Business Resources

Recently I wrote a piece about how to get The First Five Customers, which are so critical for a B2B business.  One of the main issues addressed in that piece was the issue of the perceived risk the customer has in choosing you over their alternatives (including doing nothing!).

This issue of overcoming a customer’s risk aversion to your product or service is not confined to B2B, B2C companies encounter it all the time.  In fact for new offerings of all shapes and sizes, customers generally resist change for a variety of reasons, and most of the time your biggest objection will be “I’m just worried it won’t work out as you say it will.  How can I trust you?”  This hesitation is a sales disaster, even if they are warm to your product or server, they won’t buy because they’ve got this nagging feeling in the back of their mind telling them to wait.  Not to say “no,” but just to postpone the decision.

I hate it when that happens.

Offer them (free) insurance

Whenever possible, you’ll have the most success if you offer to take the risk off their hands.  Your new offering introduces a lot of uncertainty for them – if you can remove it all you’ll have a lot more buyers a lot sooner.  The form of this insurance can take many forms depending on the type of customers you have, the perceived risks, and a few other issues, but here are some examples.

• Satisfaction guarantee – if the customer is worried they might have remorse in 2 weeks, offer to take it back if they don’t love it.
• Revenue sharing instead of fixed pricing – if the customer is worried you can’t really help them sell more, offer to share in the increased sales you’re sure they’re going to receive.
• Fixed pricing instead of revenue sharing – if the customer is concerned that you’re taking too big a chunk of their prospective business away, let them pay a flat fee and feel unencumbered.
• Split cost savings with them – if your service saves them money over what they’re doing today, offer to implement it and split the savings with them.
• Offer a trial period – maybe they just need to play with the product for a few days or weeks before they can feel really comfortable purchasing it.
• Offer to uninstall/remove it for free – paying for return shipping, or removal for free is a sure way to send the message that you really believe they’re making a good decision.

When I make these suggestions people will sometimes comment, “I’m not sure I can afford to take on those risks.”  This is an interesting point.  If you’re not sure you can afford to take on those risks, then you have a bigger problem than you think, your customers really should be worried about buying from you!  After all the marketing spin and sales tactics is that single choice for the customer to choose you.  At that moment you have to ask yourself, if you’re not willing to take the risk, why should they?

About Chris Harris

For 13 years Chris Harris has been successfully developing technology solutions and creating winning business strategies for both start-up and brand-name companies.  Chris co-founded Inventure Global, a San Diego headquartered IT consulting firm with offices and programmers in India offering sophisticated IT and technology planning, design, and implementation services for new and growing businesses looking for experienced talent and intelligent support. Inventure Global also maintains the New Venture Outsourcing Blog.

There’s a lot of advice out there that goes against the grain when it comes to what you’re good at.  Most people will tell you the only way to get something done right is to do it yourself, but I think there’s some serious potential to waste time if you’re not hiring the best people for a job.  If you’re the founder of your startup, chances are you’ll probably have to do a little bit of everything, especially in the beginning, but you shouldn’t be wasting time with stuff that you’re not brilliant at doing.

Some people may get nervous that their position in the startup becomes less important if they’re not the best person for a certain job.  In my case, I always want to be the best designer and user interface person around.  I confidently go around telling everyone that “I’m the best in the world,” even though it may not technically be true (according to me it is), I have always had a difficult time giving the reigns to someone else.  I usually do the sales work, the management work, the accounting, and about everything else under the sun.  But recently I’ve learned how painful it is to give up some of these things.

Even when it comes to your startup, letting go can feel extremely weird.  But let’s face it.  Your job as a founder is going to primarily be in sales, and possibly one other thing that you’re really good at (maybe it’s programming, or server load balancing, or if you’re me, writing brilliant blogs that receive raving reviews).  If someone else can sell your startup as well as you can, then you might have a cause for concern.  Some of my friends in their startups will complain, “I’m the only person in this startup that cares more than anyone else, why can’t everyone just be as excited as me?”

The reason nobody else is excited is because it’s not their idea.  They don’t see the same vision or dream that you do, and they may have different intentions than you do.  But that’s not always a bad thing.  Sure you can motivate your team by divulging in how great their vested options will be in time, or how much they’ll contribute to a great effort, but beyond that, you’re going to need to stick to what you do best.

