. In Quarter 1 it reached a tipping point.


Objective: Have the best Q1 ever without working ourselves to death!!!

Key Results:

❌Get 500 email signups for the Technical Hiring Handbook

❌Close 6 Roadmapping Sessions

✅Average less than 1 critical bug per month

✅At least 2 people make commits to each repo each month

✅Get 2 new qualified leads through content

Our goal at the beginning of the quarter was to have our best quarter ever ( ✅) without working ourselves to death ( ❌). We closed 5 Roadmapping Sessions, and got 67 email signups for the Technical Hiring Handbook before deciding to put it on the back-burner (just for the next few months).

We did do a better job of making sure no one was isolated on a project (that’s what the third key result is about) and we killed it with content. We also only had 2 critical bugs, but they were still stressful to deal with.

💵 Revenue

In the first quarter of 2019, we brought in $178,481 of revenue with $59,017 in profits. Our average profit margin was 32.5%. Our focus for 2019 is improving the profitability of the company, and we’re off to a great start. If we can keep it up, we’re planning on instituting a profit sharing program this year.

The increase in revenue is primarily because we were booked solid, but we also prepared our existing clients that we’re raising our rates in Q2. It’s been years since we raised rates for our existing clients (we’ve slowly been raising them for new clients). Our skills have improved over the years, and to continue to attract great talent we need to improve our top end revenue while maintaining healthy margins.


💰 Expenses

Our total expenses for Q1 were $119,464 or ~$40,000 per month. We increased my salary and Austin’s to something resembling market rates for the first time and paid taxes in March.

Spoiler alert: Our expenses are going to make another jump in Q2 as we hire two new team members and increase salaries again. Our goal is to stay within a 20-30% profit margin while making these increases.

Once we get to 3 months of expenses in the bank ($120k-$150k) we’ll consider reinvesting in salary increases or marketing projects.


👥 Revenue per client

In Quarter 1 we had 14 total clients. Our revenue per client was ~12,000 which is a really healthy number for us.

We’re handing off two projects in Q2 because they’re causing too much stress on our team. In both cases, we’re helping them find, vet and onboard a new team. This will naturally affect our revenue per client, but our goal is to maintain 5-8 clients per month.

Our projects are large by nature, which introduces risk. But 5-8 clients creates a good balance.

👨💻 Number of team members

For all of Q1, we had 6 team members, with 5 full time. We also had 1 kick ass financial advisor.

📊 Revenue per employee

Our revenue per full-time employee was $35,696 in Quarter 1 or ~11,898 per employee per month. We’re staying consistently in the $12k range, with goals of increasing this over time to $15k so we have space to increase salaries.

🧠 Mental health

We’ve talked before about the stress we’ve experienced when we’re running at full capacity. This quarter we decided we’d had enough.

We made the tough decision to transition away from two projects because they were causing too much stress on the team, and we felt they’d gotten to a point where a new team would be best for the future of the project.

We also decided to revamp our project management processes. We’re still working on figuring out exactly what this looks like, but the big picture ideas are:

  • Adjusting our billing so we’re time and materials, not a hybrid between time and fixed-rate
  • Investing more time in the documentation part of Roadmapping Sessions so we have clear expectations for projects up front
  • Setting healthy boundaries with clients and sticking to them
  • Documenting everything whether it’s processes, internal expectations, or something simple like client meetings
  • Focusing on enough, not more

Personally, I’m learning to say no and not to shy away from hard conversations.

Note: our clients are great. They’re working on incredible things and we’re proud of all of them. We take the decision to move on from a client very seriously, but sometimes it’s in our best interests and theirs.

💸 Salaries

Part of the way through Quarter 1 we increased my salary and Austin’s to $72,000 per year which was a huge milestone. Our roles are nebulous, so there’s no clearcut market rate, but this is the closest we’ve ever been. It’s relieved a lot of stress on both of us to have more breathing room financially.

  • Andrew Askins (Partner / CEO) - $72,000 year
  • Austin Price (Partner / Designer) - $72,000 per year
  • Kevin Hoffman (Lead Developer) - $72,000 per year
  • Garrett Vangilder (Developer) - $70,200 per year
  • Jerry Hardee (Developer) - $70,200 per year
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