Never compete on price alone – Part 1
September 3rd, 2010 // 4:35 pm @ Kwame Kuadey
For a bootstrapping business, competing on price alone can be a very expensive gamble, which usually does not pay off. Over the next couple of blog posts, I am going to explain why you should never compete on price alone, especially not when you are bootstrapping.
1. Your Business Will Not Last
Your business will not last if you compete on price alone. All it takes for your model to fall apart is for a new competitor to spring up offering the same product at a lower price. Usually, this happens if the competitor has lower cost or has the financial backing to sustain lower margins for a while.
And since you were not offering your customers any value beyond lower prices, once they find a cheaper place to buy the same product, they will abandon your product and go to the new, cheaper supplier. You may never get those customers back since you did not offer them anything beyond lower prices to begin with.
I have made a conscious decision at GiftCardRescue.com to never compete on price, and that has paid off. That is not to say we are not competitive with our pricing but we are not out to win the pricing trophy. Have we lost some business as a result? Absolutely. But we want customers that appreciate what we offer as a business, which is providing outstanding customer service. Our goal is to become the Zappos of the secondary gift card market and we want our customers to know us for that.
And even though we don’t have the very best discounts, those who buy from us more often than not come back for more, which is why 80% of our business is repeat business. We like to believe it’s partly because we provide the best service.
Check out Part 2 of this series where I talk about the paranoid life of those who compete on price alone.
Category : Blog &Featured Work
Random Thoughts: Counting our blessings
August 29th, 2010 // 6:50 pm @ Kwame Kuadey
I was on my way to a meeting last week in Baltimore when I saw this building under construction for what will be a children’s hospice.
I was really bothered by the whole idea of a children’s hospice. It is such a difficult issue to contemplate, both for the children involved and their parents. My heart goes out to the kids. I also commend the courageous people who volunteer at such facilities. It takes really special people to work there.
Made me thank God for my many blessings.
Category : Blog &Random Thoughts
Definition of Bootstrapping a Business
July 28th, 2010 // 8:43 pm @ Kwame Kuadey
This blog is about how to bootstrap your start-up to profitability. I will be sharing tips on how I bootstrapped my first company, GiftCardRescue.com to a successful million dollar business. But, before I go any further, it will be helpful to define what I mean by bootstrapping a start-up.
The best definition of bootstrapping I found is from Wikipedia, which says “Bootstrapping in Business is to start a business without external help/capital. Startups that bootstrap their business fund development of their company through internal cash flow and are cautious with their expenses. Generally at the start of a venture a small amount of money will be set aside for the bootstrap process.”
In other words, bootstrapping involves starting the business without venture or angel funding. The obvious question is why would someone choose to take the hard road (bootstrapping with personal funds) when there is an easier road (venture/angel funding) available to them? Well, the truth is that the “easier road” is actually the least traveled for most start-ups. That is because for the longest time, a myth has been perpetuated that all you need to do is to come up with the next great idea and venture capitalists will be tripping over themselves to get a piece of the action. In reality, less than 5% of venture money goes to seed-stage startups. Which means for 95% of start-ups, seed funding comes from personal resources (in my case, credit cards) or borrowing/gifts from friends and family.
The irony is that venture funding usually follows later, after you have successfully proven the model and built something of value (generating revenue, and maybe profitable, or close to profitability). So, if we can agree that the probability of a start-up getting venture or angel funding as seed capital is next to impossible, then the question becomes, how do you maximize the funds you are able to raise from personal resources or borrow from friends and family to start your business? The goal is to get to the point where the business is generating enough cash flow to fund operations, and eventually lead to profitability. That is where bootstrapping comes in.
Over the next couple of posts, I will discuss the benefits of bootstrapping to the entrepreneur, after which I will introduce in broad terms, my bootstrapping ideas, which will form the basis of this blog. Stay tuned!
