Two syndromes every new entrepreneur must avoid
I am an entrepreneur. I started my first company in the middle of last year. The strength of the company was the products and services we were offering to our clients as a result of the domain expertise we had in our particular industry. Like every other entrepreneurial journey, I had my ups and downs in the first year of operations.
In the first few months, we were able get few projects and then came a lean period. After that, again some busy time came. For over a year, it has been continuous ups and downs. Thereby, after one year and a few months, due to personal and professional reasons, I decided to shut it and look for better opportunities.
While I was shutting the business, everyone whom I talked to suggested me to make a list of the key things which I learnt from my past experience. They also asked me to make a list of the mistakes I did with an aim to avoid them in the future.
These are the two syndromes that I have come across as per my past experience and my discussion with other entrepreneurs from the same network. I found, they also did the same mistakes while commencing the business. These are the two significant syndromes every new entrepreneur must avoid.
The Nice-guy Syndrome
Once I was sitting in front of a client and he asked me to quote a final price for the product and the after-sales service offered on it. The cost of the product was, for instance is Rs 10,000. With a fear of losing the project, I quoted a figure around Rs 11,000, keeping a margine of 10%, knowing fairly that it won’t suffice my purpose. My absurdity does not end here, I was offering much more in terms of after-sales service in return of the price I have quoted but I realized that after the meeting. In return of being the Mr. Nice I’m-Here-For-You-Guy, I had to lose my hand in the negotiation process.
Likewise, my entrepreneur friend, who does photography for a living shared with me that he also lost his hand in the negotiation process by offering a client 400 photographs for a wedding in the price of 250 photographs. He confessed that he lost interest after doing the first 250 photographs, this lead to delays in submission of the work, and in return, 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 their demands in the best possible manner. Ultimately, they are the one who are giving you money. What must also be done here is, even though my business is new and I need this client desperately, I should not daunt my strengths and lower the price.
Another instance, the first car which my father bought about 20 years ago with whatever resources he could manage, was a Maruti 800. Today, after 20 years, he is equipped with enough resources to buy an expensive car. Do you think he will buy the same Maruti car, even if it costs Rs25 lakh? The answer is No. He would rather prefer a Mercedes or BMW. The reason behind it is the price, which always leave an impact on our minds.
For a new entrepreneur, price is a double edged sword. If you sell something for too low price, in order to be the Mr. Nice Guy, the client won’t consider you when he would like to spend on something expensive, they would rather contact the one who has a brand value attached.
Moral of the story, be there for the client at all situations, but try to come out of the negotiation process 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, check out the ‘I Will Teach You To Be Rich’ course by Ramit Sethi (free version available on his website). Although, I must mention here that even I haven’t tried this technique yet, as I got to know about it recently. I have gone through the material and it was impressive with some of the techniques he has mentioned and I believe that if implemented diligently, it will give good returns.
The Superman Syndrome
While conceptualizing the idea of opening a new company, I was super excited. Then, as I figure out the amount of work it would take, I was anxio a bit. The website, the logo, the marketing material, the printing of all the stuff, the promotion, the finances, the operations, the projects, all look too much in my plate. I was good at certain things, while in others, I lagging.
Stil, I was a young entrepreneur with an inner feeling that I can do anything and everything myself. So for instance, I started learning Corel Draw in a bid to design the logo, the fliers, the brochure and all the other stuff by my own. I knew what I should be doing is perhaps marketing, relationship building. After days of surfing the internet, checking tens of YouTube videos and asking all my designer friends, finally got a hand over Corel Draw and designed the logo and brochure, only to realise that the designs I have prepared were basic and can suffice my purpose for a short duration but won’t be any help in the longer run. This happened because during those days, 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 the designers and web developers for the same work. And voila! within a short duration, with minor people management, everything was ready.
Being a new entrepreneur, you may feel anxious 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 advice here is, 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 built 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 running out of cash. Amidst all this anxiety, one need to keep focus on thorough market research of the customers’ preference and preparing a detailed plan to reach them, focusing on your strengths and if possible, delegating non-core work to others. With persistence and hard work, anyone can lead 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.