Size Matters! How To Make Your Startup Appear Bigger Than It Is
Zero To €100k Revenue In 12 Months — Month 2
We’ve made it this far! The business is alive, we have our first few customers, a rough product and its generating income.
This month we look at adjusting your pricing model, figuring out how much your time is worth, accounting nightmares and how to appear bigger than you are.
It is 5.30pm on Christmas Eve and I am sitting on the couch, channel surfing on the TV. The Home Alone movie is just starting but the problem is I’m 160 kilometres away from my family and the couch belongs to a new client who has a guest arriving to spend Christmas in Dublin.
A new customer called me just as I was preparing to finish work on Christmas eve and I took the job. They had been let down by a friend and urgently needed someone to meet their guest.
When you are starting your business, you must be prepared to do things others won’t. However, this comes with a massive lesson that took me a long to learn. I said yes to absolutely everything and I was wrong.
The check-in fee for that customer was just €30. To make matters worse, the guest was 90 minutes late as they had never been to Dublin before and got lost. I earned €30 for 90 minutes work on Christmas Eve.
To be truly successful, you need to understand the difference between being busy and being productive. I learned that my business would never scale or even reach profitability if I was earning a fee per hour.
If you can’t measure it, you can’t improve it. — Peter Drucker
From the very start of the business, I tracked absolutely every metric possible. This was not based on my love of numbers. I was bootstrapping the business and there could be absolutely zero waste. When entrepreneurs think about waste, they imagine excess stock or inefficient use of raw materials.
The single biggest form of waste in startups is your TIME!
By tracking how I spent my time, I was able to work out that getting paid per hour was the quickest way to become a busy fool earning less than minimum wage.
When you are starting your business, you are the CEO, marketing director, head of sales, operations director and janitor! If you are wasting your time by taking on jobs that don’t make you money or advance your relationship with a client, you are doomed to failure.
Key Tip: Use Google Calendar or a paper diary to plan each hour of the day. This may seem excessive, but try it for one week. You will see how it avoids time wasting or even better, exposes how much time you are currently wasting. You’ll be shocked at how 15 minutes on Facebook per day can add up over 7 days.
Entrepreneurs love to brag how they get 5 hours sleep and spend every waking hour in the office. To be successful quickly, you will need to put in some 18 hour days, but if you do that for too long you simply burn out.
Don’t work harder, work smarter.
Shortcut To Burnout
Every entrepreneur will tell you, “once you start a business, there is no such thing as a day off”. This is both a cliche and 100% true. However, there is a massive difference between constantly thinking about your business and actually being on call 24/7.
Before you start your business, you must know if the business you have chosen will suit your lifestyle. The hospitality service is 24/7, 365 days a year. I’ve had calls from guests and landlords at 4 am in the morning more than once. This can be stressful and can have a massive impact on your personal life. I once had a guest call me at 6 am, to say she couldn’t find a spatula to cook her porridge and could I pop over with one?
Key Tip: From day 1, set customer expectations and let them know what your work hours are. This may seem obvious, but I promise, without boundaries, you can expect calls at crazy times of the day and night. If you need to have an out of hours service, put a plan in place so that you aren’t on call 24/7.
Show Me The Money
I am now going to share with you the most boring lesson and the one you will most likely to ignore. It is also the tip that will save you tens of thousands of euros and keep you out of bankruptcy court. Skip ahead if you hate making profits!
Key Tip: The first day you begin to earn money from your business, is the day you should get an accountant.
Unless you are very savvy with finances, do not waste your time trying to figure it all out yourself. You will be flying blind. Finance is one area you simply cant afford to figure out as you go.
As you can probably guess, I did not follow this hard earned advice. I thought I could track with a combination of Google Sheets, and a basic, free online accounting package.
At the start, your turnover levels will be low and the temptation will be there to do it yourself. An accountant can seem like a luxury when you literally can’t afford to even pay yourself a salary.
Given the choice between paying myself or paying my accountant, I’d happily hand over the cash. You can’t put a price on a good nights sleep knowing your finances are in order and your taxes filed correctly.
If you do not set up your accounting software right from the start, each day you will be compounding your mistakes.
Every entrepreneur must focus on their strengths but it is more important to be aware of your weaknesses. For the first 6 months, I wasted so many hours trying to do everything myself. Find an expert, develop a good relationship with them and it will save you heartache, money and lost weekends in the office. I once spent two hours Googling the VAT rate on orange juice in Ireland. I wish I was joking about that fact.
The money you pay your accountant will be recouped 100 times over with the money and time they will save you. I was extremely lucky to be introduced to a brilliant finance guy, who I knew would give me honest, genuine advice and most importantly, keep things in order. You can check him out here.
Once you start generating cash, its time to start tidying up the loose ends that were ignored earlier. I commissioned a brilliant graphic designer friend of mine to create professional logos and a brand image.
I always prefer to work with people I already know. Sites such as Fiverr and TaskRabbit are useful, but you can often spend more time and money outlining the task and arguing over revisions.
You can negotiate a better rate when dealing with a friend or someone from your network but more importantly, always work with people you can trust. If they do you a favour when you are a small, cash-strapped company, make sure you return the favour when you can afford to send more work their way.
5 Tips — Keeping Up Appearances
1. Put a physical office address on your website. So few companies do this and it makes a massive difference. This doesn’t mean you have to rent an expensive office. I ran HostButlers from my spare bedroom and coffee shops for the first 11 months. I met prospective clients at their properties or booked cheap meeting spaces. Do not overstretch your budget by investing in vanity items like a fancy office.
2. Have your phone number and a short biography of yourself on the website. To this day, my phone number is on the site and I handle 99% of calls personally. People buy from people they like and trust. I advocate automating with software where possible, but never outsource your first point of contact with a potential customer when you are a young company.
3. Get customer endorsements/testimonials as soon as possible. If you do a great job for a customer, ask for a simple two line endorsement on your website or Google business profile. The power of endorsements has earned me thousands of euro. As a young startup, people can often be afraid to try your service if they think they are a guinea pig or you don’t have the relevant experience.
4. Overdeliver every single time. With each of my first prospective clients, I aimed to impress from the very first interaction. Ahead of a meeting, I would email a calendar invite and it goes without saying to be early for the meeting. Remember the motto, “Early is on time, and on time is late”. Following the meeting, I would email within 4 hours, a short, succinct proposal with clearly outlined next steps. Professionalism costs nothing as a startup, its an attitude you foster from the start.
5. Physical appearance is important. You no longer have to wear a suit and tie but like it or loath it, people judge you and your business on your appearance. No need to rush out and invest in a tailored suit, but present yourself as you want your business to be perceived.
Next Week — Month 3
I embark on a new marketing campaign that earns us lots of new customers but almost kills the company.