Bootstrapping Your Company Comes With Challenges

Bill Keleher cofounded what is now known as Kennebec River Biosciences in 1996 when he was in his late 20s. He’s built the Richmond-based company, which provides laboratory services and health products to aquaculture companies, to a point where it currently has 15 employees and customers from Down East Maine to Panama to Vietnam.

But the company’s trajectory has not been without its growing pains. Over the past 20 years, he’s had his share of missteps and challenges. In the early years, Keleher and his original partner, Deborah Bouchard, began to butt heads on strategy and disagreed about the best path to grow the business. The impasse was challenging and created some disgruntlement, which Keleher discusses in the interview, and led to him buying her out in 2005.

Keleher took on a new partner, an employee named Cem Giray, and they’ve continued to bootstrap the business, with help from the Maine Technology Institute grants. The company’s original offerings were all service-oriented, but it has made some major investments in the last several years and is now also manufacturing vaccines and other products for its fish farm customers.

Keleher said the company is experiencing “double-digit” growth this year due to a few things, including growth in the aquaculture industry and the fact the company received the go-ahead from federal regulators last year to develop a facility for the production of autogenous vaccines for fish—an approval that greatly expanded its ability to design and provide custom, strain-specific vaccines to clients around the globe.

“With this capability, year over year revenue has increased substantially and improved our profitability,” he said.

In the interview, Keleher addresses early challenges that led to him buying out his partner, what happened when consolidation in the aquaculture industry led to a 40 percent drop in his revenue, and why he’s never sought investors to help grow his business.

What was your first entrepreneurial experience?

When I was a teenager, I would raise earthworms in my parent’s basement. At the height of operations, I had over 10,000 worms which I would wholesale to bait shops. In my best year, I think I made close to $1,000.

I think entrepreneurship is sort of not being afraid of the system, whatever system that might be. For example, the last time we sold our house, we did it ourselves. You talk to people and tell them you sold your own house and they’re like, “What? How?” They’re so afraid of the system and the fact it’s an unknown and they don’t know how to do it. It’s usually not as hard as you think it is.

You founded Kennebec River Biosciences when you were still in your 20s. Did you feel prepared?

At the time, I did feel like I was mostly prepared, but thinking back on it now, I was not as prepared as I could have been. That said, I don’t think you can ever know everything you need to. You have to be confident and be willing to work outside your comfort zone. You most certainly will make mistakes, but in the process you learn a lot about yourself as well as running your business.

What’s been the largest challenge you’ve faced in growing the company?

There came a point where my original business partner and I had differing views on how to achieve growth and how much risk we were both willing to take to make that happen. I think I was willing to take a lot more risk. I think what happened is that I got disgruntled to a point where maybe I was willing to walk away from it all.

How did you overcome that challenge?

The situation caused some disgruntlement and that built some walls. I was on the fence. Do I just walk or do I try to buy it out? Ultimately, I was able to structure a buy-out, but it meant taking on more debt, which I did not want to do at the time. In retrospect, I think I grew a lot from that and would have done it differently and would have had a more frank discussion. Unfortunately, the buy-out occurred at the same time there was a round of consolidation within the North American aquaculture industry leading to an approximate 40 percent reduction in our revenue. That was really tough.

What mistakes have you made and what did you learn from them?

The biggest mistake was not making adjustments to our work force more quickly when there was that significant down turn in revenue. When you are a small company you are much like a family and every cut is personal. It can be quite sobering at times and if you were to run out of cash that would put the viability of the entire company at risk. In the end, you have to be honest and upfront about what is going on and why a change needs to be made. In retrospect, I would have done it quicker because it prolonged the pain and it wasn’t good. Those types of conversations are difficult, but you have to do it because if you don’t and you run out of money, everyone loses their job.

Have there been personal challenges to cofounding the company?

We started the company when I was in my late twenties. The days were long, but I really had no other commitments other then making sure the business succeeded. The challenge came as my personal life competed with my business life. Marriage and children, while complicating things (in a good way), also keeps you grounded.

What has surprised you about building a company?

I think the ability to come up with an idea, developing a plan, and then making it happen. You really do have the ability to create something and then seeing how it does in the marketplace. This is what makes me want to go to work every day.

Talk about your decision to bootstrap the company.

The company started with a $45,000 loan from Key Bank, which was also backed by the SBA. We had been turned down by the first two banks, but Key was able to get it approved, but required $2,500 from each owner.

Not selling equity has been a deliberate decision and reflects our long-term approach to building our business. We have been able to fund growth through bootstrapping, but have taken on debt when an infusion of capital was needed. As an aquaculture-focused biotech company, we have also been able to tap programs through the Maine Technology Institute and the federal government (i.e., SBIR) which have allowed us to develop new product lines and fund our research and development.

How does a founder knows whether it’s a good idea to take VC money or not?

My own view is that you should be in as strong a position as possible before considering VC money. At the end of the day, it depends on the type of growth you are trying to attain. The steeper the growth curve, the more funds you will need to realize it.

Two pieces of advice to early-stage business owners?

You learn the most when things don’t go according to plans or outright fail. The second piece of advice is to not sweat the small stuff – focus on what is important.

Read more about startup advancements in Portland, Maine at TechCo

Editor’s Note: Founder Forum, a weekly interview with a startup founder in Maine, is sponsored by the Maine Technology Institute

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Written by:
Whit Richardson is a former daily newspaper journalist in Portland, Maine, who has covered business and entrepreneurship for the past decade. He's founder of Maine Startups Insider and currently editor-in-chief of 4Front Publishing, an online news startup covering the nascent legal cannabis industry.
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