Early Proposals: Avoiding Consulting for Free

Written by Sean Murphy. Posted in 2 Open for Business Stage, skmurphy

A lot of bootstrappers start out by selling their product or services to friends or people they know and/or have worked with in the past. One of the early thresholds a team crosses is making the transition to “selling to strangers” (see the “Startup Maturity Checklist” for some relevant questions) and they can get tripped up on a number of points.

Two key challenges

  • Free Consulting: strangers may want to learn more about the technology area you are addressing and request one or more sales calls while they listen attentively. The net effect is that you are offering free consulting to someone who has no intention of buying. Tipoffs: always encouraging, “tell me more.” They talk very little about their own challenges but are very interested in your offering or the technology arena that you are focused on.
  • Column Fodder: potential buyers at large companies may need to solicit a minimum number of bids in addition to the team that they want to do business with. This means that they will put you through the exercise of generating a bid just so that they have three, even though they have no intention of working with you.

Here are four steps to take to immunize yourself against the default assumptions you made when selling to friends.

  1. Balance time invested against size of deal, probability of a win, and competing alternatives. Establish a marketing budget in hours in advance (e.g. default might be 15 minutes for an inquiry, 60 minutes for a phone call) and adjust it as your understanding of deal size, probability of a decision, and probability of a win evolve.
  2. Always put an expiration on any quote or proposal, if nothing else it gives you a reason for one last E-mail/call.
  3. The first payment is always the most difficult, if appropriate ask for a token payment after you have expended some marketing effort to assess interest level.
  4. If you are not certain of interest in getting started, float a later date (e.g. six weeks instead of two) for the follow up and see if they pull it in. If you are not having conversations every week or two then the deal is in percolate or nurture mode and is not active.

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