When I met a few start-ups last week I felt like a self-employment veteran. I started working for myself in 2011 but I’ve learnt so much since then it feels like I’ve been doing it for years and years.
I learn something every day so I thought I’d share a few of my lessons in case you find them helpful…
1. The Fallacy of Sunk Costs
This is something I remember from my days as an economics student and I think back to it quite often. It can seem counterintuitive at first but it shows that a lot of the time we’re making irrational decisions.
Don’t keep investing time, money or energy into something that isn’t working
It’s natural to think, “I’ve been in the queue for 20 minutes, I’m going to wait until I get to the front now”, or, “I’ve spent £300 on X so I’m going to persist until it pays off”.
Whatever you’ve invested already – time, money, energy or emotion – is a ‘sunk cost‘, it’s gone, spent, you’ll never get it back. So you should work out if continuing to do something – paying for that networking group, waiting in a queue, going to an evening class, doing work for free – will get you what you’re after from this point onwards.
Unless something is going to change which will start giving you the return – money, enjoyment, happiness – it makes no sense to keep doing it.
And how will you know what’s working?
2. Measure Your ROIs
It took me a while to have the self-discipline to do this but now I measure EVERYTHING. I know where every lead, enquiry and piece of work comes from, and what I’ve spent on each type of marketing.
My Facebook page achieved nothing in a year so I got rid of it but I get work directly from Twitter and LinkedIn so I put time and effort into them (and I really enjoy them too).
Do more of what works and less of what doesn’t
I carry on with the marketing activities that pay off and stop doing anything that doesn’t, and I remember the fallacy of sunk costs when I’ve got a decision to make.
It’s not fun, it’s not interesting, I’d much rather be writing – but as my marketing becomes more and more focused I can spend less time and money on it, while the returns increase.
3. Target Your Marketing
It’s obvious I know, but the more targeted you are the more successful your marketing efforts will be. Why would sending out 1000 letters to people who aren’t interested in what you do work?
But if you can target 100 – or even 10 – people who might be interested, well, you just might get a response.
4. It’s Hard Work
Starting and building your own business is bloody hard work! I’ve put in nights ’til 3am, got up at 6, talked to hundreds of strangers, bent over backwards for clients, juggled deadlines and things are going well, I’m doubling my income every year and getting a pretty good reputation (I think!). But I’d never say it’s been easy.
It’s not about money or connections. It’s the willingness to outwork and outlearn everyone when it comes to your business.
– Mark Cuban
Your work will never end, you’ll always want money to come in faster than it does, you’ll have quiet periods followed by weeks when you need 15 working days, it’ll test you, it’ll push you but in the end it will be worth it.
10,000 hours to make it
Remember why you started working for yourself in the first place and give yourself permission to take the odd day off – but be prepared to work hard if you want to succeed…
In ‘Outliers‘, Malcolm Gladwell studied the most successful people in lots of different areas – from top sportspeople to the Beatles to Bill Gates. None of them became successful overnight, not one, they all put the work in.
Gladwell found that it takes around 10,000 hours to become an expert in your field, that’s more than a few months even if you do work into the early hours.
5. Do One Thing Every Day That Scares You*
[*stolen from Baz Luhrmann’s ‘Everybody’s Free to Wear Sunscreen‘]
Apparently Richard Branson once said:
Say yes – then learn how to do it later!
That’s been my philosophy too (I’m not taking the comparison between myself and Richard Branson any further don’t worry!!).
Be confident that you can do anything or learn how to do anything and say ‘yes’.
When I was asked to write a competition entry for a catering hire company last year do you think I’d written one before?!
But I wrote it and the company won the award. So I was asked to write it again this year… and they won again.
I say yes to everything, work out how to do it, do a good job – and often terrify myself in the process!
6. Don’t Compete on Price
From day one I knew I couldn’t compete on price. Someone in a far off country or on Fiverr will write something for $5/ hour. They may be rubbish, they may be good – I don’t know – but I’m not going to compete with them, I can’t make a living doing that.
If you compete on price someone will always charge less than you
What could you compete on? Could you be…
- the fastest?
- the most flexible?
- the most accurate?
- the nicest?
- the most qualified?
- the most creative?
- the most experienced?
- the nearest?
- the most energetic?
- the funniest?
- the best quality?
Most people don’t base their decisions on price alone so if you offer other things they value – brilliant quality, excellent customer service, long opening hours, Saturday appointments, a guarantee, 24-hour helpline, a huge range of goods, simple processes – they’ll come to you.
Get smart with your pricing
People do buy on price if they can’t afford to spend more so you either decide that they’re not your customer. Or – if you’ve read my blog on price discrimination (more commonly known as price flexibility in business) – you offer a cheaper version of what you do with no frills to pick up people who are very price sensitive and have other levels for clients who can pay more. Smart.
That’s probably enough for now, I hope at least some of it is relevant to your business. If you think this could help anyone you know please share it.
Thanks for reading.