Page 10 - The Bootstrapper Bible

ChangeThis money marketing lousy versions of Windows. How could it afford to do this? By raising money from the stock market at very low cost and hanging in. Big companies have access to capital that a little guy canʼt hope to match. A hot company like Yahoo! is able to raise money from the stock market with no personal guarantees, no interest payments, no downside risk. And it can raise a lot. More established companies can issue bonds or get lines of credit for billions of dollars. The banks and investors that back these companies arenʼt looking for a monthly or even a yearly return on their investment. Instead, theyʼre focusing on building profits a de- cade from now. A bootstrapper could never afford to compete with this approach. If a market can be bought with cash, a big company will do it. 3 BRAND EQUITY. Why would you be more likely to try a new line of clothes from Nike than from Joeʼs Sporting Goods Store? Because Nike has invested billions of dollars in building a brand name, and youʼve learned to trust that name. Nike can leverage its name when introducing new products. Donʼt underestimate the power of the brand! Financial World magazine estimates that the Marlboro name and logo are worth more than $2 billion. Any tobacco manufacturer can make a similar cigarette. But only Phillip Morris gets to extract the profit that comes from having more than 50 percent market share. If the consumer of the product is likely to buy from an established brand name, the big company has a huge advantage. 4 CUSTOMER RELATIONSHIPS. Especially for companies that sell in the business-to-busi- ness world, access to customers is a tremendous advantage. Time Warner collects nearly one-third of all the advertising dollars spent on magazines in this country every year. | iss. 6.01 | i | U | X | + | h 10/103 f