3 Startup Lessons I Know Now, But Wish I’d Known Then

Take notes about these lessonsAfter you’ve been in business a few years you look back.  Suddenly everything is so obvious.  Too bad all those things that seem so clear now, were not so clear then, when you were living through the early years of your startup.

The longer I stay in business, the more I realize what I DON’T know.  But let me share 3 lessons that could have saved me a lot of expense and time:

 (1)  Offer smaller-ticket items that sell quickly.  Consultants and service providers often make this mistake.  They offer services that cost thousands of dollars, require a huge commitment from customers, and lengthen the sales cycle.  Then their cash flow suffers.  Instead, make it easy for customers to buy or hire you for something that doesn’t require a huge commitment.  You need to prime the pump at first!

Along those lines, here are some techniques that will help you do that — for both service providers and product companies:

  • Offer at least one smaller service that costs $100 to $300 –  Prospective customers will want to “try you out.”  They are testing you to see if they like working with you, how well you perform, etc.   When you offer small ticket items, you give them that option to try you without a big risk.
  • Publicize firm prices –  What’s with this thing professionals (and some product/solution companies) have for not listing prices?  Listen, I know that big projects vary depending on circumstances and can’t always be nailed down.  But there are smaller services where you can attach a firm price.  Building a website may depend on too many variables to quote a firm price for every situation.  But critiquing an existing website, or installing a new template, is fairly straight forward and you should be able to name a price.
  • Systematize your business — One of the reasons I was unable to set firm prices is that I did not have my processes systematized.  Every service, every deliverable was a “new adventure. ” And it should not have been. I should have been able to say that to do X  project I would follow a defined set of steps that would take X hours.  I strongly recommend writing down the steps that you do for each service you offer.  Only then can you analyze and establish systems.
  • Create one free or loss leader product – If you are a product company (or even a service provider) create at least one product that you sell for a modest amount or give away, even if you lose money at first.  Specifically, create something that will get customers you can upsell or cross-sell to, or who will refer you.  One marketing consultant I know sells a modestly-priced, DIY manual for planning customer appreciation events.  She also puts together customer events for clients as a service for a much higher price tag.  Likewise, a blog designer sells blog templates and gives away a few free ones, in addition to custom design services.

(2) Don’t waste money on expensive marketing UNTIL you’ve figured out your offering and your brand.  Notice I didn’t say “Don’t waste money on marketing” period.  I think marketing is crucially important.  But first things first.  Figure out what business you are in first.

That may sound ridiculous to the uninitiated.  I can hear what you’re thinking, “Shouldn’t you KNOW what business you’re in if you just started it.”

Well, anyone who’s ever started a business understands that your business will more likely look different a year later, than the same.  A startup is like a maze.  You go down one path, only to be met by a dead end.  So you backtrack until you find an open path.   It’s only after we get some initial successes and customer feedback that we learn what we really should be offering, and what customers value from us.

So think in terms of “starter marketing” at first — here are examples:

  • Brochures and business cards – Instead of printing thousands of dollars worth of brochures and business cards, create them on your desktop computer using templates you can find on the Web, or in programs like PowerPoint, Word or Publisher.  Print small runs on a good quality printer.  Or,  go to Staples, OfficeMax or Kinko’s to get short runs printed.
  • Logos — Instead of spending tons of money on a logo, use text at first.  Or commission a “starter” logo.  Don’t spend more than a few hundred dollars at first.  You can always overhaul it later.
  • Website – Instead of building an expensive $10,000 website from the get go, get yourself a domain name and start a blog at the domain.  Bolt on a few pages about your business.  Six months after you get the blog going, you can better figure out what you really need and can invest in a kick-butt, professional website.  The process of working with a Web designer will go smoother later on, too –  clearer needs, less wasted time.

(3)  Integrate technology deeply into your business.  A while back a study came out (that I can no longer find), showing that a higher percentage of successful small business owners were geeks and early adopters.  As I recall it showed that these successful small business owners devoted time to learning about technology, and saw technology as a key competitive advantage.