Category : Blog &Featured Work
Random Thoughts – Things we take for granted
July 22nd, 2010 // 9:36 am @ Kwame Kuadey
Growing up in Ghana, electricity blackouts were common. One could go days without power and over time, it became normal. Power was rationed because nearly all of Ghana’s power supply came from hydro electric, and when there was severe drought, the water level at the Akosombo Dam would fall, reducing the amount of electricity generated. You will think the Ghana government, knowing the negative impact on businesses of unreliable power supply would have come up with a solution. But that is not the case. Even in 2010, Ghana is still faced with rolling blackouts. Many Ghanaians have become experts at reading the water level at the dam (pictured below).
I was listening to PRI’s “The World” on NPR yesterday and was surprised to learn that Venezuela, with its oil resources, is facing the same problem of rolling blackouts. Like Ghana, it turns out Venezuela gets 70% of its electricity from Hydro power and a prolonged drought in that country has led to power rationing.
My sister lives in Ghana and owns a Fashion Design business and I have heard her complain several times about how the power ration is affecting her business. I can imagine what other small businesses in Ghana and Venezuela are going through. For a third world country where jobs are scarce and unemployment is high, the least the government can do to promote growth is figure out how to provide dependable power supply. I am sure hotels in places like Accra, Ghana have back-up generators, so tourists are generally shielded from this, but those who venture outside Accra are definitely going to see how frustrating power rationing can be.
It just makes me realize how blessed I am to be doing business in a country where I don’t have to worry about power supply. The things we take for granted 
Category : Random Thoughts
Enter to Win Amazing Prizes from GiftCardRescue.com
July 20th, 2010 // 12:13 pm @ Kwame Kuadey
Become a fan of GiftCardRescue.com on Facebook and enter to win a $100 Walmart gift card, a Kodak Digital Camera or an Asus Netbook. No purchase necessary. For contest rules, visit the Gift Card Rescue blog for details. Enter to win now, you have nothing to lose
Category : Blog &Featured Work
Fun Side Project – Ghana Movie Channel
July 16th, 2010 // 8:49 pm @ Kwame Kuadey
One of the fun side projects I have been working on over the last couple of months is the GhanaMovieChannel.tv, with the goal of creating a fun and engaging website where people can view online videos about various topics on Ghana, including Highlife Music, Travel, Documentaries, Gospel, Black Stars, Funny Ghana Videos and more.
Category : Blog
Leveraging Available Content
July 16th, 2010 // 8:26 pm @ Kwame Kuadey
One of the fun side projects I am working on is the GhanaMovieChannel.tv. Our goal is to create a fun and engaging site that aggregates online videos related to various topics about Ghana, including Ghana Movies, Ghana Hiplife Music, Funny Ghana Videos, and Ghana Radio Online.
As a rule of thumb, I only spend a maximum of 20% of my time on side projects. I have had to work hard to stick to this rule since side projects have a tendency to take your focus away from your main business. I will provide further updates as we make progress on the site, so stay tuned.
Category : Blog
Reflecting on Perseverance in Business
July 16th, 2010 // 8:23 am @ Kwame Kuadey
It is no news to say that perseverance is a key part of whether you succeed in business or not. The entrepreneurship journey is often a lonely experience, and you always have to find a way to lift your spirit and focus on execution. This is particularly important when you are bootstrapping your business. Bootstrapping success comes only through determination and perseverance.
A good example of how perseverance can pay off is reflected in the success GiftCardRescue has had with our Bulk Gift Cards program. Our goal was to become the #1 buyer of Bulk Gift Cards/Wholesale Gift Cards. Getting bulk suppliers to trust our brand and sell gift cards to us was not going to be an easy task. But through clever marketing, relentless focus on customer service and staying on top of changing trends in the marketplace, we have grown our bulk supplier base to the point where it now accounts for two-thirds of our revenue.
So, the point here is that sometimes, you may not have all the answers to a particular problem when you initially launch, but as you persevere and focus on what your customers want, you will lead yourself to a workable solution.
Category : Blog
The Art of Bootstrapping to Success
June 30th, 2010 // 10:22 pm @ Kwame Kuadey
In case you are wondering what I plan to post on this blog, the answer is simple – To share the bootstrapping wisdom I have accumulated over the last two and half years of building GiftCardRescue.com from nothing, into a million dollar company, all without any outside funding. Stay tuned. Photo by.
Category : Blog