Is time right to take the leap?

July 13, 2008

Q: I’m ready to leave my job to launch my own business, but I’m worried about the U.S. recession and the impact it might have on the Canadian economy and my business. Would you recommend I wait until the economy improves?

A: New businesses start and succeed at every point in the economic cycle. The advantage to starting up during a weaker economy is there are probably fewer competitors entering the market at this time and what better way to create a recession-proof enterprise than to launch a lean business machine?

For now, keep your expenses minimal and set up simple stream-lined systems. Resist the need to invest up front on glossy marketing materials, elaborate business cards or lavish office equipment to make your business “official.”

Focus your efforts on the work itself — and doing the kind of outstanding job you want to become known for. Start small by giving clients a low-risk experience of working with you. Your goal is to leave them wanting more.

Develop your reputation and build on their confidence and trust in you. Trust that word-of-mouth referrals will follow when you’re professional, deliver excellence and ask for more business.

Grow your market slowly and steadily, ironing out the kinks in your early days. A start-up business has the flexibility to respond quickly to consumer needs — an advantage in a constricted market when buyers are more value conscious.

However, if worries are getting in your way, it’s not unusual to hold a day job as a fledgling business is ramping up. Being hungry for the business can drive you; being desperate for the sale can drive clients away. Playing your cards right when consumers are belt-tightening could mean hitting the jackpot when spending confidence resumes.

Originally printed in The Province on July 13, 2008.

Outlining expectations will save headaches later

June 1, 2008

Q: I’m an independent contractor and my largest client continually squeezes me for more services for the same fee. How do I stop the bleeding without jeopardizing the deals or the client altogether? 

A: First, don’t compete on price. Promote the value you are providing for the fee charged. Managing client expectations may be even more imperative than delivery of the service itself. 

As an existing service provider, you have the competitive advantage of meeting the client’s evolving needs — even shaping them. Track this vital information by summarizing your progress, reporting results and highlighting achieved outcomes to the client after key milestones.

Here’s your opportunity to elicit feedback from the client. What are they satisfied with? Where are you exceeding expectations? When the client articulates this, it reinforces the return on their investment. The most challenging yet noteworthy question to ask is, “What would you want different next time?” Their responses enable you to refine your service to more closely meet their needs.

When pressed to include additional services, refer the client back to their stated satisfaction levels.

If they insist on bundling more services for the same price, hold firm. Fees that appear negotiable run the risk of being ground down by the client.

Instead, explore what’s motivating their need to discount. Determine what services they are willing to take off the table in order to reduce the price. Alternatively, offer to exchange, reduce or remove other components to maintain your fee.

Originally printed in The Province on June 1, 2008.

Preparing to cast off the safety net

October 28, 2007

Q:  I want to leave my job to start my own consulting business, but I’m nervous about paying my monthly bills until I am up and running. What tips do you have for making a smooth transition?

A:  Doing market research, setting up business systems, even creating a financial nest egg can provide you with a solid foundation that will save you migraines later.

Actively test-market your service immediately. You’ll quickly learn what the demand is for your services, how much people will pay and which marketing approach results in a sale.

Gage people’s reaction to your message and fine-tune it until you can say it with confidence — and people are saying, “Sure, I’ll buy from you.”

New entrepreneurs tend to grossly underestimate the time and effort it takes to secure a new client, complete the work satisfactorily and get paid.

By taking on manageable contracts now, you will have realistic expectations based on experience.

Experiment with what to charge to cover your time, meet the client’s expectations and net a profit after expenses.

Aim to accurately forecast your marketing and sales cycle so you are not caught off-guard later.

This is a perfect time to create business systems. Standardizing will keep you from being overwhelmed when customers are knocking down your door.

Beta-test your business with a low-risk trial run. You’ll recognize when you have worked out enough of the wrinkles to smoothly step into self-employment without a safety net.

Originally printed in The Province, October 28, 2007.