Starting a business is an exciting chapter for anyone. Our minds are occupied with day dreams of what the future may look like. We see ourselves working in a home office or tending the register’s ending cash flow, right after flipping the “Open” sign to “Closed”. We dream about buying the items first on our wishlists, taking our family out for adventures, or driving our new sports car. We dream about improving the lives of those we serve.
Eventually, start-up companies hit the wall where wearing all the hats becomes exhausting. Not long after does the romanticization fade and our day dreams drift into a deep sleep. Some days you earn money, some days you don’t.
For the eager beginner CEO, it’s best to keep money in-house. Especially in the beginning, you will want to maximize net profit and pocket as much as possible. However, we advise you not to do this. Your business needs at least five years to build a foundation that is sustainable and you need at least three years to master the in’s and out’s of your industry. When you’re just getting started, keep money inside the bank. You will be experimenting, learning customer behaviors, and managing team members. When loss of revenue hits you’ll be thankful you had back up funds to keep going.
From the start, keep a database or tracking system to monitor:
- What your customers buy
- How much they spend
- How often they repeat purchases
- Any feedback they give you
Just because someone says they want one particular product or service that you don’t already offer, doesn’t mean you need to offer it to everyone, but if 75% or more of people say the same thing, you may have a golden opportunity here. The same goes for negative feedback – one person disliking something you offer does not define your entire audience.
Like starting your business, when the opportunity to launch a new product or service comes up, you’ll get excited again. Before announcing this, do your research. Write out how the costs work (or don’t). If they don’t it may not be liable right now. For example, when we owned a small farm countless people told us to grow asparagus. For starters, asparagus takes a long time to grow and would occupy space for too long (meaning other fast-yielding crops would wait). It’d also require much time, labor, costs/resources. This alone drove the costs up that put it way above local market pricing. We weren’t large enough to support this highly desired product, unfortunately. Was it a bad idea from our customers? Absolutely not! It was an opportunity that we couldn’t manifest on a small scale. Preferred choice by popular demand isn’t always in your cards.
If the costs work out and you can offer something new, meaning you’ve worked out all of the logistics, then you can move forward. Still, you don’t want to announce a launch date yet.
The eager CEO loves to light a fire under their seat and set a due date before having all of the materials. Many hiccups can happen and you may find yourself with busted shipments, delayed deliveries, or other common setbacks. Wait until you already have all of your ducks in a row, even a prototype, before making any promises. It’s okay to say “Coming Soon!” but do not take preorders unless you have officially completed your trials and have plenty of stock to fulfill your delivery. Even if it’s a service or new monthly event, rehearse how it’d pan out to ensure the optimal experience.
Discounts are another area eager beginner CEO’s offer. When you begin, you’ll probably want to please everyone, especially while getting to know who your real customers are. That’s okay, but keep yourself from offering deals and discounts just because. You’ll find that many customers want to negotiate or haggle you for a discount. If you give a dog a bone, they’ll keep coming back. Do this enough and word will get out and you’ll see that more customers come to you for a bargain than for the quality of your true value.
Discounts should always be made by you and only when you’ve screened the logistics. Is there a service you offer that isn’t selling well? Try to knock the price down and see if it does better before cutting it out. Have a few left over items you don’t need anymore? Mark it down to make some profit. You can even offer free gifts or special perks to your most loyal customers, so long as you have side funds to support a rewards program. Can you make more by offering a membership at a set fee which gives monthly gifts? Do the math first and make sure you have enough data to support discounts. Don’t just give things away to make a buck.
One of the worst pieces of advice we’ve ever heard is, “you can’t afford to say no. In the beginning, you need to take all the money you can get.” We say we can’t afford to say yes to everyone! Why is this advice bad? Because energy has hidden costs. Every yes to a bargain customer turns into a high-maintenance relationship. Every yes to an additional opportunity to make more money costs labor, resources, and time. When we devote our time and energy to things just because it might bring us money, we end up losing. When you get an opportunity, research the data and do the math. Treat each opportunity as innocent before guilty, but don’t say yes, yet. Be the juror. Be unbiased. Gather the information, then make your decision.
The most common beautiful yet risky trait of any CEO starting out is the eagerness. Be tame. You can still enjoy the process, but be sure you think all things through before acting. That’s your first lesson. You’re in the big chair now, which means all decisions need to be scrupulously vetted before you give the order of execution.