(I posted this yesterday on Small Business Trends. I’m reposting here because this is my main blog, and it belongs here too. Tim )

Last week a group of students interviewed me, as part of a class project, looking for secrets and keys to success. They were asking me because after 22 years of bootstrapping, my wife Vange and I own a business that has 45 employees now, multimillion dollar sales, market leadership in its segment, no outside investors, and no debt. And a second generation is running it now.

Frankly, during that interview I felt bad for not having better answers. Like the classic cobbler’s children example, I analyze lots of other businesses, but not so much my own. As I stumbled through my answers, most of what I was saying sounded trite and self serving, like “giving value to customers” and “treating employees fairly,” things that everybody always says.

I wasn’t happy with platitudes and generalizations, so I went home that day and talked to Vange about it. Together, we came up with these 10 lessons.

And it’s important to us that we’re not saying our way is the right way to do anything in business; all businesses are unique, and what we did might not apply to anybody else. But it worked for us.

1. We made lots of mistakes.

Not that we liked it. At one point, about midway through this journey, Vange looked at me and said: “I’m sick of learning by experience. Let’s just do things right.” And we tried, but we still made lots of mistakes. We’d fuss about them, analyze them, label them and categorize them and save them somewhere to be referred to as necessary. You put them away where you can find them in your mind when you need them again.

2. We built it around ourselves.

Our business was and is a reflection of us, what we like to do, what we do well. It didn’t come off of a list of hot businesses.

3. We offered something other people wanted …

… and in many cases needed, even more than wanted. You don’t just follow your passion unless your passion produces something other people will pay for. In our case it was business planning software.

4. We planned.

We kept a business plan alive and at our fingertips, never finishing it, often changing it, never forgetting it.

5. We spent our own money. We never spent money we didn’t have.

We hate debt. We never got into debt on purpose, and we didn’t go looking for other people’s money until we didn’t need it (in 2000 we took in a minority investment from Silicon Valley venture capitalists; we bought them out again in 2002). We never purposely spent money we didn’t have to make money. (And in this one I have to admit: that was the theory, at least, but not always the practice. We did have three mortgages at one point, and $65,000 in credit card debt at another. Do as we say, not as we did.)

6. We used service revenues to invest in products.

In the formative years, we lived on about half of what I collected as fees for business plan consulting, and invested the other half on the product business.

7. We minded cash flow first, before growth.

This was critical, and we always understood it, and we were always on the same page. See lesson number 5, above. We rejected ways we might have spurred growth by spending first to generate sales later.

8. We put growth ahead of profits.

Profitability wasn’t really the goal. We traded profits for growth, investing in product quality and branding and marketing, when possible, although always as long as the cash flow came first.

9. We hired people slowly and carefully.

We did everything ourselves in the beginning, then hired people to take tasks off of our plate. We hired a bookkeeper who gave us back the time we spent bookkeeping. A technical support person gave us back the time we spent on the phone explaining software products to customers. And so on.

10. We did for employees’ families as we did for ourselves.

Family members — not just our own family, but employee family members too — have always been welcome as long as they’re qualified and they do the work. At different times, aside from our own family members, we’ve had two brother-sister combinations, an aunt and her niece, father and daughter, and husband and wife.

And in conclusion…

Bootstrapping is underrated. It took us longer than it might have, but after having reached critical mass, it’s really good to own our own business outright. It might have taken longer, and maybe it was harder — although who knows if we could have done it with investors as partners — but it seems like a good ending.

Family business is underrated. There are some special problems, but there are also special advantages too.

Joanna Van Vleck has revamped her business plan at least half a dozen times, made a new take on an old idea work sensationally, and is riding triple-digit growth during this recession.

So, when she humbly offers 10 lessons for startups, it’s worth listening.

Joanna is founder and CEO of the Trunk Club, which is a network of fashion experts helping men buy clothes in a new-world model using Skype video to give clients the online convenience with personal service. She’s 25 years old.

She spoke to my start-your-business class at the University of Oregon the other day. I say “humbly” for real, because she started her talk apologizing for presuming to offer lessons. But she had her list ready. With slides.

1. Have a plan

Interesting, because Joanna has changed her plan several times, wholesale revamped her plan, but she always had one. She switches the world “vision” for “plan” sometimes; meaning that she goes in and out of granularity. Recognizing that plans change doesn’t mean not having them. Expect it to change.

2. Find out what’s important to you.

Plans may change but you want to keep your eye on what’s most important to you. Joanna wanted to do it fast, and well. She loves the style business but she doesn’t aim for a lifestyle forever business. She wants it to grow. She thinks about when and how to exit.

3. You have a lot of time, they have a little.

Joanna said:

In the beginning, you will want to connect with the “been there, done that” people. Remember this: you have a lot of time. They have a little. Respect that. If you tell them you will need 15 minutes of their time, make sure you only use 15 minutes. It will make them respect you more as a young entrepreneur.

4. You don’t always need experience in that industry.

This is interesting to me, because it contradicts my instinct, and a lot of generally accepted wisdom. But she did it, so she can talk about it. She wanted style and clothing, but she didn’t work first in clothing retail, and didn’t have a partner who did. She just dove into it, learned on the fly, and changed the model as she discovered what worked.

