New Entrepreneurs are extremely creative people. They have to be to get their new business off the ground. Unfortunately the very mindset responsible for success in the early start up stages of their venture can haunt them later. As an Entrepreneur Consultant, I have run into this issue on many occasions. I call this mindset the “Barter Mentality.†It is always a bit of a task to help my clients move on from this mentality and into the focused structuring stage, which opens the door to step-by-step action.
What is the Barter Mentality?
In the beginning stages of a new venture most, if not all, Entrepreneurs are working with bootstrap capital (very little money). Due to little capital these Entrepreneurs are forced to keep expenses low. One really successful strategy to keeping expenses low is to barter services. One client I had offered mobile pet grooming services, so when she came to me for help the first thing she did was offer me her services for free. I didn’t have a pet at the time but my parents did. I took her up on the offer and helped her organize her break even point numbers to enhance her business plan. This was a good trade at the time even though I severely discounted my services for two grooming services.
The problem arose when she needed further help and still wanted to barter her grooming services rather than pay my fees. She felt some one else could help her prepare to negotiate a deal with a local pet store to use her services as a benefit to their customers who purchased a new pet, or to prep the animals to show prospective owners. I politely explained I couldn’t use her grooming services to pay expenses. She moved on to a few other Consultants who all refused to barter. Just under a month later she returned to me and tried to barter again; I again politely declined.
As it turns out she had lost the deal with the pet store because no Consultant would take her business for barter and she refused to pay the fees. I finally explained to her how she had to transition from the barter mentality into a mindset of building a team of experienced Advisors which would cost money. I too learned a lesson then, most Consultants with a good reputation will not barter with their clients for their services because it starts a chain reaction of enabling the new Entrepreneur to continue their habit of bartering.
The Pet Groomer was the first client to barter with me but not the last. It took me a few years to learn how to deal with the “Barter Mentality.†At first I thought it was no problem as I had engaged in the practice in my early stages too. Later I began to notice a pattern with my bartering clients. They all (no exceptions) seemed to get stuck in the early stages of start up never transitioning to the growth stage unless a drastic event pushed them to change their thought process. Just as most employees get stuck in a rut, most bartering Entrepreneurs get stuck in their belief that their entire business could transition to the growth stage by bartering.
I have identified a few key characteristics of my bartering clients which help me identify them right away:
1. None seem to have a business plan, although some have a plan on a single piece of paper or napkin.
2. None of them have ever had a budget, or any financial tracking document. The one exception had Quick Books but the financial data was way off.
3. They all seemed to be great networkers.
4. Despite their networking abilities, they have very little sales experience.
5. Most have achieved success in their job through their network of people.
6. None of them understood how important quality of service or product is for their business and my services.
7. They say they understand and respect my time (and that of similar Consultants) but really they do not because they don’t understand.
8. Most seem to be disenchanted with asking for payment.
9. None of them have a real sense for what their product or service is worth in dollar amount, caused by a lack of research.
The real problem with these Entrepreneurs is their lack of belief that their services or product is worth the price they want, or their ability to generate cash flow because they have never accomplished this. It is further complicated by their disenchantment with asking for payment and understanding the real value of their product or services.
Today when I come across such Entrepreneurs as a Mentor I always explain my services are charged in steps and I will not move to the next step with them unless the fee is paid. It is imperative these Entrepreneurs understand how to generate cash flow or their business is in jeopardy before it has a chance to start. The next thing I do is instill a sense of organization by requiring certain documents from them before moving to the next step. Obviously the pattern is evident; I break up everything into steps, which I call Milestones.
The answer:
Research is critical and the proper Consultant can point you in the right direction. I often accomplish 3 important goals each step with my clients:
1. I give them the direction they need to research and an idea of what the results should look like.
2. I assign them homework; they need to draft certain documents to present the results in a way that applies to their business.
3. I assign them tasks to complete (the last being my payment for the next step) before moving to the next step. Usually these tasks are action oriented like contacting or having lunch with key people.