Yada yada yada — I know, you’ve heard it before about embracing technology.  Well, let me offer three specific ways I wish I had embraced technology much earlier in my business career:

  • Taken a class in programming — I wish early on I had taken a class to learn some — any — programming language.  Not so I could program, but so that I could (1) communicate better with programmers and (2) understand the limits — and possibilities — of software.  You can’t run a business today without using software, so you’re better off knowing a little something about what’s under the hood.
  • Replaced lingering fears or resistance to new technology with action – Sometimes we build up in our minds an unreasonable fear or resistance to technology.  We won’t upgrade because we “heard” something was confusing.  Or we resist trying something new because we fear it will take too much time to implement.  Been there, done that.   Don’t spend mindshare worrying about such stuff.  Jump right in and act.  Every time you catch yourself thinking something fearful, replace it with a technology action step.  Worrying is not doing.  Do.
  • Jumped in with baby steps – I’m a big fan of incrementalism.  Start small.  Build step by step.  I only wish I had  done more of that when it comes to technology, instead of holding off the big projects. Examples:  Improve one page of your website, rather than waiting 6 months until you find the time and money to re-do the entire site.  Or go to electronic billing — don’t hold off thinking that you should automate your entire payables and receivables process.  It may be years before you can get to such a large project.  Meanwhile, you’ll benefit from the smaller steps you take.

Knowing these 3 lessons, perhaps I can save you some pain, expense and wasted time. Let me know the lessons you have learned, in the comments.

62 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

62 Reactions

  1. Another useful set of tips and advice. You make a lot of good points here, especially about offering smaller ticket items so customers can try you out first. Once they have a pleasurable experience, they’ll surely come back so it’s a win-win situation.

    I, too, am a big fan of baby steps and these days, taking that approach in life at every turn is wise.

  2. #2 is a great point that I think a lot of people jump right into. Marketing can be so expensive and i think you should take it one step at a time. Start with little steps, like you mentioned, and expand your marketing efforts as your business expands. I know several people who jumped into spending loads of money on custom sites and materials and never made it passed the planning stages. All that money wasted on something that never materialized.

  3. Hey,

    Am planning to start up a consultancy to launch officially around this time next year. But I will inform a bunch of business owners next week of the impending idea, we will be active though during the year (beta year). Currently I have developed content but it on google sites for proofing; my partner and are doing things in small bits and its paying off, till now we have covered some ground in product development without paying a dime, we anticipate to go live next year minimal expenses and a bush fire of word of mouth.

    grts

  4. Great post – as someone who’s only been in business for 6 months it’s great to get that perspective.

    Really made me think of a book I’ve been reading recently on running small business and marketing one (Book yourself solid and beyond booked solid). Lot of the same principles, and all laid out in a system. Thoroughly recommend them. Free chapter on his website – bookyourselfsolid.com or something like that.

    Also would recommend logoworks for cheap logo – just got my new one done for $399.

    Don’t mean to sound like an advert! But when I find great service seems to make sense to tell others about them.

  5. This is great! Part of this (especially – don’t get a huge web site, don’t spend a fortune on business cards and the freebie) I have been recommending to my clients for ages.

    Very good stuff (pulls out notebook to write down everything else)…

  6. Anita: Couldn’t lesson #3 become an expensive lesson? We installed Microsoft Visa at our café & business center, but we had to uninstall after awhile to do some bugs and things that weren’t compatible with each other, e.g. printing out things, external scripts, etc. Please note that we were early adopters and tested the new system about two years ago. It looked cool, but our customers were not so impressed and not used to the new system.

    Do you have a figure on how big percentage is now using Vista compared with older systems and competitive systems like Linux?

