When chasing new business in startup land or any business for that matter, the time to revenue is more important than the amount or revenue.
It’s easy to believe that a big $500,000 project is better than a little $5000 project. Maybe the big one takes a year. Maybe the small one takes a week or two.
I say the small projects rule! But before I choose, the questions I usually ask myself include:
- How long will it take to get the revenue?
- What is the potential for expensive mistakes?
- What is the probability that the project will go over the time estimate?
- Are we paid in time put in or final completion of said project?
- What level of resources need to go into pitching & winning the project?
- Will we get more smaller projects after successful completion of the first?
When we answer these we usually find that the $5000 project that takes a week is a far better option than the $500K project that takes a year. And the reason that they are better is that the revenue is compressed.
I heard a great little story today about how to overcome barriers when pitching business, changing minds or influencing in general.
Changing worldviews is hard, often impossible. But there are two possible routes we can take when trying:
Route (A) We can try and change peoples view on a topic- change the unchangeable.
Route (B) We can change the currency. - This route is invariably more successful because it re-directs peoples perspective.
Car sales people do it all the time. Once the negotiation is close to reaching a stale mate on price, they then bring in the optional extras: Items removed from price. Although they do have a value, it changes the view point of the negotiation. It’s a change in currency. And the discussions can progress to a close.
When trying to reach an agreement, or change a mindset, we need to re-invent the currency of what is being discussed.
I had a catch up with a well known pitch doctor yesterday. He reminded me of some of the most important factors, and regular mistakes we make while pitching.
Biggest mistake: Wasting time talking about ourselves. They already know enough about us, or they wouldn’t be in the room. The right amount of time to allocate talking about ourselves is close to zero.
Biggest Opportunity: Leave some questions unanswered. (counter intuitive I know) This creates the opportunity for real conversation. When we converse, we see how each party thinks. It also enables us to determine if we have the right chemistry to work together.
Sometimes a startup just make sense. Logical in hindsight to the point where it feels like we should have done it.
Vitamints is one such startup. It is what it says – Vitamins which are also mints.
This Australian startup has taken some really clever insights to form the basis of the product format and it goes a little deeper than vitamins that taste nice. They found that houses were graveyards for half used vitamin bottles (I know mine is!!). The basic idea was to get vitamins out of the kitchen cupboard and into peoples pockets, like gum. So why not package it like gum? Why not make it taste nice? Why not distribute it in more convenient locations?
And aside from the fact that mints in convenience stores are almost the fastest growing impulse purchase, Vitamints taps beautifully into the mobile society we now live in. Your vitamins now live in your pocket people. Sounds a bit like a classic web mashup business, but in an old tired category. Once again industry incumbents need to take a lesson from an innovative new business – maybe that’s why I like it so much.
I can’t wait to read about them getting bought out by a multinational pharmaceutical company in 10 years time.
When starting out or chasing new customers on an existing business it makes sense aim for smaller players first, to build confidence, and get a few small wins on the board…. right?
The problem with thinking like this is that it makes life harder and less profitable.
The truth about small fish, is that they are harder to catch than big fish. They’re more elusive than the big guys and are often much harder to convince to invest their money in whatever we are selling. With the small fish the decision is often about whether they should invest their money or not. The advantage of the big fish, is that the investment funds are usually allocated, it’s more a question of doing business with company A or company B. From a revenue perspective it’s far wiser investment of time to court a customer whose decisions to invest are already made. A $10,000 customer is harder to get than a $1,000,000 one.
The other factor worth considering is our reputation. If we become successful selling to the small players, we’ll be seen as a small solution provider. But if we land a big one it gives us a license to knock on other big doors. When the investment is time, its worth chasing the bigger reward, and the truth is that it’s often an easier sell job.
Spreadsheets cause far more problems in business than they solve. When we sue spreadsheets too much we start to believe our business is the numbers we make up to fill in the columns. Turns out the numbers on the tidy little sheets have very little to do with our business. Our business is about people, emotions and serving needs. It’s about human movement and insight, not predictions and forecasts.
In recent times brand managers and entrepreneurs have become spreadsheet managers. Busy forecasting, doing profit and loss statements for upcoming launches and estimating sales revenue and market share for the upcoming quarter. The problem with most of these activities is simple, they are predictions. They rarely turn out to be correct, and they suck time we should be investing in getting our products to the market, talking with our customers and promoting what we do.
In startup land there are only two colums we need. Expenses and revenue. Once we have these we just need to make sure the revenue side is greater than the expense side. After that we ought leave the spreadsheets to our accountants.
Here are two important assets for entrepreneurs:
Asset 1 = Imagination
Asset 2 = Effort
The aquisition of these assets does not require any financial output. Rather they only require desire and courage.
Desire to continue when others quit, or you lack the energy needed on an idle Tuesday.
Courage to take the inevitable criticism that arrives when you use your imagination to change something.