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The difference between wanting that sale and needing that sale can be devastating to almost every facet of your tiny business.
You have to have cash to operate. Duh.
When we [tiny business owners] find ourselves with no cash — we will do some pretty stupid things:
We Take Projects We Can’t Handle
Sure, I can do that. And you probably can. But how well? Can you do it efficiently? Do you have any experience with it or will you be attaching a steep learning curve that the customer will not be willing to pay for.
Will you fail at it? Will it damage your reputation if you don’t do it well [uh... damn right it will].
Sounds rough doesn’t it? Perhaps it would be smarter to refer this project to someone in your network. You may be making a more sound business decision by referring this business on and growing the good will around your business with someone in your network.
But hey — I get it — sometimes you have to take something outside of your comfort zone when times are tough — just be careful. 
We Let Customers Push Us Around
Hey, we are desperate. We NEED that money — and we have to make that customer happy.
So — we let them dictate the terms of the deal 100%.
- They are not paying until services/product are rendered
- They have negotiated some extra perks [that will cost you time or money]
- They keep growing the scope of the project
And on and on. And we stand there with our tail between our legs — powerless.
It is the nature of business to get the most value for your money — and your customers will be seeking the same — don’t kid yourself.
Make sure you have processes in place — policies that protect you from getting into a bad position. These policies will rarely break any single deal — but if they aren’t in place, they could break your business.
We Take Projects For Less $ Than We Should
Is it better to be working for 1/2 of what I need to survive than nothing at all?
Not necessarily.
You have to remember that there is an opportunity cost to your time. While you may need to execute some work to increase your portfolio or testimonials — the time you will spend executing on that project may be better spent finding customers that can pay you what you are worth.
There is a fine line here — no question — you have to weigh your circumstances carefully with each project.
Your turn! What kinds of crazy things have you done when you were strapped for some business cash? Did it work out? What advice do you have?
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{ 10 comments… read them below or add one }
I have done all those things Russ. When I go after printing business, I used to just agree to whatever the customer wants, because I wanted the business. But it finally clicked that I was doing everyone a disservice. So I literally remind myself before appointments or calls to be straightforward, forthcoming, etc. and just tell them like it is. I can not do your job that fast, I can not absorb the cost of creating your artwork, etc…it is much better for my stress level, and the customer has better, more accurate expectations. And it all stems from constantly reminding myself to stand up for myself.
@Greg Bussmann — yep — everyone loses when you don’t set parameters. This is a devastating lesson that can kill a tiny business before it really gets started — the toughest part about it is that you absolutely have to have cash to operate and this can make you bend over backwards to get a deal.
Russ you hit it on the head. We’ve all done it, and in some cases we continue to do it.
It’s tough for a small business, especially one that can see the ‘potential’ of a deal with XYZ company. Maybe the first gig is small, and then they hang that carrot out there of ‘more work’ if you do this one well. And then you use up twice the amount of hours trying to do a good job for a future job that probably doesn’t exist. Makes you look like a fool, and you’ve invested way more time than you should have.
Sure, we all need cash to run our business, but we can’t and should never come across as the weaker one in any deal. Once the other side sees any inkling of “we need the money”, they’ll pounce and you’ll be sorry.
@St Louis SEO — Ooooooohhh! The dreaded — do this job for a tiny amount and you will win a bigger deal down the road — like you said — the deal usually doesn’t exist.
But it’s really hard to project confidence in a sales presentation when you desperately need the cash. You are a poker player Will — you know that you can’t sit down at a game and play scared — you will get lit up.
The Sandler Sales Class I take teaches to have the attitude, “I’m independently wealthy and I don’t need this business.”
Hard to do sometimes, but if you can project that attitude while holding your price, you’ll close more sales.
Also, being the ‘Walmart of price in your field’ is not a good strategy. You’ll find yourself spending major time on projects that make you minor profits and drive you nuts.
Be honest, giive value and the business will come to you!
@Fred E Miller — It won’t just drive you nuts — it will drive you out of business. I have been there/done that.
Hi Russ,
You asked some pointed questions all business owners / sales people need to ask. Cash is king. Cash flow is a our life blood.
What you are presenting to people is the question: What is your time worth? People need to understand the value of their time.
Be focused. Be exact. Respect your yourself.
This is what Ed and I have to keep in front of mind when networking. Because as you’ve stressed over and over again, referring business to your peers who are better suited will always come back ten-fold with kindness and blessings!
Have a great weekend!
AMM
@AMM — Thanks so much Ann for the great comment. Both you and Ed add such a great perspective on running a tiny business.
Being up front with your customers and not being afraid to discuss the dreaded “money and budget” topics early in the conversation can save everyone a lot of headaches and hassle. You absolutely need to know what your time is worth and determine whether your customers agree.
This is an interesting article, because it is true for many small business, they get to the point where they have to do something. I knew a guy who owned a skate shop and started screen printing in the back to add another channel for income. Another example is a buddy who owned a bar opened his back room up to a group of bunch of poker players and just charged a house fee. So when times get bad “you gotta do what you gotta do”.
@St. Louis PPC — Thanks John. It’s a common problem that I think we have all had to deal with at one time or another in our businesses.