  7. Oops! Sorry for the typo. It should be Vista. Please feel free to continue the open thread post on Microsoft’s new ad with Jerry Seinfeld and Bill gates. click on “Martin Lindeskog” Says:

  8. great article, thanks for sharing. i have been doing these in my own IT consulting business for 5 years, and i could not agree more with these tips! thanks!
    Justin
    http://www.perfectintegration.com

  9. Anita
    I have lurked around your posts for awhile. That is a compliment, since I tend to rotate thru blogs because after a period they become repetitive and shallow and it seems eventually that every post of the ‘entrepreneurship and achievement’ genre is just a different way of saying:
    - have clear objectives
    - focus
    - stick to it
    BLAH!

    Your post actually has some meat and I can also identify with almost all the observations – not that that legitimizes it, but nevertheless…

  10. Hi Martin, 2 years is a long time in the life of software. What I hear now from people is a lot different.

    For instance, Staci (my assistant producer for the Small Business Trends radio show) uses Vista on her desktop and on her laptop. As she explained, it took a little getting used to because menus are different, but now she likes it. Ivana Taylor, who you also know as an Expert here, told me recently she LOVES Vista.

    I am not suggesting you go for something the instant it comes out. Beta testing software is different from trying something established, but new to you.

    I’ll be getting a new notebook computer soon, and when I do it will be Vista. I am looking forward to it, especially after hearing Ivana rave about it.

    – Anita

  11. Hi John, I’ve used Logoworks, too. I ran a whole series on using them to do a new logo a couple of months ago. And soon I will launch that other site that I created the logo for.

    Stay tuned and I will show the transformation from a simple blog using a free template and “text” in place of a logo, to a professionally designed site with a logo. Incremental steps….

    – Anita

  12. Anita,

    We wanted to be cutting edge and use a new operating system. Our customers got our attention, but it took time to learn the new system and get a feel for it. It was interesting to test a brand new and fresh system, but it was a bit too early for us in order to feel 100% comfortable with it.

    When I get a new portable computer (I am interested in the new tiny notebooks coming out), I am open to have several OS on the machine. My brother has a Mac PowerBook and I think he has both Mac OS and Windows. It would be interesting to both have Windows and Linux on the same machine.

    Talking about Visa, here is a MS blog: http://windowsvistablog.com/

  13. Great post, and great food for thought as I develop my business!

  14. Nice Post, information well worth reading and application!!

  15. Well, I strongly agree to this. “Replaced lingering fears or resistance to new technology with action.” The place where I used to work to or shall I say my ‘bosses’ have these fears which I couldn’t understand why. It’s late for them to know that their enormous amount of data can no longer be catered by their manual secretaries, bookkeepers and enormous cabinets containing files.

  16. Hi Anita,

    “Jumped in with baby steps” – I agree to that. I can relate that to our Systems Analysis and Design subject when I was still in College and that is coined as “Top Down Approach”. It is breaking the whole program into smaller parts/modules so the progress rate of the project is faster. And most importantly, using that kind of approach is more manageable.

  17. My start-up had it’s 5 year anniversary Sept 3 and I’ve learned two very important lessos. First, you should find a niche speciality but make sure it can be offered across more than one industry segment. This will help to insulate your business from diffcult economic times. Too many businesses focus on a product/service offering for one industry only to see that industry decline and thier business go down with it. Second, no matter what you are offering you must find a way to create a recurring revenue stream. If there is a cost of sales associated with each and every dollar you bring in each month your business is not expandable and you are going to work yourself to death. Every business has some opportunity to sell something one time and then get paid for it month after month. Find that and you are well on your way to long term success. Oh, one other tip that has served me very well…. do not allow your business to be limited to the market around your business. Just like industry segments rise and fall so do geographic markets. If you can bring on board customers from different cities who are in different economic cylces you will insulate your business from the up’s and down’s of economic cycles. Paid internet seach is a really easy way to expand the geography of your business.

  18. Hi Amanda,

    On the importance of baby steps: as I like to say, “from the tiny acorn the mighty oak grows.” Start small and do things here and there. Before you know it, you’ll be amazed at what you have.

