Why start-up busi­nesses are unattrac­tive cus­tomers

Jamaica Gleaner - - BUSINESS -

“MY LEAST favourite cus­tomers are first­timers. I have found it so stress­ful to work with them that they are no longer my tar­get.” Those were the words of a vet­eran real es­tate bro­ker ut­tered dur­ing her pre­sen­ta­tion at a real es­tate sales­man course I at­tended a few years ago. No one wants to hear that they may be un­de­sir­able or unattrac­tive, but she made a strong case that not all cus­tomers are cre­ated equal, and that up-and­com­ing real es­tate pro­fes­sion­als needed to be strate­gic when se­lect­ing a niche. Her main rea­sons for shun­ning first-time home­buy­ers were that they had un­rea­son­able ex­pec­ta­tions, fo­cused too much on the aes­thet­ics of a prop­erty in­stead of the bones, and were too in­de­ci­sive be­cause they were con­stantly con­fer­ring with sev­eral peo­ple who had widely di­ver­gent per­spec­tives such as their par­ents, si­b­lings, other fam­ily mem­bers, and friends. As a re­sult, first-time home buyers were more time-con­sum­ing, overly de­mand­ing, and more dif­fi­cult to sat­isfy than other cus­tomer seg­ments, mak­ing them less at­trac­tive in com­par­i­son with other seg­ments of the mar­ket.

It is im­por­tant for start-up busi­nesses to un­der­stand that just as first-time home­buy­ers are un­de­sir­able for some real es­tate pro­fes­sion­als, they, too, may be unattrac­tive for some ser­vice providers, such as land­lords, ac­count­ing and le­gal pro­fes­sion­als, mar­ket­ing and ad­ver­tis­ing com­pa­nies, fi­nan­cial in­sti­tu­tions, busi­ness sup­port ser­vices, and oth­ers.


One of the main rea­sons startup busi­nesses are unattrac­tive is they are al­ways strapped for cash. Most en­trepreneurs boot­strap their way when launch­ing a busi­ness, and lim­ited cash on hand is one of the in­her­ent chal­lenges.

Land­lords tend to be very cau­tious when do­ing com­mer­cial rentals be­cause of the high­rate of busi­ness fail­ure and the sig­nif­i­cant risk of late pay­ments, un­paid rent, or early ter­mi­na­tion of lease. Although ser­vice providers may be sym­pa­thetic to the cause, the re­al­ity is that many of them can’t af­ford the un­cer­tainty or de­lays in re­ceiv­ing pay­ment, or hag­gling over costs or re­quests for dis­counted goods and ser­vices, which is com­mon­place for many start-ups.

New en­trepreneurs some­times also have un­re­al­is­tic or un­rea­son­able ex­pec­ta­tions which are dif­fi­cult if not im­pos­si­ble to sat­isfy. For ex­am­ple, I have heard many en­trepreneurs com­plain bit­terly that they spent money on an ad­ver­tise­ment but didn’t see an im­me­di­ate re­sult, and as such, they wasted their cash.

The re­al­ity is that ad­ver­tis­ing is not meant to be a one-off in­vest­ment be­cause it takes nu­mer­ous and con­sis­tent im­pres­sions for ad­ver­tise­ments to con­vert to calls or sales. There­fore, one-month ad­ver­tis­ing con­tracts or so­cial-me­dia cam­paigns may not yield a sub­stan­tial re­turn on in­vest­ment, if any, be­cause they didn’t meet the re­quired ef­fec­tive fre­quency.

Ef­fec­tive fre­quency is A mar­ket­ing term that refers to the min­i­mum num­ber of times a mes­sage must be ex­posed to a prospec­tive con­sumer to change his or her be­hav­iour or get them to buy into the mes­sage, prod­uct or ser­vice be­ing ad­ver­tised. How­ever, be­cause most en­trepreneurs have no for­mal train­ing in busi­ness, fi­nance, oper­a­tions, mar­ket­ing, or ad­ver­tis­ing, their ex­pec­ta­tions are un­der­stand­ably far re­moved from re­al­ity in many cases, thus mak­ing them overly chal­leng­ing to work with.


Ad­di­tion­ally, one of the most sig­nif­i­cant risks that ser­vi­ce­providers try to avoid is bad word of mouth from start-ups whose com­plaints re­sult more from their own in­ex­pe­ri­ence than from the fault of the com­pany with which it is do­ing busi­ness.

Un­for­tu­nately, in­ex­pe­ri­ence has sev­eral neg­a­tive con­no­ta­tions, es­pe­cially in busi­ness. It is of­ten as­so­ci­ated with time­wast­ing, costly mis­takes, poor pro­duc­tiv­ity and work qual­ity, un­de­sir­able at­ti­tudes, lack of crit­i­cal skills, and more.

Start-ups can be unattrac­tive be­cause of the lim­ited ex­pe­ri­ence of the prin­ci­pals. The big­gest is­sue for some ser­vice providers is the time and ef­fort it takes to ed­u­cate prospec­tive cus­tomers on the nu­ances of ex­e­cut­ing var­i­ous forms of work.

For ex­am­ple, a web de­signer re­cently shared that she no longer works with start-ups be­cause they don’t know how to put to­gether a brief or clearly out­line the de­sired spec­i­fi­ca­tions for ser­vice, as a re­sult, she found her­self spend­ing un­bil­l­able hours try­ing to fer­ret out their needs and help­ing to cre­ate their own wish­lists.

Start-up busi­nesses may take so­lace in the fact that no one is born with knowl­edge of how the world works and ev­ery busi­ness goes through the grow­ing pains of in­ex­pe­ri­ence. How­ever, un­der­stand­ing how your en­tity may be per­ceived by some is help­ful in most facets of do­ing busi­ness, par­tic­u­larly when se­lect­ing ser­vice providers. Start-ups should not only be mind­ful when build­ing re­la­tion­ships with var­i­ous stake­hold­ers and part­ners, but also be de­lib­er­ate in seek­ing out those who are em­pa­thetic to their cir­cum­stances and are will­ing to grow with the busi­ness through its life cy­cle.

One love!

Ya­neek Page is an en­tre­pre­neur and trainer, and cre­ator/ex­ec­u­tive pro­ducer of The In­no­va­tors TV se­ries. Email: info@ ya­neek­page.com. Twit­ter: @ya­neek­page. Web­site: www.ya­neek­page.com


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