Everyone has their own management style, but I’ve found with newer companies that the co-founders will micro manage since they’re not used to letting other people take control.  I can say first-hand that micro management is one of my least favorable styles since I’ve been on the receiving end.  It stifles productivity and has a tendency to take a toll on the motivation factor.  The effect is that it feels like every employee is being parented in the startup.

I’ve been reading The Harvard Business Review on Entrepreneurship, and their suggestion is to implement systems and controls to evaluate the results and milestones, as opposed to the actual productivity and how jobs are done.  I’ll usually tell my team “I don’t care how you get this job done, and any decision under $200 can be made without me, but just make sure the client is happy and we deliver on time.”  Other than that, I don’t care about details since the people I’m working with are extremely good at what they do.  Donald Trump says to hire people and not trust them, which is fine if that’s how you want to approach it, but you’re never going to be able to have a say in 100% of the decisions made in your startup.

Giving up control over your startup is painful.  But I think it’s also a good indication that it’s becoming a sustainable business, because the less you’re required to do, the more systemized a startup becomes.  If that’s happening, you may eventually be able to walk away for a while and things will still work right.  At least we hope.  It stems from emphasizing your strenghts and refusing to dwell on fixing your weaknesses.  The only way to do something right is to hire the best person to get it done for you.

About the Author

Jared Tame is an entrepreneur who has worked with hundreds of clients on website design, marketing, and sales, and currently works with StartPal providing high-quality, low-cost website design and e-commerce solutions to small businesses and startups.

Thomas Edison’s famous quote, “Genius is 1% inspiration, and 99% perspiration” is the embodiment of a startup.  There is often a lot said about the value of overcoming adversity – but I think the context of this advice is often too dramatic.  The real stresses of starting a new business come from the combination of chronic day to day failures and rejection combined with the acute disasters and fire drills.

Managing this stress is quite possible – but it’s important to know it’s there and that it’s unavoidable.  The part of starting a business most people romanticize usually ends up with a business plan on a cocktail napkin.  This is a really fun preamble to starting a business – and it’s basically stress free.  This is where you have your eureka moment and invent, connect, or otherwise discover the great idea that is the seed of your new business.

The rest of your life as an entrepreneur will be very different.

Great ideas aren’t enough

I’ve posted previously about How much value is in an idea?  This topic truly fascinates me.  Trying to tease out who should get what share of an innovative new business is always a challenge when the skill sets of the team members involved are so varied.

On thing everyone can agree on – just having a great idea or great technology/research/whatever is not a business.  A business is a very different beast – it is the sum total of activities which your customers are willing to pay for.  Great ideas and cool technology generally solve your problem not your customer’s problem!  You have to do more to combine that idea with hard work to package it in a way that it really satisfies your customers’ needs.

This is an important distinction and why it’s necessary to abandon the “cool technology” or “revolutionary research” pitches when you move into the mainstream from the early adopters.

The takeaway is this – if you have a great idea for a new business you’re not half way there – you’re just getting started.  This isn’t meant to discourage you – just to set your expectations that the road ahead is long.  Embrace the challenges and the journey!

You will fail many times before you succeed

The challenges of starting a new company are so numerous it’s cliché. The inevitability that you will fail many times, in many ways, before you succeed is often lost on people during the ups and downs of a new venture.  Again to quote Thomas Edison, he once quipped that he created over 1,000 failures before he created the successful incandescent electric light bulb.

You will always fail before you succeed for the same reason your keys are always in the last place you look.  You obviously won’t keep trying new things after you figure out the right answer!

Starting a business may be fun, but it’s not easy

No matter how many times you’ve done it – the stresses on your psyche are tremendous.  The failures have a way of sticking out in your mind and overshadowing the successes unless you remind yourself about them occasionally.

You’re effectively putting yourself on the line and success or failure becomes very personal very quickly.  Be patient, be humble, and keep after it.  You can get there through almost pure heart and force of will.  Look at Edison – he’s one of the greatest innovators in US history!

About Chris Harris

For 13 years Chris Harris has been successfully developing technology solutions and creating winning business strategies for both start-up and brand-name companies.  Chris co-founded Inventure Global, a San Diego headquartered IT consulting firm with offices and programmers in India offering sophisticated IT and technology planning, design, and implementation services for new and growing businesses looking for experienced talent and intelligent support. Inventure Global also maintains the New Venture Outsourcing Blog.

