"cute kitten!" approach to business
With all the talk of financial meltdown, it is easy for entrepreneurs to panic. Here is my advice inspired by the addition of a kitten to our family:
1) find paying customers ASAP
This is not the time to worry about ramping users while putting yourself in the hole for the sake of demonstrating traction. This is a bad time to look for investors and acquisition valuations aren't going to be very high so forget about trying to impress others. It is time to focus on revenue, plain and simple. That has led me to prune the list a potential clients to those that can pay and are highly motivated.
2) cut overhead to the bone
We gave up on office space last spring and any and all frills. Anything that doesn't get us paying customers is simply not pursued. Everyone continues to work for sweat equity, we're partnering with a local university to get students to work with us while getting paid through a University program. Essentially, we're building this company on less than a shoestring and we're still getting traction!
The fact that nobody in the company gets paid anything until we get revenue keeps us extremely hungry and focused. Much easier to have a false sense of security with a few million in the bank from a recent round. Raising money is not a sign of success and it could be your undoing if not handled properly. Our lack of money will make our company stronger ... I'm convinced of it.
3) Apply the "cute kitten!" sales approach
My kids are very good at sales. I have been against getting a cat for as far as I can remember. Today, one of our neighbours was giving away some kittens and the kids brought one of them in to show us. Darn thing was so cute and was cuddling and purring right away next to my wife. A quick trip to the pet store for supplies and we now officially have a four week old kitten.
We have now moved to a simpler pitch and with the fortune of a few new team members joining us recently, we can pre-build a working mock-up before going into a customer pitch. "Look how cool this is, it already has your name on it and it is ready to go ... we can have this up and running tomorrow!" I now call this the "cute kitten sales approach". It just worked on me and I didn't even want the product!
4) Make it easy for customers to say yes
Customers are going to be thinking twice about putting money out right now, no matter who they are. There are three possibilities:
a) they add to their budget to get your product ... tough sell right now
b) they eliminate something to get your product ... again, tough ... they have to change their mind which is never easy
c) your product allows your customer to save money or make money and ideally both at no or very minimal risk. a revenue share can be a good way to go with the right type of customer
5) this financial chaos can be the best thing that has happened
Are your customers going to be able to achieve their goals while spending dramatically less using your product? In good times, people don't count their pennies as much and are not motivated to change. They are motivated now. Can you build something that capitalized on this uncertainty?
So in summary, focus on revenue, cut overhead to the bone, focus on specific customers and make them taste it using the "cute kitten" technique, make it easy for them to say yes and remember ... this financial mess may be the best thing for you.
So, what do you think? Am I full of it? Do you have any advice of your own? I would love to hear it.