The start-up marketing challenge (3)

John Poole in his Constructionomics blog addresses the question: How do you get work as a new construction company? He writes from first hand, live experience, and says it is more than rough -- especially in the current economy -- it is more like the Ironman than the marathon.

Above anything else, a network of potential clients is probably the most advantageous resource for a new company. If there are people for whom you have delivered work in the past while working for another company, a new firm can approach these folks and try to drum up some business. The potential client will have a better feeling about this new firm because, although they are new, there is at least some history of past performance which will establish some confidence in the mind of the client. So that's avenue number one - hit up your past clients.

But what if your network is sparse because you are in a new area or you are working in a slightly different market than one you have worked before? Well, this is where you need to pound the pavement like a marathon runner. You also have to explain to any potential clients what features and benefits your company offers. Construction services are not a commodity, they are unique to every organization. Your company must have a competitive advantage in the marketplace in order to get off the ground. Of course low price can be one of these advantages but there also has to be more. Something creative, something new, something to differentiate yourself from the ranks of ho-hum organization doing similar work.

In his post John describes leads services (he has signed up with one but not received any work, and pounding the pavement). For one public project, he found 25 competitors at the site meeting (for a $100,000 job). I've heard worse -- up to 50 or 60 have shown up for some Ontario projects. Can anything be harder than this?

So to sum it up, it's difficult, not impossible, but difficult. I suppose persistence is the key, but you will certainly be no stranger to a strong dose of frustration.

My sense the biggest challenge John and other people have is that they haven't yet found their Uniqueness. If you are one of many competing for the jobs out there, you will be fighting a pretty tough fight -- this is brutal stuff with insane price competition , qualifications barriers, and if you have the misfortune to be in an area with organized crime and corruption (like Quebec), you may have to work with evil people.

John has part of the answer in his well-written blog. It can be a healthy differentiator and relationship builder, and it humanizes his business, making him more than another number. And, yes, some decision-makers will go the web and check you out, so if you are writing useful stuff it will help.

The challenge in start-up is to combine uniqueness, solid existing relationships, and a lot of sweat. Its how I got started 20 years ago, and I have never regretted the decision.

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The start-up marketing challenge

Start-up architectural, engineering and construction practices/businesses have the standard "experience" problem plaguing prospective employees either just getting started, or starting a new career.

You don't have experience, and no one will give you a chance without experience and verifiable references. This is especially painful for public projects, where supposedly the competition is fair, but you require a bond, and surety companies won't touch you with a ten foot pole.

If you are a renovator, designer, or the like, how are you going to stand out from the clutter of really bad hacks, willing to work for next to nothing, and what kind of clients are you likely to find who will give you a chance, who don't know you already?

Obviously, every year, many businesspeople surmount these challenges and successfully launch their businesses. Generally, you can overcome the start-up challenges with a combination of these traits:

You have experience, connections and knowledge (and relationships and reputation) in the area you wish to serve.
This occurs for example when you have been an executive at one company and are starting out in the space as a competitor. Your suppliers (and, if you are not subject to non-competition agreements) your clients know your integrity, reputation and capacity. The advantage of suppler connections cannot be understated. I know of one roofing contractor who got his start because suppliers, knowing his character, extended 90 day credit, and he could get bonding for small jobs (again based on his reputation and personal assets). So he then went to bid public jobs, undercutting the competition, but not worrying about cash flow with supplier support, thus building his reputation and market potential.

You have lots of money
Yes I know this is the quickest way to lose it, but you can certainly start a lot easier if you have money to lose. The danger is you will probably lose it if you are not really careful. My suggestion: Read the third option on this list before spending any of your money and starting up. You need to establish your business on the hard knocks of reality before it hits you in the pocket-book.

You learn/know how to sell directly
You will not be successful at a start-up unless you can sell. Plain and simple. You cannot get others to do this for you (the exception is a partnership between two people who know each other well, have plenty of experience in the business, and fit all the qualifications as a team for the first route above. Then, of course, as a partnership, you are treated as "one" and thus are defined to have selling ability.)

Note I didn't say you have to like to sell. If you get your business of the ground you can hire others to help you on the selling function, but you simply won't be able to lead unless you can do it yourself.

