Hurdles In Starting A New Company From Scratch

I’ve always been amused by the Seinfeld episode where Jerry attempts to ‘help’ Babu, the owner of a restaurant near his apartment building, who is not having any luck attracting customers.  Despite Jerry’s goodwill, his attempt at helping is, of course, met with disastrous results, and eventually the restaurant is closed and Babu is left penniless.  He also inadvertently causes Babu’s deportation in a later episode, which is also quite funny, but I digress.

I have never really had that entrepreneurial spirit, where it’s been attractive to me to own my own business or go out on my own.  I respect the heck out of those who have.  My uncle ran a successful gift and collectibles store for almost two decades (which also supplied me my first job).  Fellow bloggers have quit their job to write and provide blogging services full time.

To them, I say, that’s awesome.

So why have I never taken that leap?

I think the main worry is I would be afraid of putting a bunch of work in, getting everything just right, open the doors, and then have nothing happen.  Nobody show up.  Nobody browsing whatever it is I’m selling.  Nobody telling their friends.  Of course all leading to: No Sales.

I’ve always wondered how people get over that initial hump and have come up with a few thoughts on things that business owners likely do to generate those first sales:

  • Have contacts in the industry – If you’re already in the industry that you’re entering, you likely have contacts.  You often have to tread carefully and not be accused of stealing customers from former employers, but you can often use your existing contacts to build a base.
  • Advertise – This requires a lot of up front money, and often money is scarce anyways with associated costs of starting many businesses, but getting the word out can be achieved by targeting your desired customers.  One challenge is using the right medium and getting noticed by the right people.
  • Paying for customers – OK, you don’t actually pay for customers, but you can pay for leads.  A construction company looking to target the commercial sector can use companies dedicated to the process of finding leads that can then be targeted for potential sales.
  • Discounting – This can be combined with any of the above  methods to lure customers in and give them the opportunity to see what you’re all about.  If you prove yourself as worthy, you can often use this to build a long term relationship.  The biggest challenge here is retaining customers at a higher price once they’re hooked in.  You also have to make sure your discounts don’t put you right out of business, as many deal-of-the-day participants have learned the hard way.

So, I might have answered my own question about how to go about getting customers in, or at least methods which can help attract those first customers.  Still, these aren’t surefire ways and you have to make sure to approach each one carefully, making sure to understand your marketplace, your desired customers, and how to make adjustments along the way.

No wonder business owners are so darn busy!  That’s a lot to take in.

Have you started your own company?  How did you generate your first customers?

19 thoughts on “Hurdles In Starting A New Company From Scratch”

  1. I consider my blog a company even though it is a side company. Fear of rejection stops many from reaching their full potential. It is difficult to conquer but if you can you will find many more doors opening in your future I think.

    • I totally agree. It’s funny reading about your fears in the post, like being afraid of putting a bunch of work in, getting everything just right, and then have nothing happen. That’s exactly what I went through with blogging, and I’m sure you did too. So maybe you have more entrepreneurial spirit than you think! 🙂

    • Very true. It can bring in money and I’ve learned that a successful blog isn’t made by not having fellow bloggers in your corner (and being in theirs)

  2. When I started my businesses I spent money on advertising and on attending weekly or monthly networking events. The advertising was a waste of money. The networking meetings brought in a lot of business. People referred me to their friends and they referred me to their friends. Best money ever spent.

    • Interesting! May I ask what type of business you were in where networking events helped you so much?

    • Networking is key, and finding the right spots to network is the biggest door to unlock. Sounds like you did that effectively.

  3. I think you make some good points. I think most of them are why many people suggest starting your business on the side first when possible. That way you’ve got a bit of a clientele set up first, and are able to grow it exponentially (hopefully) when you decide to make it a full time venture.

  4. When I started my first business (A Mobile DJ Company) in High School- I did a couple of dances free for local schools and a wedding reception. I did the same thing for the local chamber of commerce and a local non-profit when I started offering Game Show services.

    With certain kinds of service businesses, it’s helpful to literally show people what you can do. In both instances, I had people ask for business cards or info. Time well spent.

    I’m not sure if donating my time would work as well for what I do now, but I’ve considered it.

    I don’t have a lot of experience with physical products. My CD/Record store was a success because it was the only one in town offering unedited music (Wal-Mart wouldn’t carry the explicit lyrics and this was before the days of online shopping).

    Advertising is rarely effective for small businesses. Word-of-mouth is usually better. The only problem with it is- you have to wait for it to pay off.

  5. It’s also important to have a product or service that people need. It doesn’t always have to be a new idea.

  6. Great Post. Customer acquisition is always the toughest thing to nail down. It takes a lot of trial & error before you’re able to nail it down. It’s important to figure out your demographics and figure out where they’re located.

    • Great point. I remember the first time I saw a demographics report. It was pretty cool to see all that data available. The trick is knowing how to use it to help your business succeed.

  7. I love those Seinfeld episodes, too! The book the E-Myth by Michael Gerber is a great resource for people starting a business (why most small businesses fail and what to do about it).

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