Photo by Robert Couse-Baker

Photo by Robert Couse-Baker

I am writing a blog series on how to start a business.  If you’d like to review previous posts on this series, you can find them here:

So You Want to Start a Business
Revenues, Direct Costs and Expenses… Oh My!
Hourly Rates
How Can You Earn More Revenue without Spending More Time
Direct Costs and Gross Margin
Keep Expenses LOW!
Profit is NOT an Ugly Word
Creating a Financial Forecast
Sanity Check – Does your Business Make Money?
Market Research… it’s about the Questions!

If you ever tried to find your first professional job, you have been confronted with the response, “You don’t have enough experience.”  So, you are in this odd situation… you cannot get your dream job without experience; and you cannot get experience, unless someone hires you in your career of choice.  As a brand new small business owner, you will be faced with the same dilemma.  It doesn’t matter if you are selling a product or service, your prospective clients will not want to be your experimental guinea pig.  So, what can you do?

I want to cover a few tactics to build up your references in your small company: 1) Wedge Strategy; 2) Free Samples; 3) Selling Skills; 4) Guarantees; 5) Networking Groups; and 6) Employment History.

Wedge Strategy:  I have termed a wedge strategy as a gradual payment for your services.  The wedge is a 3-step process.

The first step is to give your client something with no financial investment.  I need to stress that you are not giving something away in this first step.  You are asking your new client to give you a reference, their time and their feedback.  These three things are almost more valuable than money if you are starting business.  Here is how this first step looks.  You may give a free workshop that helps your client receive real value; and also become more educated on the services you offer.

The second step is to offer a follow up service that is a paid service or product, but the cost is relatively low.  This offering could be a book that you have published so they can learn more about your service or product.  It may be a more advanced workshop that continues where the free workshop left off.

The third step is to offer your full service or options for full-payment.  Your first and second step is an opportunity for you to impress and educate your prospective client.  Most clients do not understand the value you have to offer with a simple sales pitch.  In a free offering, they may gain a better understanding of your value.  If you do this wedge process, you need to make sure that your free offerings accomplish both of these objectives.  If you offer sub-par services, you will most likely not get good references; and you will not gain paying clients.

Free Samples – A free-sample is just that.  There are no strings attached whatsoever.  You can use this strategy if the cost of your product is relatively small; and you believe a prospective client will like your product and buy the full-size version once they have tried it.  You may get a little feedback that says your product is good or bad; but you will only know for sure, if your prospective client buys the real thing.

Selling Skills – I hear from many small business owners that clients are simply not buying their service.  In fact, they cannot even give away their service.  Most small business owners are great at a skill, but lack sales skills.  Selling is not about trying to convince someone to buy a product that will not work for them.  Selling is about educating a client on the value that your company offers.  This value proposition is key to getting a client to even try a free service.  After all, if your prospective client will spend half a day in a free workshop and not get anything out of it, why would they attend?  Assuming you have a good product or service, the rest is about salesmanship.  A few key ingredients to good selling: 1) Create a powerful value proposition that clearly communicates the benefits your client will receive if they do business with you; 2) Speak the language of your prospective client; 3) Be clear about why you are giving away your services… many people are skeptical about free offerings; and 4) Don’t be afraid to advocate for your product/service.

Guarantees – A brand new client is often reluctant to try out a new company without a track record.  A guarantee of your service that can be measured, is one way to gain new clients.  If your are a painter and you tell a client that if their paint starts chipping within the next 20-years, you will repaint their house at no cost.  Other guarantees can be more general.  I guarantee 100% satisfaction.  Obviously, this satisfaction is somewhat subjective, but most people will not want their money back, if you truly did good work for them.  The one problem with a guarantee is that most clients know a new small company may not be around to make good on a long-term guarantee.

Networking Groups – Networking groups can be a great source of referrals or introductions to your new small business.   In a networking meeting, you will be able to find out what someone does for a living.  In a more personal meeting, you may learn more about the person and their history.  However, in order for someone to actually refer you to someone else, they have to USE your product/service.  This is why it may be important to create an aspect of your business that is a give-away described above.  If your service is relatively low cost, you may consider a discount or guarantee.  If your service is relatively high cost and complicated, you may want to give them a sample of what you do for free that will allow them to give you a referral; and allow you to get more business from that person.  With referral networks, don’t be afraid to try other services as well.  You normally only get what you give.  Give others a chance to earn your business.

Employment History – Many professionals work for a large company for a number of years and then decide to retire and use much of their experience to start their new company.  Although your old company may not be exactly like your new small business, think about any projects or services you offered in your old company and use these experiences in your new small business.  For instance, let’s say that you were an accountant and decided to start a financial consulting business.  You have tons of experience looking at books, doing taxes and understanding financial statements.  This experience is invaluable in your new consulting business.  Go ahead and reference this work. Be honest about where you earned this experience, but don’t be shy about sharing this experience with prospective clients.

Conclusions

I have only scratched the surface on how you can establish a relatively reasonable, professional and experienced image within a short amount of time when starting your small business.  You should be aware that your new product or service may not be that great.  Ask for, and listen to, feedback you get from your free customers or your first customers.  Most people want you to succeed and will give you honest feedback.  Listen to what they say and make adjustments that will work for your business model.  If you’d like to weigh in on this topic or any other topic, join the discussion at Acuity Small Business Consulting’s Facebook Page.

In my next blog post, I will talk about marketing and advertising.