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You have to have some skin in the game…
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You have to have some skin in the game…
At the Ohio SBDC we train and advise entrepreneurs and small business owners at every stage of business from those that only have an idea and need guidance on how to develop it into a business to established, existing businesses seeking expansion or in financial hardship. We run the gamut. Undoubtedly the most challenging to work with are those that are just starting out.
They are passionate. They believe their business is the best thing that has happened to the human race since the invention of indoor plumbing and that’s a good thing because passion is important in business especially in the beginning stages. You have to believe in what you’re doing because the investment necessary to develop your business is going to be great. And while your product or service could eventually become the game changer you believe it is, the reality is… much of the investment you’re seeking will come from you alone. This is a tough realization for many first time business owners to accept and applies to not only the need for financing but also expertise that lies beyond their own skill set.
Case in point: Twice in recent months I’ve worked with or encountered entrepreneurs in the early start-up stage of their businesses that were trying to establish a web presence. Both of these individuals were in need of the technical expertise to develop a website but was neither willing to pay for it to be done nor willing to personally develop the necessary skill set. The first entrepreneur confided that they had the money but didn’t feel this was something they needed to pay for. The second entrepreneur was contracted to create a website on behalf of another business owner. Similar to the first, they didn’t want to pay someone else to do it as that would reduce their profit from the contract but again did not personally possess the knowledge to develop a website on their own (Obviously there are some other issues that need to be addressed in this second scenario but that’s another post for another time). In both of these cases, the entrepreneurs knew individuals that could provide these services at a substantial savings below market but instead of paying, they were unsuccessfully trying to leverage their relationships with these individuals to secure the services for free.
First and foremost an entrepreneur must acknowledge that it is not possible to be all knowing; they cannot realistically possess all the knowledge, skills, and abilities necessary to build, manage and grow a successful business without the willingness to devote some resources to the cause. Secondly, while bootstrapping* is a viable and recommended method for start-ups strapped for financing, taking it to the extreme by refusing to pay or otherwise compensate for needed services could be detrimental to the health of your business and associated relationships.
When your business is in need of a product or service as in this scenario, allow me to offer some advice:
Understand the value of the finished product or service to your business and be willing to dedicate a commensurate level of resources.
In today’s environment telephone books are obsolete, consumers can locate merchants, products and services with a few keyboard strokes and online reviews equivalent to the value of “word of mouth” referrals are readily available. Many times the decision to purchase is made before a customer steps into a store. Because of this the legitimacy of your business and the quality of your product or service will initially be judged by every visitor to your site who is new to the company. Cutting costs / resources here could be harmful and limiting to business growth.
If you don’t have the money to contract out the service or the skill set to do the work yourself, find someone who does and barter equivalent level services.
Develop the skill set yourself
Now you won’t be able to pull an Eddie Murphy and play the role of every employee in your company but there may be areas where it would be beneficial for you to develop your knowledge base. Marketing / managing your online presence, as in this example, would be a good one to consider for maintaining brand consistency and developing relationships with your customer base. There are many local low cost to free training opportunities available via the SBA, and the Small Business Development Centers* as well as community colleges* and of course resources available through your local libraries.
Be selective when calling in favors
While you may have friends and family who have the skill set you need, be selective when calling in favors and don’t make these free favors part of your overall operating strategy. Realize the value of the time and work done for your request. Show your appreciation, compensate whenever possible and be cautious in how often favors are requested. Family, friends and your business network are some of your most valuable assets in your personal and business life…conserve them.
* This hyperlink goes to a non-government website.