Scott Gerber encourages more people to quit their 9-to-5s and become entrepreneurs. But there’s no denying that this is a difficult path to follow.
Here he shares my biggest challenge as an entrepreneur and how he solved it.
About Me: I’m an internationally syndicated small business columnist, serial entrepreneur and the author of the book Never Get a “Real” Job (Wiley, 2010). I am also the founder of the Young Entrepreneur Council. My company, Sizzle It!, is a sizzle reel production company that produces promotional videos for PR and marketing professionals. The company’s clients include freelancers, agencies and major corporations such as Proctor & Gamble, Dolby and The Gap.
My greatest challenge: Like most businesses, in the first quarter of 2010, business was flat–and very quiet. Previous clients were taking upwards of 60 days or more to complete payments on previous projects from Q3 and Q4 of 2009. Even though our return customer business was high, our lack of consistent cash flow was impeding our ability to grow. Not only did we need to get new customers in the door faster (a conversion process which normally took 60-90 days) , but we also needed to get them without spending anywhere near our normal customer acquisition costs.
The solution: Before spending precious dollars on any ad buys and campaigns to target “new” clients altogether, I chose to set up lunch and phone meetings with all of our existing customers to get some strategy ideas. These conversations not only led to my “ah ha” moment, but they also changed the way my company does business to this day.
Although Sizzle It!’s primary customers are mid-size and large companies with multiple divisions, at that time, I had assumed that once we became an accredited or qualified vendor by our customers (and put into their databases), everyone in the company would know about us simply by typing in a few keywords in their company-wide address books.
Boy, was I wrong. Big time.
What I found was that in almost 80 percent of my customers’ companies, one hand rarely washed the other. Employees might have been meeting at the water cooler or over lunch all of the time,but I found that the they almost never knew what their counterparts in other divisions were up to. Knowing that the budgets were getting tighter for some of these divisions, I began to offer incentives to our current clients, such as steep discounts for successful referrals, in order to directly recommend us to the project leaders in other parts of the company.
The Aftermath: By instructing our sales team to operate with a 2-for-1 mindset–where every new client should produce at least two new clients–we effectively doubled our existing client roster, strengthened our relationships with our clients, and best of all, generated more income without having to incur any costs associated with attracting new clients. Once our cash flow rebounded, we continued to invest in our client acquisition programs, however, to this day, we still utilize our 2-for-1 strategy.
The Lesson: Never settle for one client just because you sign one client–especially when it comes to working with larger firms. Mid-size and larger companies have many divisions, so don’t miss out on revenue-generating opportunities by only working with one. Turn all of your big clients into multiple clients by offering your happy contacts a reason to introduce you to their co-workers and colleagues.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.