While starting a company is hard, starting a company when you’re married with children is even more difficult.  After having started and run five startup companies, I can tell you first hand that if you’re planning on running a company and a family at the same time, you had better know what you’re signing up for!

A Startup Requires an Emotional Investment
 
When little Sally falls down and gets a cut, you somehow feel just as much pain as she. Why do you think that is?  It’s because you are emotionally invested. That emotional investment is what makes a parent special and uniquely qualified to raise their children.
Successful startups have the founder emotionally invested in much the same way as a parent to their child. This is why they are often the only one in the business going the extra mile to see it succeed.

So why is this challenging?

Emotionally investing yourself in more than one thing can be draining. In retrospect, I’ve found myself emotionally withdrawn at times from the business (and coworkers) or my family because it can be so overwhelming.
 
When you find yourself in this situation, step back and focus on the little things.  Read your kids a book before bed or grab lunch with a coworker to discuss things that always seem to get pushed aside for more important issues and outright fires.

A Startup Runs your Life and your Schedule

Your son’s grades are slipping so you need to spend more time than usual with him in the evenings and weekends. At the same time sales for your startup are slumping and you need to spend more time than usual working on new products and a business development strategy.
 
With both demands competing for the same hour of time, which one do you give in to?  This is the million dollar question.  Far too often I’ve seen the family be the sacrificial lamb.

Being part of family and running a startup are both arguably 24/7 jobs meaning sacrifices will need to be made if both are undertaken. Make the wrong sacrifice at the wrong time and there may not be a way to repair the damage down the road.  That goes for your business and your family!

How do you mitigate the risk?

You have to be creative in your family life. Try simple things like grabbing lunch with your family or surprising the kids by being the one who picks them up from school. One thing that has worked well for me is the arrangement that work comes first Monday – Friday, but family comes first on the weekends.  No matter what you do, the one thing you can’t ignore is the fact that you have to make sure you schedule time with your family!

You Can’t Lose it all Because it isn’t yours to Lose

Property in a family is communal.  It isn’t yours to gamble away on a new business idea like you may have done back in your single days.  In addition, recovery from loss is much more difficult when you have a family because your options become more limited.   You can’t easily pick up and move to another city, you can’t easily move in with your parents or a friend, and you may not be able to take the job with the crazy hours just to pay the bills.

If you have to risk the physical assets in your life, make sure that you at least protect the intangible ones.  You can’t afford to lose (under any circumstances) your credit, your business relationships, and the respect of your staff.  You’ll need these during recovery and on the off chance you want to roll the dice again down the road.

Can you be a Successful Entrepreneur and have a Family?

Yes, I’ve lived it and it can be done. The point I’m trying to drive home is that if you don’t have a family yet, think hard about starting one while you are also starting a business. If you’re ultimate decision is to tackle both at the same time, hopefully you’ll at least know some of the challenges going into it so that you can better prepare.

Back in my high school days, I did a lot of sales work at Verizon, Sprint, Sears, Radioshack, Target, and my own service-driven startups. I’ve held the top sales positions at every job since I was 16.

As a sophomore in college, I started an entrepreneur group and recruited 15 students and a co-chair (chosen from over 100 applications) and established 2 partnerships with prominent groups on campus in under 2 months, all while freelancing, being a full-time student, and staying involved in student organizations. Most of the people I met and recruited were attracted initially from a simple Facebook message. I learned quickly that sales was more important than I ever imagined for getting things done.

I think sales is the name of the game when it comes to getting co-founders on board. Same thing goes for getting employees and investors. Unfortunately, most technical people suck at sales. If you want to know the trick behind getting really good people on board, it’s sales and dating (yeah, dating). That’s what it really comes down to. Your idea also matters, but we’ll assume that your idea and experience is good.

