The 3Cs of early entrepreneurial success

My years of working in a corporate venturing setting and then with start-ups and their investors have cemented my belief in the power of that very first customer that you sign up and to whom you deliver your goods and services satisfactorily. Most recently, in a conversation with a California-based social entrepreneur, the point came up again.

It is currently relevant too as we are seeing many around us losing their jobs and becoming ‘forced entrepreneurs’ (n.b. they are different from ‘visionary’ entrepreneurs and ‘lifestyle’ entrepreneurs both of whom choose to be entrepreneurs rather than are forced by circumstances). The importance of that first customer can not be overestimated by such free radicals, free agents, freelancers, or whatever label du jour they prefer.

Here are the three advantages – the 3Cs in the title of this post – that the first customer brings to an entrepreneur.

Confidence

For many technically competent people, selling themselves or their product or service does not come easy. If it did, so many marketing consultants to SME would not be doing such brisk business!

Successfully making a sale boosts one’s self-confidence. In addition, finding a customer willing to use one’s product or services and pay for it signals to the market that another party has confidence in the product or service and the entrepreneur.

In seeking to develop the business further, the entrepreneur benefits from both the surge in his own confidence and the signalling effect of the customer’s preference for his product or service.

Collateral

The first successful sale also creates a worthy tool for future sales – collateral. In marketing speak, collateral is a broad term applied to any and all sales aids that one has at one’s disposal.

A reference from a customer, who has paid for one’s product or service is amongst the best sales aids. It helps the next prospect feel more confident about giving the entrepreneur a shot at attempting to sell his product or service.

Cashflow

Last but not the least, a successful sale and delivery brings the means to pay bills and to invest in further development of the business.

After the customer, cashflow is king in most early stage businesses. Especially for those, who have been forced to become entrepreneurs, cashflow is a crucial tool to measure success.

In summary, getting that first customer is therefore important, no matter how much or how little marketing you may have undertaken. Early success also crystallises the fuzziness of plans and dreams. Focusing one’s mind – and resources – on the first success is therefore advisable.

What do you think? What is your experience? Have I missed something? Do share your views in ‘comments’ below.

Related reading:

Dharmesh Shah, serial entrepreneur, super-smart, all-round nice guy on Startup diaries: Getting your first customer

James Gardner on The cost of your first lost customer

USA Today article on The first customer is always the most difficult but don’t let that well-known truth distract you from working to get one!

Late addition on May 8th, 2009:

Dharmesh Shah on The Attention Economy v. The Wallet Economy

3 thoughts on “The 3Cs of early entrepreneurial success

  1. Great article.

    I think the whole notion of getting customers is coming back into fashion again for many entrepreneurs.

    And, thanks for the kind words.

    @Dharmesh: Thanks for stopping by! The words are well-deserved by you, of course.

    I agree indeed customers are back in fashion. About time. But look at the timing.

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  2. The test of an entrepreneur for me is the conversion of a cold customer. A lot of people who set up as a “consultant” end up working for “family and friends” rather than selling in the open market.

    The test of an entrepreneur is the ability to see an opportunity and then take it. Too many believe that networking is about the collection of business cards rather than understanding of relationships and promotion of skills. When I was managing people the difference between the good and bad salesman was the ability to deal with rejection having asked for asked order. Over time given that promises are backed up with execution the collateral builds a reputation which makes sales easy because of referrals.

    Too many that are working for themselves are doing so not because it is a lifestyle choice but rather an economic necessity; in the current market that will remain. As the employment market improves the real entrepreneur will maintain doing what they are rather than return to paid employment.

    @Ian: I agree with all the points you raise. Not least about the fool-proof test of real entrepreneurs. I feel when the market improves, some, who were being free radicals by default and not by choice, may have tasted blood, recognised their own self-worth and may not return to full time employment.

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  3. Entrepreneurship is in air. I have read a lot bout it today. Feb issue of Reader’s Digest features entrepreneur Dyson who created a new vaccum cleaner. Here is another link I got via Desipundit, it has some interesting discussion:

    https://www.sramanamitra.com/2009/02/03/entrepreneurship-in-india-2/

    @Poonam: Thanks for the link although I disagree with the ‘technology is the only way to be an entrepreneur/ innovator’ school of thinking, especially when it comes from an Indian person who, if she understood the grassroots context better, would know how much innovation really goes on in India. But I digress. As @Ian points out, for some, being an entrepreneur is not own choice, but Hobson’s choice.

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