Entrepreneur Office Hours - Issue #42
NEWSFLASH: Fundraising is still hard!
This week’s issue skews toward fundraising advice again. If you’re thinking about raising money, I’m especially encourage you to read the first article I link to about how venture capitalists identify successful startups. It breaks down what I describe as the “filters” VCs use to quickly sort the thousands of startups they hear from each year and eliminate ~95% that simply aren’t ready for funding. As a founder, just knowing those filters is going to help you get much further along in the fundraising process.
If fundraising isn’t you’re thing, don’t worry. I’ve got good stuff for you, too. On Web Masters, I chat with Robbie Allen, who built a company that automates content… like what you’re currently reading. In fact, maybe this very sentence was written by a computer. Wouldn’t that be weird?
Also, check out the Q&A where I tackle a question from an entrepreneur who wonders about the difference between selling products and selling services.
When you’re done with all that — or even before you get started — be sure to share this issue of EOH with everyone you know because… well… I’m asking you nicely: Pleeeeeeeeeease….
-Aaron
3 Tricks Venture Capitalists Use to Identify Successful Startups
Choosing the best startups to invest in is hard, but it’s probably not as hard as you think. You just have to understand how venture capitalists filter startups.
The Sports Fan Who Automated Writing
Who wrote the words you're reading right now? Some person, right? But are you sure? What if these words were actually written by a computer? Would you know? Would you care? Those are the questions we explore in this episode of Web Masters while talking with Robbie Allen, founding CEO of Automated Insights, the company that automates writing on the Web.
Listen to Robbie’s story now on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
Is Your LinkedIn Network Making It Harder to Fundraise for Your Startup?
I used to always accept the common startup wisdom advising entrepreneurs that “warm intros are always the best way to meet investors.” Now that I’m a little older, a little wiser, and a lot more jaded, I’ve begun thinking that advice is absolute garbage.
The Most Clichéd Advice in Entrepreneurship Is Still the Most Important
During my conversation with Robbie Allen on Web Masters, he told a story that got me thinking about a certain cliched piece of advice and whether or not it’s true.
Office Hours Q&A
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QUESTION:
Hi Aaron,
Love reading your content, but a lot of it seems meant for companies with physical products.
I run a small consulting business. Any tips or advice you can give on getting more clients? How is the sales process similar to physical products? How is it different?
Thanks a lot!
-Lisa
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Realistically, the sales process for a new consulting client is basically identical to an enterprise sales product. That’s because when you’re selling an enterprise product, the majority of what you’re selling is the customized implementation and support aspect of what you’ve built. Usually the product itself isn’t particularly different from a non-enterprise version (if one exists).
For example, imagine the product is Gmail. There’s a free version of Gmail you, me, and anyone else in the world can sign up for on our own. But there’s also an enterprise version of Gmail that Google sells to corporations, universities, and other large organizations. Functionally, the email client itself (and the broader G-suite of applications) isn’t particularly different between the free version and the enterprise version. But the enterprise sales process is all about customizing the product for the organization. That means the organization isn’t paying for the product (which, remember, is free). The organization is paying for the unique customization and support related to that work, which is functionally very similar to consulting services.
As a result, an enterprise product sale and selling your consulting services are, at their core, what are known as relationship-based sales processes. Both can use the same prospecting processes for finding customers/clients, both can use the same qualification processes for identifying quality prospects, both will have similar types of sales calls to determine the needs of the buyer and “pitch” the product/service being sold, and so on. In other words, nobody needs to reinvent the wheel here. To get great advice about how to get more clients, look for articles/videos/experts explaining enterprise and/or relationship-based sales.
In my mind, the bigger issue with a small consulting business (which is something I ran for a number of years) is that if you’re not careful you can get trapped in an endless sales-delivery loop that can prevent you from growing.
Specifically, in a small consulting business, the person/people acquiring customers is/are often also helping provide the services. This means getting new customers creates additional work after the deal is closed. That additional work can limit the time you have to focus on getting more customers, which makes it hard to grow.
Having gotten trapped in that loop myself, the most important piece of advice I’ll give about selling consulting services is to keep the person/people doing sales completely separate from the person/people providing the actual services and supporting clients. This allows the sales process to operate continuously as opposed to having to keep starting and stopping it while the people doing the selling also deliver work and support for the clients.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!