I recently got this question from a reader named Doug:
I'm a typical start-up and can't seem to get my "first customer." I've started a thermography company (infrared inspection), and I provide preventive maintenance inspections. This is the problem: I've never had to start with no customers before, and I have a real hard time cold calling. Any thoughts on getting my first few customers to start the ball rolling?
It's a great question. And it goes to the essence of starting a business when the real question is, Can I sell my product or service to a customer at a decent profit so I can build a company and attain critical mass. Let me explain that. I define critical mass this way: With the amount of capital you are able to raise, can you get to breakeven cashflow before you run out of money? Before I start a business, I always ask my friends and colleagues if they would buy this product or service. And would they be willing to pay X amount of dollars for it?
Here's an example: In the year 2000, I heard about a business called document shredding. And I learned there were two ways to do it -- on site or off. To do it on-site, you needed a piece of equipment that cost $250,000. To do it off-site, you had to build a facility that would cost close to $750,000. With my partners pressuring me to make up my mind, I decided that I had to first find out if I could sell the service at a profit. I used an outside service to do the actual shredding. I quickly found that I could sell the service, and I also figured out that I'd make just as much money by neither buying equipment nor building a facility but by partnering with somebody who already had a facility in place. Today, this business does millions of dollars with great growth margins. But I didn't start it until after I got my first customer.
Back to Doug's question. He says he's already started the business, but I don't think a business is a business until you make sales. So Doug, if I were you, I'd start networking with friends, other business people. I'd go to local groups, such as your local chamber of commerce, where you can meet a lot of people and I'd try to sell your product. If you find you really can't do it, if you're just not comfortable cold calling, there's another solution: Hire somebody who can.
By the way, here's another Tivo alert: I'll be on MSNBC's "Your Business" this Sunday, from 7:30 to 8:00 a.m. ET to talk about how to develop a loyal following and to answer viewer questions. The show will be re-broadcast the following Saturday at 6:30 a.m. ET.
Last updated: Dec 14, 2007
Street Smarts columnist and senior contributing editor NORM BRODSKY is a veteran entrepreneur who has founded and grown six businesses. @NormBrodsky