Sweet Chaos Dot Net

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.