Making mistakes early in your business years is all part of the game. Everyone makes mistakes. However, the type of mistake you inevitably make can mean the difference between profit and loss. The wrong types of mistakes trigger more than just a monetary loss; they deplete morale and drain your resilience to continue on in spite of a business bad turn. The issue invariably begins with the entrepreneurial race for the same one thing – clients. Clients are the name of the game, particularly when you’re first starting out. You want them and you need them. The problem is that they know this.
Much like a prison yard where veteran lifers can almost smell fresh meat, businesses see these types of over-eager newbie entrepreneurs a mile away. The freshly launched company might have a great product or a great service. It might even be spearheaded by a fantastic team and spirited leader. However, the company needs clients for two things. First, they need a means to market themselves further by showcasing existing client work. Secondly, they need the revenue. The trouble is that this dire need is transparent in most newly launched business; the stench of over-pleasing desperation is hard to ignore and even tougher to resist for companies looking to shave the cost down.
In this three part series I’ll draw on my own first year experience to offer a portrait of three types of emotionally draining clients that will leave you second guessing your business worth.
First, because this type of client lacks structure, you’re almost guaranteed to be putting in more time and effort just ‘reeling’ in the client’s attention and business direction. You can bet your marginal rate that you’ll be doing double the work for just a fraction of the cost. Expect an email inbox blitzkrieg and plenty of tangent requests for services that aren’t specified within your contract. Secondly, this type of client also doesn’t respond well to fee hikes. Whether you’re realizing the level of involvement invested here, or you plain and simple just need to raise your rates after a year or two, you can bet this client will likely ‘go dark’ the minute you mention a fee increase. Since the airy-fairy type of entrepreneur doesn’t like structure, they’re not going to respond well to you’re structured business and refined fees.
The High Emotional Toll: Here you’re burdened with the stress that comes from a client who demands the attention of three clients. The tendency to favor unstructured business can also leave you out of breath as you juggle a flurry of tasks and requests that seem to overreach contract terms. This type of client is near impossible to peg into a strategy that fits their own needs; they’re just too all over the place. You’ll be left emotionally drained from the adult-child persona this airy-fairy client brings to the table.
Lesson Learned: Evaluate Your Market Options
It’s best to talk with people in your industry before you go launching your business. Factoring in my early years experience, I would advise against small business clients that haven’t passed certain Benchmarks. In your pursuit of a market demographic, know that there is a right way and a wrong way to approach people. The right way includes reaching out to your existing network and surrounding businesses through your local chamber of business. A simple networking luncheon or a chamber meeting could kick off an insightful conversation. You could even seek to connect to local and industry types via LinkedIn by seeing who’s responsive to starting a conversation about the current business climate.
The wrong way to approach a speculative demographic analysis is with the expectant idea that people owe you their time. Time is a valuable commodity, as is business expertise; you cannot expect people to offer it freely upon request (especially when there is no established connection or relationship). Instead, offer them something of value in exchange that goes a little beyond meeting for coffee or dinner – an impetuous idea that doesn’t value an individual’s time and personal priorities. Instead, try asking what they need and match up any gaps with contacts in your own field. You’re more likely to yield a favorable response if there’s some quid pro quo arrangement that’s of equal benefit to both parties. If all else fails, you can offer them a flat rate in exchange for their thoughts in the form of a 15 minute phone call or one page report. Most people do appreciate candor and expediency.
To the first time entrepreneur who recognizes that beggars can’t be choosers when it comes to accumulating clientele, I offer the following advice: create a structured contract that clearly outlines the terms and set identifiable parameters. A good contract is your iron-clad defense against taking on any excessive and/or out of left-field work queries. Your contract should include a 3-6 month clause if you’re adamant on securing the client. You can offer a lower rate as long as the client agrees to be locked in for at least 3 months, which makes your effort worth the while and ensures an adequate return on your rate and time. Setting a 6 month contract window leaves you open to renegotiate terms and rates now that you’ve had the opportunity to work with this type of client.
Continue on to Part 2, the “Looking Into” Client…
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