1. Establish the ground rules. Yeah, I know, nobody is forcing you to do it. But you won’t realize how much pain this saves you later down the road until you’ve experienced it. I’ve been on both sides of the startup fence: I’ve created and I’ve joined. Regardless of your situation, the earlier you negotiate, the better. It’s very difficult to negotiate terms and expectations later, and you fall into a mental trap of rationalizing: “well, I can just do it later, and it’ll be fine.” But it’s not like that. It gets worse and worse, the longer you let it drag out. Be sure to communicate your intentions, expectations, and rules to everyone joining your startup.
2. Read up on sales. I know, you read this article hoping that there was some quick and easy answer to your problem. But who said this was going to be easy? Take a week and study sales techniques, strategies, and the psychology underlying everything. Be ready to answer questions, deal with objections, provide incentives to act immediately, and close. Jeffrey Gitomer and Jeffrey J. Fox are personal favorites of mine. Incentives are the cornerstone of life, as quoted by many sales experts. Give every single person you meet a compelling reason to join right now.
3. Read up on dating. It sounds kind of strange, but dating involves a lot of social dynamics.  You could start with Erik von Markovik, and read up on the characteristic traits of demonstrations of higher and lower values.  Getting a co-founder, employees, and venture funding is kind of like a dating game.  I’m sure you’ve heard the comparison of VCs to girls; the similarities are surprisingly very strong between the two.  To this day, I still recruit friends to join startups of people I’ve worked with, and if you can get a grasp on the concepts that most people in the dating field teach, things will make more sense.
4. Make sure your heart is in your work. Ever wonder why some people hate their jobs? It’s probably because they hate what they’re doing and don’t believe in the product they’re selling. It’s pretty similar in sales. Have you ever tried to sell something to someone that you know doesn’t work? It’s hard to do (remember, I worked at Sprint), and you can’t force yourself to be convincing. People can usually tell if you’re not being honest with them. Unless every part of you thinks your product (or startup) is the best around, and you truly have something worth sharing, you’ll likely struggle.
5. Don’t come across as desperate. I should have put it as number one. You shouldn’t come across as desperate; that includes being over-enthusiastic about your idea. Try and approach a girl and say “Listen, I really need a girlfriend right now. Are you interested?” Try it out, and see how many girls sympathize for your desperation. On the contrary, to get their attention, don’t care whether they join or not. Don’t get emotional, and don’t get personal.  I always say you should do the same when you try to get funding, just because they’ve heard it so many times.
6. “No” doesn’t always mean No, but you’ll hear it a lot. You probably won’t be lucky enough to hear a lot of “No’s,” because most people don’t want to hurt your feelings. They’ll make up excuses, or they’ll find a nice way to sugar-coat it. Above all, if you don’t sell them on joining you, they’ll sell you on why they can’t join. Selling will always happen, just depends on who is sold.  Remember also that a “No” could be a way of someone saying “I’m not sold yet, so let’s talk about my objections.”
7. Go through your friends and family. Chances are, you may just be looking too far out, when you should consider people in your immediate network, like friends and family. People you can really trust. See if they know a friend, or if there’s one of your friends who fits your profile. If you’re at college, try to get involved in the organizations that interest you and compliment your startup.
8. Keep a positive attitude. I saw athletes in high school wearing shirts that said “Attitude is everything” and I didn’t really take it too seriously until I got into some sales work. If your attitude isn’t at its peak, your going to struggle. If you lose the internal optimism, you may start looking for less qualified people, and people may sense the frustration (which becomes as bad as desperation). It’s important to stay positive, and remember there’s almost always a “Yes” coming up, and from someone who’s more qualified.
9. Learn to read people. Many entrepreneurs are good at reading people, they’re just blinded by their desperation for getting someone to join. They know when people don’t get interested, and for some reason, they flip on this switch in their head that turns the entire pitch into an argument. It digresses into a debate of why a person should join, which does more harm than good. Don’t argue with someone about why they need to join. Dealing with objections is something entirely different. But learn when to give up and start looking elsewhere. When someone isn’t interested, don’t burn a bridge. Chances are, they have something else they’re more interested in now, and would prefer to join at a later time. Unless the world ends tomorrow, it should be ok (but in this day and age, you never know).
10. Incentives are the cornerstone of life.  As quoted by Steven Levitt (author of Freakonomics), incentives are going to be your way to getting things done.  Incentives I’ve heard for attracting a person from a steady job into a startup: a) you’ll have equity and there’s going to be a liquidity event expected, b) you’ll be part of the key decision-making process, c) you’ll learn much more because it’s a fast-paced environment, d) if it works out, you’ll be in a great position to start your own company, e) you’ll meet lots of cool people and investors, etc.

About the Author

Jared Tame is an entrepreneur who has worked with hundreds of clients on website design, marketing, and sales, and currently works with StartPal providing high-quality, low-cost website design and e-commerce solutions to small businesses and startups.