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