Create Customers First

Getting machines, creating a fancy corporate identity, hiring a team of people and buying top-notch computers are all very well. They won’t put food on your table though – and they’ll drain what little cash you start out with.

One of the most common mistakes of start-ups is they plan everything down to the last degree and get carried away with the kudos of being a new ‘entrepreneur’. Somehow though, they forget the most important aspect of running a business.

YOU’VE GOT TO SELL SOMETHING!!

Yes, the only way to start building up that fortune is to think about your customers and what you can sell to them and how, above and beyond everything else.

Don’t get carried away by process. What you need to worry about is getting your great idea in front of your customer and getting the money out of their pockets. Apart from anything else, you won’t get everything right with your processes in the first place, so it is pointless to waste valuable time before you know what sort of market you have and its scale. Once you’ve got your customers on board, you can always iron out the back office.

Similarly, no businesses plan ever survives first contact with the customer. All your carefully made projections and assumptions are just that until a real, living, breathing person tells you what they really want. So, doesn’t it make sense to refine your plan first? The quicker you get out there and test your big idea, the quicker you will find out what you really need to do to get that fortune rolling in. It is fine to change your business plan on the hoof, (indeed you probably will, I did and still do) but it is not easy to do if you are too busy choosing which colour floor tiles you want in your corner office.

Sometimes, of course, you need to spend a bit of money first. If you have a web-based business model, for example, you will need the website to function properly before you can start getting your customers to try it in earnest. But, don’t get so carried away by filling your boots with the most perfect site ever that you run out of cash before a single product is sold.

I confess that this is a lesson I have learned the hard way. When I devised a van insurance website, I invested thousands of pounds and countless hours of blood, sweat and tears, into getting the best, whizz bang site I could get. Though I say so myself, it looked terrific. When it finally went live after months of painstaking tweaks, I discovered that that the online enquiry bit of the site was not working as we had expected and we were missing out on 20 per cent of the leads this super-duper service was creating. I literally had to go back to the drawing board and spent many more hours sorting it out.

I could have saved myself weeks of work if I had gone live sooner and worried about sales first. I could have been correcting the teething problems while reaping the benefit of the sales I could get with my, albeit less than perfect, site.

On other occasions, I have spent a fortune recruiting a team of people in the anticipation of a massive sales surge for some new service or other. Then, I have had the frustrating site of watching them kicking their heels and gossiping around the water-cooler when the business takes off far slower than I had expected. I have learned my lesson – sales first, staff and infrastructure second. It doesn’t take that long to recruit people or buy desks, so it makes sense to wait until you know they are really needed, rather than wasting money in anticipation.

The key points to remember are:

1. Do not add a ton of back office costs until you have created customers
2. You don’t need lots of lovely promotional banners, spare office space, desks, leaflets and key fobs. Until you know where you are going, this is all a pointless waste of money.
3. Use your PC or MAC to create your own stationary. There are plenty of programs around which will help you do this and come up with some very creative ideas.
4. Spend as little as humanly possible in testing your market and think carefully about how quickly you can get your business to ‘go live’ so it can be tested in the real world.
5. Do your early PR and marketing by yourself, to save on costs. After all, who knows more about your product than you do?

Never, ever, lose sight of the fact that the most important issue around starting a business is the customer. Without customers, you have no business.

Start ups that fail, fail because they don’t give customers what they want. The founder falls at the first hurdle because he or she forgets why they are doing what they are doing. They get distracted by ego and things that are not important.

Failed start-ups, generally blame ‘lack of funding’, but if you look more closely you will usually find they simply failed to attract customers. They were too slow to get their product or service out in front of people with money to spend.

Constantly remind yourself who the customer is, what needs your product or service will satisfy and why it is the best on the market. Everything else is just superfluous until you get underway.