Early stage selling may involve canvassing, cold calling, knocking on doors, and calling every friend or near friend you have. If this is too sickening to do, just try the same techniques to find a job!

You have a defined, unique focus and niche
This is an important principal in marketing, even at start-ups. You need to know what you want to do, and be willing to drill down and stick to it. The more specific, the better. You can't do everything, and if you want to dabble at several unrelated things at the same time, you will struggle.

You should follow your strengths, doing what you enjoy, and what you are really good at doing.
This is going to be a rocky experience, frustrating, challenging and fraught with failure and defeat. You need to have the stick-it-to-itness and ability to rebound or you will give up before you get too far.

Realistically, not everyone is cut out for business, and even if you are, your first "choices" may be bad. You need to figure out what you really want to do, and be willing to pay the dues. It isn't easy. But the rewards of success make it all worthwhile.

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Finding your way: Self employment, start-up focus and marketing

Yesterday, I had coffee with a friend who I've known for many years. Formerly employed by a major corporation, over his life, his pay cheques have probably been much larger than mine (we've never discussed specific salary or income levels: bad manners to do that, of course.)

He's seen shifts, changes, bumps and grinds, and experienced the painful reality of corporate life: When decisions are made outside your control, you can be victims of corporate misfortunes not your fault.

His challenge now: He doesn't know exactly what to do, and his explorations in starting up in business for himself have had their share of disappointments.

He started work co-ordinating a renovation project (he is skilled with his hands as well as his mind). Even with a proper contract and clear processes, things went truly bad when the homeowner suddenly decided that the project would end mid-stream, immediately. Pay -- including the thousands of dollars for ordered and delivered kitchen cabinets? "No way," the homeowner said. Lawyers say he is well covered by the contract, and with changes impending increasing the small claims limits within Ontario, he is waiting a couple of months to file the legal papers. But right now he has $7,500 in kitchen cabinets.

"There are people out there willing to work for virtually nothing, and I've been offered $1,300 for the cabinets," he said. "I don't know if this is for me?"

I started the conversation, before knowing this story, asking him what he really enjoys and is good at. He said he could be a great consultant, and maybe he could be a great renovator. Well, those are two rather different career tracks.

I have a potential business/career opportunity in the consulting space. This blog (and my own expertise) are leading to plenty of initial inquires, but I haven't found a way (yet) to effectively guide these potential clients. The problem in part is that many readers here are very small businesses and start-ups (like my friend) without much money for full-scale consulting services. We need to have a system to process the leads and guide the qualified ones for revenue-generating services.

But I have an existing business, and right now the marketing from this blog is focused on guiding potential clients to the services we currently offer. They are useful, of course, but quite specialized, and I sense that while they could be of value to many readers here, the blog isn't really the best way to refer the potential clients to my current business.

I proposed to my friend that we could build a consulting business, in part, by rethinking this blog's lead management system. He expressed interest. But I didn't rush the decision.
I probed deeper to get a real sense of what he really wanted to do.

Does he really want to be a renovator, or does he really want to be a consultant (or does he want to go back to the corporate space?) Is one bad experience as a renovator dissuading him from a really rational career choice? If that is the case, I suggested he join the relevant home builders association, and budget some money (about $3,000 to $5,000) for marketing to build a brand and distinguish himself from the low-ballers. It won't be easy, I told him, but it is the way to go if he really wants to work in that field.

I explained to him that I have always had the good fortune of being "dumbly narrow". In other words, from when I was 10 years old, I knew that I wanted to be a journalist and publisher. It took a while to fulfill these visions, but ultimately I found my way. With the decision in hand, I developed the necessary supporting skills and eventually had my own business.

I could push him to work on the consulting project, and he might be really good at that, but equally I listened to his "heart" and realized that it is wrong to sell this too hard.

So what should he do? Where should he focus? And how can he make the commitment to the course he wants to take, with the ups and downs, and the frustrations and economic risk?
These are easier questions to ask than answer. It is easy to say "go where your heart tell you to go" but there are still painful choices. Life isn't easy at the start-up stage; and things go wrong.

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