Do you want to start your own business? Here are 10 things founders get wrong about building a service-based business.
1. Quantity of Customers vs. Quality of Customers.
Most founders get caught up on the quantity of customers they have verses the quality of customers they have. For example, in a service business you can be frequently asked: How many clients do you have?
That’s the wrong question. It’s not about the quantity of customers but the quality of customers.
First time founders think that they need to sell their product or service to everyone. They would like their addressable market to be huge. This is completely backwards. Instead, find a group of individuals who are passionate about what you do, and they will pay you more and you’ll enjoy working with them.
3. It’s not about you.
A lot of service businesses believe that they need to show customers how great they are: We have “20 years of experience”, “We’re experts at X”
Customers don’t care. Customers care about how you can solve their problems. Show them how you’ve solved a similar problem via a testimonial, and they’ll trust that more than anything you say. As a service provider, you’re not selling a service. You’re in the business of selling transformations.
4.Have a Minimum Price Threshold.
Most service-based founders take every customer that comes in the door. They think that turning a customer away is lost revenue The focus should not be on how much revenue you’re turning away but how effectively you’re using your time.
Spending 1 hour to fulfill work that will pay you $100 is not as good as spending 1 hour to fulfill work that will pay you $500.
Set a minimum value on your time and say “no” to work that doesn’t exceed this threshold
5.First Mover Advantage.
Most Founders think that if your idea isn’t original enough and you’re not first - it’s not worth it that is not the case.
Superior execution can beat a first mover advantage.
6. You don’t have to know everything.
Most CEOs didn’t get to where they are on smarts alone. They have complementary skills sets such as good communication, EQ, sales, etc.
They cover their weaknesses by hiring specialists who can do a job far better than they could.
Do you think Mark Zuckerberg is the best coder at Facebook? I’m sure he’s great. But some of his employees could be better than he is.
7. Sales is So Important.
A lot of founders hate sales or think that sales is useless, aggressive, unnecessary.
Revenue cures all problems in an organization You gotta get used to asking strangers to give you their time, money, or attention. This is a skill that every business needs. All founders need to learn how to sell.
8. Can your business run without you?
The worst managers feel like they need to control everything all the time. They micromanage. The best employees love autonomy to make decisions and have skin in the game.
If your business can’t run without you being there all the time, there is something wrong. You need to trust your team and delegate. If you don’t trust them, give them a chance. If you don’t think they can do it, find someone who can
9.You don’t do it alone.
Stop taking credit for everything. Distribute recognition. Your employees are the ones who put in the time and effort to make your company great. Thank your employees frequently and often. Without them, you wouldn’t have a company to run.
Some founders think that they should never outsource anything in their company because of cost or lack of control over the work.
If you’re spending 1 hour to save yourself $200, think about what you could have done with that time instead?
If you could have made $1,000 in sales in 1 hour instead, spending time to save $200 is not time well spent
Today there are some solid outsourcing functions offered for marketing,finance and legal.
You don’t need to do everything. Find a professional you can trust, and focus on growing your business – that is where the greatest reward lies.
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