Entrepreneurship has become a way of working since some months. I should say that I’m quite happy and satisfed about that. My startup company is performing quite well. First months revenues and margins are in line with my targets and we are receiving many cooperation requests.
I take this occasion to share two point that I consider quite important for whom has a company like me or is going to think about founding one.
First point. Apply since the beginning a Cost Reduction policy.
Nowadays it’s quite mandatory to avoid useless expenses. Try to maintain assets extremely reduced. If you are not able to invest some money for an office rent, go to a business center: it’s a chip solution which cost really nothing. For example, When you need a meeting room for an important occasion, rent it that same day. If you can avoid loans, better. I know that this depends on your activity and that sometimes it’s necessary if you plan to produce goods. What I want to say is that in case you must request some money to banks, capital ventures organizations, business angels etc, prepare the most accurate business plan having under control requested interests, contract constraints which could be a potential cause of problems.
In m y case, talking about sales outsourcing services I didn’t have to ask for loans. It was enough capital invested by me and my partners. Of course you need to prepare contracts that includes fixed fees related to different activities performed for and with your customers. In addition to that you have a variable part of your payments related to sales. This drives me to the second point of my thread, Customer selection.
Second Point. Customer selection.
During my first activities as a general manager of my company, one of the mandatory issue to be solved was to have a bunch of customers which permit me to start having revenues with a reasonable timing and that could accept a fixed fee. Is quite well known that if we are talking about sales, customers are telling you: “give me a deal and I’ll pay your commission…but don’t ask me a fixed fee”.
I know that is difficult to select customers but especially nowadays is a must. For two main reasons: be sure that they are going to pay you (Accurate rating to be done previously) and have someone that can accept to pay you a fixed fee, vital for your company.
How can you make your customer accept a contract with a fixed fee? Studying its needs and offering a dedicated service scheme with defined activities and targets. If possible adopt a scalable fee scheme too, better avoid some unexpected reactions to your requests.
If you have customers that are not so profitable, or pay you only on provisions, think to eliminate them as soon as possible or dedicate them less time and priority.
So I thing that resuming what I’ve just written, being an entrepreneur sometimes is not easy but it can be really satisfactory even in a downturn situation. Being careful with expenses and customer selection is a must, and is a tremendous drive for a company success.