Interesting

The First Ten Paying Customers

I’d like to share my experience in business, and how I went from a mostly-unqualified designer to owning an agency that has had revenues of more than a million dollars since I started it.

More specifically, I would like to focus on the beginning, because that is where most people get stuck, and where it is the easiest to get discouraged and give up.

While much of what I will write about may be specific to running a professional services / consulting business, I hope that the core ideas are applicable in a wider sense.

The Proof is in the Pudding (Or Something)

The key idea to grow professionally is to do work that is challenging at just the right degree. You want something that stretches your limits and forces you to learn new things, but not too difficult that you get really stuck and do a bad job.

This is a careful balance, and there are no strict guidelines on how to judge this. What I can say is this — if you’re getting bored with the work, it means you’re taking far too much work that is at or below your skill level, and if you’re constantly staying up at night worrying about your work, or pulling massive amounts of overtime, then you’ve bitten off more than you can chew.

Between these two lines there is a happy medium where you have some healthy amount of challenge, and yet it doesn’t ruin your life!

So, how does one go about actually getting the work in the first place? This, as it turns out to be, is can often be the hard part.

There are two main ways to approach this:

  • You can do it yourself, either as a freelancer or by setting up a business, and there are plenty of advantages and disadvantages to this.
  • You can outsource it to someone else, which normally means you work for someone else who finds the work, and you just focus on the delivery.

An interesting point to note, if you’re very successful with point 1, you can actually then outsource the finding customers part to someone else, by hiring them to do it for you. However, this is normally quite a long way off, and not worth considering right away.

Obviously, in this essay we are considering only Point 1, as Point 2 is the default option that most people choose, and it is quite well documented elsewhere…and it is rather simple, just go and find a job! 🙂

So, if you have some skills, and yet you have no customers, it is important to start moving things in the right direction. The absolute best way to get work is to have people spread the word on your behalf. This is called Word Of Mouth Advertising, and it is really cool.

The way it works is this:

  • You do some good work, and get a happy customer.
  • The happy customer knows people, and in their day to day business they will mention or recommend you to their colleagues, business partners, vendors, clients, etc.
  • These other people will contact you, asking to do something similar to what you did for the customer in point 1.

The faster you can keep moving through this cycle, the more work will come in, and then the challenge will be the delivery of a larger amount of work than you can handle individually, and that will often mean hiring some people to help you do that..and voila! You have a business.

As mentioned in the introduction, the difficult bit is starting this cycle off, and the best way I recommend doing this is by using a manipulation.

The best manipulation to kickstart your career is price. For any service or product, the lower your price, the larger your potential audience. At an extreme point, if you set your price at zero, you should have a queue outside your door asking for your product or service. So, this means that you should lower your price until you can find clients that are willing to work with you.

That said, do note that there are some caveats:

  • Certain people won’t buy things that are cheap, because they value quality, and won’t believe that high quality products or services come cheaply. This is something that you can play towards later in your career, by doing the opposite strategy that I am suggesting now and pricing yourself above the market, not below it.
  • This does actually assume that your product or service is good (even better, great!) and that it is something that others both desire and need.
  • You may well need to swallow your pride and be prepared to work for peanuts or even for free. While this may hurt your ears, you need to think of the big picture. You are building a real portfolio, and you are building good will, and, more importantly, you are building a network, which will become really handy later on.

The Customer Experience

The key thing about these first few customers is that you want them to be pleasantly surprised about how great the experience was working with you, both in terms of speed of delivery and also the quality of the services rendered.

You want to spread the idea that you are the “go to” person for the type of services that you’re offering.

You also want to be quite transparent in what you are doing, that you are charging less than what you believe you are worth because you are building up a portfolio, and once the project is finished, if they can give you a testimonial or a referral, that would be great.

One thing you MUST do, is ensure that you write up a case study for each and every project that you do. This ensures that you can easily showcase how you think and why you get good results to future prospects, and allows future customers to sell themselves, without you having to do much work.

Scaling Up

What will soon start to happen, is that you will start to get really busy, but you won’t be making much money, and the work will start to feel a little the same, because the customers that want something at the low cost (or free) that you are offering, are normally small startups or small everyday type of businesses.

Your next step will be to start shooting some higher prices in your quotations, and while being prepared to get negotiated down to your usual rate, you will find that based on your experience, good referrals, and the fact that you’re “in demand”, some clients will be fine to pay that price.

This is how I went from designing freebie websites for small restaurants to charging $1,000 per website, to $3,000, to $5,000, and eventually to $20,000+.

One potential criticism of this technique is that if you start out pricing low, everyone who knows you will expect these constantly low prices, but this can actually be effectively countered in the following way.

Remember, you only need one customer that accepts a new higher price for that to become your new “standard” rate that you charge new prospective customers.

And once you have ten paying customers at a certain rate, you can be certain that you never need to drop your rate again, because if you can solve a problem for ten customers at a given price point, it is very likely that you can also solve it for one hundred customers at a given price point.

Turning It Into a Business

As you get busier, you can mix and match the idea of getting more work, while letting some go, and also hiring people to do some work on your behalf, and then you pocket the difference between what you charge the client, and what you pay your employee(s).

One mistake I made when I started was that I imagined having a professional services business meant having lots and lots of customers, when actually it means “upgrading” your customer base. So now I actually have only handful of customers paying $10,000+ per month, instead of a dozen one off projects between $2,000 to $10,000.

This a much easier way to conduct business, and, where possible, always strive to win recurring contracts from customers because it is much easier to control your costs, and it means you don’t have to “win” at sales each and every month, and you can focus on improving your services.

Conclusion

So, there you go. A small guide for a non-sales person on how to go from freelancing to setting up your own business, based on my own experience.

It is definitely a more rocky ride that just getting a job somewhere, but it is also great having a full sense of ownership over what you are doing.