I am an entrepreneur. I started my first company in the middle of last year. Our strength was the products & services we were offering our clients as a result of the domain expertise we had in our particular industry. Like every other entrepreneurial journey, I’ve had my ups and downs in the first year of operations.
In the first few months, we were able to get a few projects along. Then a lean period came. Then again some busy time. For over a year, it has been continuously like that. And now, after one year and a few months, due to personal and industry related reasons, I have decided to shut shop and look for other opportunities.
While I was shutting the business down, everyone whom I talked to suggested me to make a list of the key things which I learnt from this journey. They also asked me to make a list of the mistakes I made which I should avoid in the future similar stints.
The following two syndromes are what I observed happened to me. And upon my conversations with other entrepreneurs in my network, I figured they happened with them too. So here goes, from the experience of a failed, a few on-the-right-path, and many successful on entrepreneurs, the two important syndromes every new entrepreneur must avoid.
1. The Nice-guy Syndrome
It happened to me once when I was sitting in front of the client. They asked us for the final price of the product and the after-sales service we were going to provide. The cost of the product was, say, Rs 10,000. I quoted in front of him, with the fear of losing the project an amount that was around Rs 11,000 keeping nothing more than 10% of margin with me knowing fairly well it was not going to do me any good. Not just that, I was offering much more in terms of after-sales service in return of the price I was quoting. It was only when I came out of the meeting that I realized that, in return of being the Mr. Nice I’m-Here-For-You-Guy, I had lost my hand in the negotiation process.
Upon speaking with another of my entrepreneur friend, who does Photography for a living, I got to know he was also losing his hand in the negotiation process by offering the client 400 photographs for a wedding when the price covers only 250. He then ended up confessing that he loses interest after doing the first 250 photographs and this leads to delays in submission of his work, thereby having a potential negative effect on his business. He was being the same Mr. Nice I’m-Here-For-You-Guy.
So what should be done? It is good to be emphatic towards your clients, to understand the client’s needs and fulfill the client’s demands as best as you can with all the resources that you have. Ultimately they are the ones because of whom your house is running. What must also be understood is that in return, especially since I know my business is new and I need this client very much, I cannot undermine my strengths and hence my lower price too much.
Consider this. The first car my father bought 20 years ago, with whatever resources he could manage, was a Maruti 800. Now, 20 years later, let’s say he now has the resources enough to buy an expensive car. Do you think he will buy a Maruti brand car, even if it sells for 25 lakh rupees? No. He will probably go with a Mercedes or a BMW.
That is because the price of something always puts an image in our minds. For new entrepreneurs, Price is a double edged sword. If you sell something for too low a price, in order to be the Mr. Nice Guy, when the time comes when the client needs something expensive, they will always go to the one who has a brand value attached. Moral of the story, be there for the client at all time, but try to come out of the negotiation table with an upper hand and a high head. Difficult? Not as much as it seems.
If you need a good source on how to price the product the right way and more, check out the ‘I Will Teach You To Be Rich’ course by Ramit Sethi (free version available on his website). Although I should add that I myself have not yet tested the methods he has prescribed since I got to know about this course very recently, I have gone through the material and was very impressed with some of the techniques he has mentioned and I believe that if implemented diligently, they will work with very good results.
2. The Superman Syndrome
Upon thinking of the idea of starting a new company, I was super excited in the beginning. Then as I figured the amount of work it was going to take, I was a bit overwhelmed. The website, the logo, the marketing material, the printing of all the stuff, the promotion, the finances, the operations, the projects; it looked as if there were a lot of things to do. Some of these things I was good at doing, some others, not quite so.
But there I was, an educated young guy, with an ‘inner feeling’ that I can do anything and everything myself. So for instance I started learning Corel Draw with the belief that I can design the logo, the fliers, the brochure and all the other stuff by myself. I knew what I should be doing is perhaps marketing, relationship building, but I figured, how will I do marketing without this material? After days of surfing on the internet, checking out tens of YouTube videos and asking all of my designer friends, I finally learnt Corel Draw and designed the logo and the brochure, only to realize that the designs I have prepared were only very basic and can suffice for a short time but won’t be any good in the longer run. This happened because during any day, I was doing marketing, preparing financials, preparing sales pitches along with designing and learning how to create a website, all at the same time.
Finally better sense prevailed and I decided to get external help with at least the non-core auxiliary functions of the company. I took out certain amount of funds and outsourced some of this work to designers and web developers. And voila! Within a short while with some people management, everything was ready!
Being a new entrepreneur, you may feel overwhelmed at times, with all the work that has to be done to build a successful company. All this while, you may want to do all the work yourself, to save money or to come out with the feeling that when in the future the radio guys interview you, you can say with confidence that, ‘I built everything myself’! My experience is to don’t be a Superman.
It is better to outsource the non-core auxiliary functions of your business in order to get a better product. There are people who certainly are more skilled than you and who can build a better product in much less time. And with the rise of online freelance communities like Elance, Fiverr, oDesk, Trulancer etc, all this work can be done at a much less cost.
As entrepreneurs, we all have hard time, especially in the beginning. The clients are not certain, the product is not sure to sell, and there is a perpetual fear of the cash running out. Amidst all this overwhelm, it needs to be kept in mind that doing a thorough market research of the customers and preparing a detailed plan to reach them, focusing on your strengths and if possible, delegating non-core work to others, along with persistence and hard work, can lead one to creating a great organization.
P.S. I don’t get any financial or otherwise benefit out of referring to the above third party resources. I have mentioned them because I have studied/tried them and believe that they can give positive results.