Thread
Do you want to start your own business?
Here are 10 things founders get wrong about building a service-based business
/ THREAD
Here are 10 things founders get wrong about building a service-based business
/ THREAD
1/ Quantity of Customers vs. Quality of Customers
Most founders get caught up on the QUANTITY of customers they have vs. the QUALITY of customers they have
For example, in a service business like mine, I frequently get asked: How many clients do you have?
Most founders get caught up on the QUANTITY of customers they have vs. the QUALITY of customers they have
For example, in a service business like mine, I frequently get 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
What would you rather have?
1. A) 100 clients that pay $10/each = $1,000 in revenue
2. B) 10 clients that pay $1,000/each = $10,000 in revenue
What would you rather have?
1. A) 100 clients that pay $10/each = $1,000 in revenue
2. B) 10 clients that pay $1,000/each = $10,000 in revenue
2/ Riches in Niches
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...
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
- You’ll enjoy working with them
Apple didn’t start to market to everyone. Instead, they started as a fringe brand for artists
- Pay you more
- You’ll enjoy working with them
Apple didn’t start to market to everyone. Instead, they started as a fringe brand for artists
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
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
@alexgarcia_atx nails this:
As a service provider, you’re not selling a service.
You’re in the business of selling transformations
@alexgarcia_atx nails this:
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
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
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
In my field of accounting and financial services – there are many competitors
Most Founders think that if your idea isn’t original enough and you’re not first - it’s not worth it
In my field of accounting and financial services – there are many competitors
However, some of my competition has:
- Terrible execution
- Poor customer service
This is an opportunity if you can do better
- Terrible execution
- Poor customer service
This is an opportunity if you can do better
• iPhone wasn’t the first smartphone
• Google wasn’t the first search engine
Though it helps to be first, it’s not everything.
Superior execution can beat a first-mover advantage
• Google wasn’t the first search engine
Though it helps to be first, it’s not everything.
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.
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
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
Take it from a CFO - Sales is the lifeblood of a company
Revenue cures all problems in an organization
A lot of founders hate sales or think that sales is useless, aggressive, unnecessary
Take it from a CFO - Sales is the lifeblood of a company
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
Here is a great thread about the importance of selling:
This is a skill that every business needs. All founders need to learn how to sell
Here is a great thread about the importance of selling:
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
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
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
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
Without them, you wouldn’t have a company to run
10/ Outsourcing
Some founders think that they should never outsource anything in their company because of:
1. Cost
2. A lack of control over the work
This is foolish.
Some founders think that they should never outsource anything in their company because of:
1. Cost
2. A lack of control over the work
This is foolish.
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
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
• 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
• Marketing
• Finance
• 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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Follow @AliTheCFO
I tweet about:
• Finance
• Business Frameworks
• Personal Growth
Follow @AliTheCFO
I tweet about:
• Finance
• Business Frameworks
• Personal Growth