    – Anita

  19. Hi Dennis, thanks for the compliment. Maybe I should write more lessons like this. Some of them were pretty expensive lessons, so other people should get some benefit out of them, I guess. :)

    – Anita

  20. Anita, I fully agree with everything you say in this post…especially #2. It’s so tempting to feel like you’re accomplishing something by expensive “image” marketing, but a true bootstrapper understands sales come first…THEN you can spend money on a fancy logo, website, etc.

  21. Vista Print has seemed reasonably inexpensive for us at tallee.com, and I love reading articles like this because they reiterate most of the things we believe about e-commerce. Especially point #3 about adopting technology. There are so many business owners out there who resist technology simply because they don’t understand it. The frustrating part is because they don’t understand it themselves, they are resistant to trust those of us who are in the business. The other points are very good as well, baby steps are especially important.

  22. Wow – can’t spend a couple days in meetings without missing all these comments and great articles! :)

    I’m the one who spent money on image BEFORE knowing what I was offering — I should have known so much better! As a strategic marketing professiona I’m embarassed to say that. But I can also tell you that the better my differentiation and positioning – the less money I spend on fancy designers and graphics.

    LOVE the suggestion of offering different price poins and PUBLISHING them. I fall into that mistake as well.

    Thanks for sharing all these great lessons everyone!

  23. I forgot the mention that yes, it’s true, I actually LOVE Vista. I hear people complain, but aside from having to figure out the new menu’s I love it. I love the look, I love the new 2007 Office suite. I love the graphics for headers and footers and tables. They look great without looking cheesy. Of course I also happen to be a sucker for new user interface stuff – so I LIKE changes to the way the program looks and feels. Am I the only one?! :)

  24. Anita you have made all the important points in such a simple and clear way. I have to admit we wanted everything right especially with our first website before we launched. In hindsight we could have gone with something cheaper at first as we changed things anyway after a few months.

  25. Excellent advice. The 3 lessons mentioned above gives courage and moves a Small Business owner to take baby steps. Most important, your article empowers a Small business owner to be persistent and not QUIT. Thanks

  26. Thanks for sharing to us the lessons you’ve learned Anita. I’ve got a very long journey to take and I’ll bear all these lessons in mind. :)

  27. to know much more about business

  28. Great advice!
    I have an LA based marketing consulting company.
    http://www.whakapapablog.com
    I have my business cards printed in small batches by http://www.moo.com. The printing quality is extremely high, and the “mini” card design is unique enough to be a great conversation starter, they are also excellent value.

  29. Hi Chad,

    The lesson about recurring revenue streams is very important — thanks for bringing it up.

    A perfect example is the model of “software as a service” that we hear so much about currently. Customers pay a monthly fee typically for use of software, instead of a one-time license fee.

    – Anita

  30. I learned lesson #2 the hard way. I’m ashamed to say how much I spent on a logo that nobody has ever seen but me. But I’m glad to share the $70 price for the logo I am using for the Technology For Business Sake show. Thanks Elance!

  31. “Take a programming class”

    I think that is very good advice. There may even a cheaper and faster way to do it… read a book on the subject. The local library has them.

    In the past year I’ve read books on PHP, Javascript on Ajax… today, I coudln’t write a stitch of any of them, but I know what to ask… who to ask!

  32. This one “Offer at least one smaller service that costs $100 to $300 – Prospective customers will want to “try you out.” ” really opened my eyes.

  33. “Offer smaller-ticket items that sell quickly. ”

    This is something I’m going to do for my business. Smaller and versions of the same product is usually what gets me in.

  34. Very precise.

    offering smaller tickets or spending late on marketing then initial hunting as well as starting a blog on domain name right as the first step are helpful and provide enough inputs and feedback…

    when you will pen down few blogs about your business everyday.. do some research .. write a little more on weekend – you are getting better…

  35. Awesome. I’ve already found some of these to be true in the short time I’ve been trying to get my business off the ground.

  36. Very good article. I am just in the startup from below ground level with my endeavor at http://www.jdp3.webnode.com. I am trying to mold some useful ideas into programs to help the average joe to earn more and somewhat easier income. No get rich quick but rather nicel and diming our way into substantial earning increases. Please keep up the good work.

