One year ago, this month, I took that precarious step toward opening my own business. I had the skills, the knowledge, and the experience that potential customers needed, but as any business owner can tell you, that alone is not enough to make the transition from employee to owner, much less, a successful business. Over the following months, I discovered five vital realities that I will share with you now, so that my fellow entrepreneurs and would-be entrepreneurs out there may benefit from my own stumbling blocks.
1. PRICE ACCORDINGLY
How you price your goods or services depends highly upon what you are offering to the customer. In my case, as a consultant, I started out pricing hourly. That failed. Then I started pricing out by job type. That failed too. The reason is clear to me now, but wasn’t at the time. If you are a consultant, you must price on either a project-basis or a subscription-basis. Otherwise, you are merely a commodity. A free-lance employee (or a temp agency if you have multiple employees). And as a commodity, you are subject to being undercut by people who will do the same work for less. As a consultant, you must consider your service to be fee-based, not an hourly-wage. I lost months of time, and customers, due to not knowing this vital rule.
2. NARROW YOUR NICHE
When I first started out, I tried to be everything to everyone, in the hopes that I would get more customers that way. As I had a fairly broad skill-set, I offered everything from data analysis, to setting up CMS systems, to Six Sigma projects, and anything else, even fixing Excel spreadsheets. That failed. It wasn’t until my niche narrowed, more and more, that I really started taking off, customer-wise. The reason is because when you try to be everything to everyone, you are one voice in a stadium full of people shouting, because you are competing against every single person who does what you do, often for less money than you charge. When you narrow your offerings to a more specific niche, you narrow your competition as well. You become one voice in a room full of people instead of a stadium. If you can narrow it further, your voice becomes more and more distinct, with less chatter around you. That is one of the reasons I eventually focused almost exclusively on increasing sales for startups and SMBs via digital marketing, with far greater success.
3. OFFER A SOLUTION
Another huge mistake I originally made was assuming that just because I was really good at what I did, and I saw the need for it, the potential of it, that my prospective customers would too. I couldn’t have been more wrong if I’d assumed they hated money, because your customers aren’t looking for another way to spend their money, they are looking for a solution to a problem they have that they are willing to spend money to fix. This is an absolutely critical point of realization that very few entrepreneurs ever realize. If you are selling widgets, your customers aren’t buying your code of ethics, your outstanding customer service, or the fact that you make a wonderful widget. Widget-buying customers are doing so because they have a problem that only a widget can solve, and your widget needs to specifically solve that problem. If you are a widget-repair service, they aren’t buying your years of experience, or your great attitude, or the fact you’re a family owned business. They have a broken widget that needs fixing, and they want someone to fix it correctly, the first time. Understanding this subtle, but crucial distinction is the difference between making the sale, and just making noise. This was the other reason I chose to focus on increasing sales for startups and SMBs via digital marketing; the problem my customers had was lack of sales. My solution was to get them more sales. This turned my business from just being a hobby into a reality.
4. EXPECT FAMINE/FLOOD
A friend of mine who owns a very successful custom commercial truck business told me when I first started out to expect nothing to happen for a long time, then boom, everything happens at once! Then it goes back to nothing for a while, and then boom, again. I refer to it as Famine or Flood, rather than feast or famine, because if you aren’t prepared for a sudden influx of customers, you can drown in the workload. The long and short of it is: don’t be discouraged by a lack of interest, and always be ready for more work than you can handle. That said, if you are experiencing a famine in your business, you may want to do a root-cause analysis to find out why. Eventually, your business must stabilize into a predictable enough cycle that you can prepare both financially, and resourcefully, for both.
5. GET EXPERT HELP
This was, without a doubt, my hardest reality to accept. In your business, there will be at least one, if not multiple aspects of business that you are not good enough at, and in some cases, assume you never will be. For me, it was sales, which is ironic, considering my eventual niche. For my entire career as an employee to someone else, I hated salespeople, and proudly proclaimed “I’m not a salesperson, I’m a (fill in the blank),” because my assumption was that salespeople were basically liars who would say anything to get the sale, then expect others to fulfill those unrealistic promises later on. However, the stone-cold truth is that if you plan to be an entrepreneur, you absolutely must be capable of making a sale. This means either learning how to do it yourself, or hiring other experts to do it for you, because without a sale, there is no business—you just have an expensive hobby. My solution to this was to swallow my pride and go against everything I thought I believed, and pay my last couple of thousand dollars to learn how to sell my services as a consultant, learning from the best. This turned out to be the best investment I ever made. It enabled me to not only appreciate just how vital sales are to a business, but also to give myself the confidence and power to make a sale, instead of just relying on Hope Marketing. That is to say, once I learned how to sell, I stopped sitting by the phone each day, hoping it would ring, and instead went on to start signing those first few vital clients.
Brandon Safford is the founder and owner of Small Business Analytics of Texas, where we increase sales to startups and SMBs through digital marketing, using a combination of data analysis, web-design, and process improvement.