Startup Life Log: Post 3

Yay! Another Startup Life Log! This series of posts are a transparent look at what makes Widgetware tick. We post the good, the bad, and the ugly, as well as some general advice we’ve learned over the past few years. In this post, I talk rant about startup life, the struggles that come with gaining new customers, and the difference between Customer Quotes and an Agile Workflow.

I Wish You Didn’t Own Me

Let’s face it, at some point during your time as a freelancer or a startup, you were so eager/desperate to get business through the doors that you made some serious mistakes. This really is a universal story. Getting that first big client feels great, can boost your moral, and can give you that feeling that “everything is going to be all right.” But unless you are the luckiest person on the planet, you likely made a few mistakes when courting your first big fish.

“I Own You”

When you are desperate for business, strange things can happen. You may cut, slash, and reduce prices. You may make huge promises and commitments. All these things are fine, if you’ve planned for them correctly, but more often than not, you didn’t because you are desperate. Before you know it, you are watching your profit margins dwindle, you are missing deadlines, and you find yourself completely tied to a client until you can make it right. Before long, you start to realize that if you continue on this course you may fatally injure your already crumbling business. There may even be times that you ask yourself, would I have been better without this gig. You’ve gone from desperate to depleted.

If you are thinking about starting a business or If this sounds familiar, then hang tight, I’m going let loose a few tips that you most certainly should read.

When the time is Ripe

One of the most important steps in opening a new business is knowing when the time is right. A lot of people recommend giving your startup a go during natural life transitions such as if you’ve just lost your current job. It doesn’t sound like a bad idea, especially since you still have some savings and those unemployment checks coming in, but this is not the primo time to go for it. Startups require a ton of time, hard work and effort, and if unemployment is bankrolling the project, you are asking for a disaster. I would recommend finding at least part time employment for starters. That way you can fend off the desperation monster while you are growing your business. This is also a great opportunity to really observe the workings of a company. Make a list of things you like and hate about where you work and you can use that to help your business in the future.

Give Estimates for Expectations not Quotes for Results

Hourly vs Salary: This is probably the hardest lesson to learn for a startup. Since you are new, it’s likely you will be seeking clients instead of customers knocking down your door. While you’re seeking, you will hear these words at least once, “Give me a Quote.” You may be asking yourself, what is the harm in that? Let’s analyze.

A quote refers to an absolute value of a finalized product. If the parameters of the finalized product change, it easy to change the quote to match. But here’s the problem, unless you are following word for word directions for the finalized product your quote will almost always be off. This is detrimental because if you are giving a quote you are typically bidding on a project (whether you know you are or not) so you are attempting to undercut the competition. Then if you get the job the margin of error in the quote will almost always be in your client’s favor not yours. At the end of the day your client may go home happy which is good, but you won’t, which could be worse when they come back looking for the same deal they got “Last Time.”

On top of that, it’s likely that your customer expects certain results from your service. There is something about the word “quote” that makes you feel like the cost is equal to the direct outcome, and this is true if your service doesn’t involve any risk. But if your service doesn’t have guaranteed outcomes, like most things, then quote is the wrong word and you will almost always get this complaint, “I paid for this and I didn’t get this!”

So instead of giving a quote, give an estimate of expectations. Clearly define what your customer expects the outcome to be, and then make an estimate. Chances are, they might not even really know what they expect and simply asking can save you a ton of heartache later. An estimate is also far more organic and can change as the project does. If a client changes their expectations they understand that it directly affects the project’s budget. This may sound like a simple phrasing difference, but there’s a lot more to it and you will notice the difference almost immediately. Regardless of what you choose, the most important thing you can do is keep your client informed on your progress and the project’s budget. This is part of an Agile workflow and there are ton of great resources out there to learn more about it.

Have you tried giving an estimate instead of a quote or fell feebly into the maw of the desperation monster? I would love to read all about in the comments below!