New Business: A Journal

[Blackhood]

I'm starting a new business and I thought it might be cool for me to document my progress through the business forum. Hopefully it will give others a good idea of the hardships, pitfalls and (dare I hope?) successes that come from the first year of running a business. So day 1, the background:

Background
I am a 22 year old Marketing student entering the final year of University. Previous experience includes being a Pilot (light aircraft) and an Art Dealer.

My partner is a 27 year old Teacher with a Masters in Computer Science. Both he and I have extensive experience in the field in which we are stating the business.

The Company
A technical support company catering to the education sector. Main competitor is the government, though by all account the clients are not at all happy with the service.

Stages Complete
Registering with Company's House to become a Limited Liability Corporation. We decided to go Limited due to the protection offered in terms of how much the Directors would be liable for should be be sued for damages. Because we are dealing with fairly large institutions it seemed prudent as they will almost certainly have better lawyers that us!

The process took approximately 45 minutes and cost £75+VAT. Very easy and even if we don't do anything with the company, there are no other costs involved.

Setting up bank accounts. A whole other matter! With about 5 local banks it took more than 8 hours of meetings, with each bank offering subtly different options. The most time however was spent waiting. If time is money, then this task will cost you dearly. My advice is to set aside a whole day for your account selection and opening, as you wont get much change from 8 hours when shopping about. When we finally settled on an account it took approximately 90 minutes to get everything set up.

As of that moment, I am the director of a fully fledged small business.


In the coming weeks I intend to update with tales of finding the first Employee, the Mythical First Client, and what ever else crops up. Unless the response to this is a resounding "Don't be such a self indulgent dick!", in which case I will quietly skulk away with my tail between my legs.

If you read that essay then well done, here is a lion as reward!

 

[acidboy]

Don't be such a self indulgent dick!

good luck, and do keep us posted. this looks epic!

 

[Eason]

Sweet Jesus a ******* lion!

 

[CouttsClient]

Lovely lion

 

[bringusingoodale]

I am intrigued. Will monitor.


But now for the snark: Great, another tech startup/consulting company

 

[Matt]

interesting thread even without the free lion.

look forward to the story as it unfolds. It's an interesting ride man, I can tell you that from experience.

 

[Kent Wang]

Best of luck. I love working for myself.

The lion looks very majestic.

 

[level32]

You better have named it LionCorp

 

[bringusingoodale]

Bump.

Any updates?
Genuinely interested in this. Starting a business is murky scary stuff for the uninitiated like me. I'd like to read someone's experience.

 

[Blackhood]

I wasn't planning on updating this as often as once per week, firstly because although there is a lot of work to do there isn't a great deal of interesting subjects to talk about. Having said that I see no harm in looking at the areas I've covered in the first week of business.

Week one: finding customers
Our first approach was to use publicly available records to cold call a potential clients and try and set up meetings. We are hitting a brick wall almost straight away in the form of secretaries whose entire existence is based around keeping our sales pitch away from its intended recipient. Out of approximately 35 company's we succeeded in securing just one meeting. A success rate of 3% is clearly not an effective way to gain clients when a business has no other revenue streams. The problem appears to be the fact that secretaries are very used to dealing with cold callers and as a result have absolutely no interest in hearing from is even if we can offer a product that will make their lives easier.

The planned to overcome this barrier is based on the simple principle that everyone loves cake. We have now set up with a local supplier of cupcakes and we're planning to hand deliver these gift boxes with a fully documented proposal directly to the secretaries. The hope is that in person it is easier to generate a good rapport with someone that over the phone. If this rapport can be developed and then we can leave a proposal document in the hopes that it is passed along to the addressee rather than placed immediately in the bin.

My main concern for this plan is that we are essentially throwing money at a problem and coming up with a solution to which the secretaries will already be impervious. If this is the case we could be wasting reasonably large amounts of capital feeding a large number of ungrateful women. On the other hand we are a small rural community where people look after each other, so the chances of getting people to switch from government suppliers to us are good.
So I sit with a map covered in little flags before me, drawing routes between establishments and hoping that a bit of charm and the promise of money saved will be enough to sustain my little enterprise!

If anyone has experience generating leads via cold-calling I would love to hear them. I'm a good salesman when I'm in front of people, but cold calling doesn't appear to be my forte.

Oddly, finding suppliers of cupcakes was reasonably easy as my University currently endorses several entrepreneurial competitions, and entrepreneurial society and a business owner's alumnus network. As a result I was able to meet a lovely young lady just three streets away who produces handmade cupcakes for several local restaurants and who is willing to supply us at a more than reasonable rate. Lesson One: networks are valuable!

 

[tj100]

Originally Posted by Blackhood

A success rate of 3% is clearly not an effective way to gain clients when a business has no other revenue streams. The problem appears to be the fact that secretaries are very used to dealing with cold callers and as a result have absolutely no interest in hearing from is even if we can offer a product that will make their lives easier.

Originally Posted by Blackhood

If anyone has experience generating leads via cold-calling I would love to hear them. I'm a good salesman when I'm in front of people, but cold calling doesn't appear to be my forte.

A 3% conversion from calls to meetings is, in my experience, pretty darned good. I look for something more like 0.5% from my inside calling team - so they get like one meeting every two days of calling. Whether the economics of cold calling work out or not depends a lot on what your avg transaction size is, but getting 3% would be pretty good.

I'm relatively skeptical of the cupcakes approach. I just don't see it moving the needle and it seems a little desperate.

 

[cross22]

Congrats on starting a new company and I look forward to reading your journal. I cringed when I read the description of your target customer and competition, that is one tough market to compete in.

Cold calling is generally a very low probability strategy and relies on high volumes to generate significant revenues. When you have a small pool of potential customers it becomes less effective.

You may want to try to network so you get some kind of introduction to these institutions. They often attend networking events, seminars, trade shows, etc which may be good places for you to get yourself introduced and land an interview. Also try to use your persona network to get introductions. Linkedin may be a good place to look too.

Good luck.

 

[Blackhood]

Originally Posted by tj100

A 3% conversion from calls to meetings is, in my experience, pretty darned good. I look for something more like 0.5% from my inside calling team - so they get like one meeting every two days of calling. Whether the economics of cold calling work out or not depends a lot on what your avg transaction size is, but getting 3% would be pretty good.

I'm relatively skeptical of the cupcakes approach. I just don't see it moving the needle and it seems a little desperate.

3% is indeed reasonable, but due to the finite number of institutions in the area for whom our service is appropriate (approx 400) It just doesn't seem like enough to push us through. Given that our product saves the institutions thousands per year, it doesn't seem unreasonable.

The cupcake thing is a tough call. If it were actual offices being staffed by a team of people I wouldn't go near it. As it is, the secretaries are often the mothers of children at the schools, working three days a week to prevent "bored housewife syndrome" (where they run up massive bills on the credit card and have affairs with unattractive men). I'm hoping that the low-key honest approach will work for us, very much as the Saddle Back Leather website does. No airs or graces, just some nice guys trying to make a living by delivering an honest service for a proper price.

Having said that it may well be a total balls-up and cost us money with few results. No way to know without giving it a shot.

 

[oman]

what sort of technical support are you aiming to provide?

 

[Elusive]

Welcome to the world of endless sleepless nights litres of caffeine grey hair and most of all being the designer of your own destiny you are a brave soul in a world where few dare to tread

Welcome to my world

1st Tip - Overheads walk on two legs so dont spend a penny if you dont have to for at least the first three years