  37. I have dealt with kinko`s and office max and they are way to expensive
    when your first starting out.

    May I suggest you use Vista Print on the net. You get very nice cards in small runs.

    250 cards with a glossy finish and printing on the back runs about $40.00.

    Contact the company so that they will star sending you offers.
    Unfortunatly they usually say the cards are free, this never realy happens but they are still way below the retailers you meantioned.

    you all have a great day.

  38. I bought a domain and left it alone for over 6 months now. It’s time to start linking my blogs and comments back to my site. I will setup a blogging page tomorrow. One step at a time. Thanks

    -Vinh

  39. Great info! Especially the part about your start-up being a maze and trying to figure out what marketing materials work! Vistaprint.com is a great way to start off cheap marketing tactics. I think the key for a startup is to start small–yet think big. So we can’t afford to have materials that look too cheap (especially considering what business we will start), yet we can start off being efficient.

  40. Loved this. Have you any more/

  41. Thanks, Anita, for these excellent tips! Being a bit techno-phobic, I would find the prospect of taking a programming course a bit overwhelming. But everything else makes sense to me. :) Cheers! Kath

  42. Thanks for the loss leader idea – I had not thought of this and will help in the trial generation

  43. Great story! So many great points. I hope we can tackle all of these effectively, and build our site how we would like to. We offer a lot of free services too, and that should help us get some traffic.

    Have a great week everyone!
    Randy

  44. Thanks for not saying “Don’t waste money on marketing”. So many startups either don’t spend money AT ALL and then wonder why they aren’t selling anything OR they spend a lot of money on marketing that is 1) either not the right channel, message, etc . or they aren’t reaching their intended target then, because of the lack of response and sales, they condemn all things marketing! Test messages and channels to find out what works BEFORE you spend the big bucks.

  45. Anita, I thought I’d share this with you. There is a great way for start ups to learn how to do some of the great things mentioned here. Check out http://socialnetworkingforbusinesswomen.com/Training-Expo.html for a one day workshop to learn how, as a start-up, to take your business to the next level.

  46. It all shows start with scratch and then goes big. Then, you will be successful rather than going big first, and then suffering huge losses.

  47. Your right about the price points. It is much easier to make a $100 sale than a $1000 sale.

    When I first started my candle business I went into fundraising full swing. In an effort to brand me or my services, I registered a DBA and had a logo created. Now, I stand out above the other 1000′s of reps our company has,

  48. I am in the beginning stages of starting a business. Thank you for all of the great tips. It is great to be able to learn from someone elses experiences.
    Regards,
    jscottalexander.com

  49. Anita, this is a fantastic post. Brilliant advice. It is so easy to do things in a grand way, but when you’re starting up it’s all about testing, testing, testing and finding out what your business really is about. Well done, we have made all these errors on various businesses, but the business that really flew for us, Arts Hub, we used the test and experiment and bootstrap approach and that’s the one that made the money.

  50. I’d have to agree with the programming one more than anything else. Albeit having a minor knowledge of it, had I known at my startup what I know now, I think things would have gone MUCH smoother. Nothing like a delay in communication because somebody lacks the proper technical know-how.

  51. Great article. Very well explained and good points!

  52. Great post. I like the baby steps advice. Remember, the best way to eat an elephant is one bite at a time!

  53. Anita, I know this post is from 2008, but I’m reading it in 2010 and getting a bunch out of it. I took your advice and started a lower-cost offering, only $19.95, to help small businesses with their website traffic. It works. In this economy, people appreciate that I’m offering help at a low price point and some are converting to bigger projects. I’m also creating a price sheet so that it is very easy to see what a small project would cost. You could refresh this and share it again as a new post because it is so helpful.
    Thanks
    TJ

  54. Something new to check out for startups Twitter.com/MicroAngels

    Its called MicroAngels, After the launch in early May it wil help CEOs of startups connect with investors by being able to showcase their ideas online in front of a large amount of small investors. This will make it easier to raise funding through many 1-10 thousand dollar investments in the startup.

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