5. Start Young

She’s 25 years old. She came out of college and built this business. She could talk about the problems of dealing with people who didn’t take her seriously because of her age. Instead, she says:

Being young is very advantageous. List the benefits of being young and risking it all. If all else fails, I will get a real job at 28.

No family, no kids needing shoes, no mortgage; easier to get by. Less underlying risk. This is the time of life to take these chances.

6. Fail often, and fail fast.

Joanna started with one business model, found it didn’t work, revised it, then found that didn’t work, and revised that one. She knows what this familiar-sounding fail-fast idea means. But she adds:

Personally, I do not believe in failing. I believe in learning from things that don’t work, or don’t work the way you intended them to. The sooner you fail, the sooner you will succeed.

7. Ask for help, respectfully

I know from experience — she was a student in my start-your-business class four years ago — that Joanna does this right.

8. Replace “selling” with “promoting.”

It is never comfortable to think of ourselves as a sales person. In fact, I never had official sales training. What I have learned is that you become a lot more effective when you think of it as promoting.

9. Are they all green lights?

I love this:

A wise mentor of mine once told me that if you wait to leave your driveway until all the lights on your route are green, you will never leave. You must jump and build your wings on the way. You will hit red lights. They are momentary and are times to stop, adjust and get ready to go again. Learn to embrace the red lights.

What a great example!

10. Never stop learning or listening.

No argument there. Why do I think it’s ironic that she’s only 25 as she says this? But then, before I get too uppity with my gray hair and all, she’s the one who’s got the business growth of close to 300% during a recession.

Billionaire Mark Cuban announced his own stimulus plan earlier this week. It's sheer genius.

Here's how he describes it in his blog post, The Mark Cuban stimulus plan:

Rather than trying to be a Venture Capitalist, I was looking for an idea that hopefully could inspire people to create businesses that could quickly become self funding. Businesses that just needed a jump start to get the ball rolling and create jobs. I'm a big believer that entrepreneurs will lead us out of this mess. I just needed a way to help.

Then he lists the rules:

1. It can be an existing business or a start up.
2. It can not be a business that generates any revenue from advertising. Why ? Because I want this to be a business where you sell something and get paid for it. That's the only way to get and stay profitable in such a short period of time.

So far, so good. But now pay attention to these next four rules, as a group:

3. It MUST BE CASH FLOW BREAK EVEN within 60 days
4. It must be profitable within 90 days.
5. Funding will be on a monthly basis. If you don't make your numbers, the funding stops.
6. You must demonstrate as part of your plan that you sell your product or service for more than what it costs you to produce, fully encumbered.

Do you see it with those four rules? He's promising to fund companies only if they don't really need funding; only if they have real value; only if they're perfectly set up for bootstrapping. It's sheer genius. I don't think he's being cynical, or deceptive; I think he's making a point. But we go on…

7. Everyone must work. The organization is completely flat. There are no employees reporting to managers. There is the founder/owners and everyone else.
8. You must post your business plan here, or you can post it on slideshare.com, scribd.com or Google docs, all completely public for anyone to see and/or download.
9. I make no promises that if your business is profitable, that I will invest more money. Once you get the initial funding you are on your own.
10. I will make no promises that I will be available to offer help. If I want to, I will. If not, I won't.
11. If you do get money, it goes into a bank that I specify, and I have the ability to watch the funds flow and the opportunity to require that I cosign any outflows.
12. In your business plan, make sure to specify how much equity I will receive or how I will get a return on my money.
13. No multi-level marketing programs (added 2/10/09 1pm).

So there you have it. This is somebody who's made it, multi-billionaire, showing a whole lot of common sense. He calls it "open source funding," which is apparently a reference to making the business plan transparent.

Not, by the way, that the country doesn't need the full formal stimulus plan as well, for about 300-some million reasons … but let's hear it for old fashioned ideas like making something people need, selling it for more than it costs to make, and minding the cash flow.

I posted my biggest obstacle here Saturday: When I started my business in 1983, needing the money was my biggest obstacle. I had a good job, which I left on purpose; and mine was the only income. And we had heavy debts left over from business school, and four kids, 10 years to one year old.

There was also a biggest boost to starting a business: My wife said "go for it; you can do it." And she meant it. At several key points along the way, she made it clear that we would take the risk together. There was never the threat of "I told you so, why did you leave a good job, you idiot!" What she said was "if you fail, we’ll fail together, and then we’ll figure it out. We’ll be okay."

If you’re starting a business and living a relationship, then think about that one. Call it a "make or break" factor.

Take a good healthy business, with good growth potential, defensible, funding itself from initial sales, or consulting, or maybe just squeezing founders’ assets and combining that with hard work.

Let’s just say this business doesn’t need outside investment to grow. Or maybe its owners don’t want more owners (as in bosses, because investors are, one way or another, bosses).

"But that’s just a lifestyle business," the professor — or consultant, or business journalist — says, often with a slight hint of a sneer. It happens a lot. Business schools teach entrepreneurship as new business, high growth, professional investment (aka venture capital) and exit strategies. Many opinion leaders, consultants, and journalists associate entrepreneurship with the process of developing a business plan, pitching to investors, and working with the investment  offering. 

My problem with that bias is that the healthy successful bootstrapped business is one of the best options there is, when it works. Don’t sneer at it. Let’s give this option its due.