How to Start a Profitable Business in Just 3 Steps September 30, 2014
When launching a new business, it can be daunting trying to figure out where to start — especially for first time entrepreneurs. With so many seemingly important things to take care of, it’s easy to get distracted by projects that feel productive but ultimately lose sight of what makes a business profitable. Should you start out making a website? Creating a Twitter profile? Designing a logo and business cards?
With so many choices, it’s no wonder people who want to start a company wind up giving up or are too put off to even get started. And it doesn’t help that writers who have never successfully started a company themselves put out articles and blogs that mislead would-be founders into wasting valuable time on things they really don’t need in order to begin.
The team at The Link Builders has founded numerous profitable companies that have been so successful they’ve even been acquired. We can speak from a position of authority that the fastest way to start a profitable business is by following these three steps:
1. Get a client
2. Get another client
3. Get a third client
This list is not a joke or sarcastic. There are two core points here. The first relates to focusing on getting clients before anything else, and the second is proving you have the potential to scale.
First, if you want your business to be profitable then the most important thing to have is revenue. If you have a client, you have a business, period. It doesn’t matter if you don’t have a website, professional letterhead, social media profiles, articles of incorporation, or anything else.
If someone is paying you money to provide a product or service, you have a business. Unfortunately the opposite is also true. You could have a slick website, fancy logo, business cards, an active blog, and even an office. If you don’t have clients, you don’t have a business — you’re just a “Wantrepreneur.” This term has become popular for describing a “wanna-be” entrepreneur, meaning someone who likes to “play business” by setting up all of the superficial signals of having a company without actually earning any money.
Somehow amidst all of the blogs telling you how to optimize your Facebook presence and pick the right invoicing software this essential point gets buried. Fortunately, once you realize this it gives you an advantage. While your competition is spending a week trying to decide which font to use for their header, you will be a week closer to closing your first deal and increasing your market share at their expense.
There’s a reason that the list said to get three clients as well, instead of just one. Your first client could be an anomaly, meaning there aren’t many other people like them and therefore your market size would be limited. Your second client could be luck, meaning there are other people like them, but they won’t want to hire you when you’re just starting out. If you can get three different people to pay you for your product or service though, the odds go up significantly that your business has realistic potential for growth.
So now that you see the most important place for you to focus your time when starting a business is on getting clients, everything should be easy, right? Wrong. The other reason Wantrepreneurs focus on making websites and business cards is because, in addition to being the most important part of starting a business, getting clients is also the hardest part.
Unfortunately this is one part of running a service-based business that doesn’t have any “hacks” or shortcuts. There have been volumes written about each of the various stages in the marketing and sales cycle, and it can take time to develop the skills necessary to land your first deal.
However the sooner you begin working on those skills, instead of spending time on nonessentials like company letterhead, the sooner you’ll be able to get your first client.
When it comes to figuring out the best way to close deals for your business, the quickest way to get started is with a three-part sales process. The first step is identifying prospects. Spend a few days to a week creating a list of at least 25 people or businesses that would be interested in what you sell. You can use anything from online forums, to Craigslist, to the list of parent contacts for your kid’s soccer team.
Once you have your list of prospects, you want to “qualify” your leads, which means figuring out who is most interested in your offering so you can focus your attention on selling to them because they have the best odds of converting. Reach out to all of your leads and introduce them to your company and what it does, and make sure to tell them what’s in it for them if they were to hire you as well. Finish your message with an offer to send them more information if they’re interested, but don’t just send everyone the same email. Instead, create two to three variations of your qualifying letter that highlight different benefits and use different language to describe your business. If any of the versions gets you significantly more responses, use that one moving forward and try additional tweaks to see if you can make it even better.
The people that respond to your initial email asking you for more information are the “qualified” leads; since they were interested enough in your business to write you back. The final step in the process is sending them a proposal and closing the sale. However, it’s often smart to first request a short phone call or ask to email them a few key questions so you can gather some intelligence about their current situation and make sure your proposal addresses their current pain points. Simply say that you’ll be happy to send them a proposal, but if it’s okay with them you have a few quick questions you’d like to ask first to make sure that you can deliver the most tailored suggestions possible.
Once you have the call, use what they tell you to create a proposal for how you will specifically solve some of their most noticeable problems, and if you’ve positioned yourself correctly you have a good chance of landing the deal.
Now you may not convert any of your leads into clients the first time through this process, but you will now have enough information to decide what needs the most improvement. If you reach out to 25 leads and get one response, you know that you need to work on your copywriting and initial pitch. If you get a decent response to your qualifying email, but then no one decides to become a client, you know you need to work on your offering and negotiation skills.
However, if each time you reach out to a prospective client you do a little better than the last time because of what you’ve learned, it will only be a matter of time before you land your first deal and officially have a real business to run.0