The reason I have transitioned from labeling myself as an Entrepreneur Consultant to a Mentor is because I have found too many psychological characteristics that need be addressed in all of my clients to be just as important as the skills they need.
You can’t afford a Consultant, or Mentor:
Organize every aspect of your venture into steps. The more steps, the easier it is to implement your plan! Don’t be afraid of the work involved, or you have chosen the wrong profession. Research means a lot of reading AND meeting with key people! Focus on generating cash flow before focusing on growth, but keep the overall picture in mind at all times. I liken this last bit to a lessen I learned in driving school; keep your eyes high enough to see miles ahead and your peripheral vision will keep you straight in your lane.
Finally: Understand that whatever you focus on (especially your venture) will happen. If you focus on just getting by on your expenses, guess what, your gonna just get by. If you focus on a gross profit of $25 Million, you will achieve it. Writing down steps facilitates success, just keeping track of them in your mind is not enough. Stop bartering.
What is the Barter Mentality?
In the beginning stages of a new venture most, if not all, Entrepreneurs are working with bootstrap capital (very little money). Due to little capital these Entrepreneurs are forced to keep expenses low. One really successful strategy to keeping expenses low is to barter services. One client I had offered mobile pet grooming services, so when she came to me for help the first thing she did was offer me her services for free. I didn’t have a pet at the time but my parents did. I took her up on the offer and helped her organize her break even point numbers to enhance her business plan. This was a good trade at the time even though I severely discounted my services for two grooming services.
The problem arose when she needed further help and still wanted to barter her grooming services rather than pay my fees. She felt some one else could help her prepare to negotiate a deal with a local pet store to use her services as a benefit to their customers who purchased a new pet, or to prep the animals to show prospective owners. I politely explained I couldn’t use her grooming services to pay expenses. She moved on to a few other Consultants who all refused to barter. Just under a month later she returned to me and tried to barter again; I again politely declined.
As it turns out she had lost the deal with the pet store because no Consultant would take her business for barter and she refused to pay the fees. I finally explained to her how she had to transition from the barter mentality into a mindset of building a team of experienced Advisors which would cost money. I too learned a lesson then, most Consultants with a good reputation will not barter with their clients for their services because it starts a chain reaction of enabling the new Entrepreneur to continue their habit of bartering.
The Pet Groomer was the first client to barter with me but not the last. It took me a few years to learn how to deal with the “Barter Mentality.†At first I thought it was no problem as I had engaged in the practice in my early stages too. Later I began to notice a pattern with my bartering clients. They all (no exceptions) seemed to get stuck in the early stages of start up never transitioning to the growth stage unless a drastic event pushed them to change their thought process. Just as most employees get stuck in a rut, most bartering Entrepreneurs get stuck in their belief that their entire business could transition to the growth stage by bartering.
I have identified a few key characteristics of my bartering clients which help me identify them right away:
1. None seem to have a business plan, although some have a plan on a single piece of paper or napkin.
2. None of them have ever had a budget, or any financial tracking document. The one exception had Quick Books but the financial data was way off.
3. They all seemed to be great networkers.
4. Despite their networking abilities, they have very little sales experience.
5. Most have achieved success in their job through their network of people.
6. None of them understood how important quality of service or product is for their business and my services.
7. They say they understand and respect my time (and that of similar Consultants) but really they do not because they don’t understand.
8. Most seem to be disenchanted with asking for payment.
9. None of them have a real sense for what their product or service is worth in dollar amount, caused by a lack of research.
The real problem with these Entrepreneurs is their lack of belief that their services or product is worth the price they want, or their ability to generate cash flow because they have never accomplished this. It is further complicated by their disenchantment with asking for payment and understanding the real value of their product or services.
Today when I come across such Entrepreneurs as a Mentor I always explain my services are charged in steps and I will not move to the next step with them unless the fee is paid. It is imperative these Entrepreneurs understand how to generate cash flow or their business is in jeopardy before it has a chance to start. The next thing I do is instill a sense of organization by requiring certain documents from them before moving to the next step. Obviously the pattern is evident; I break up everything into steps, which I call Milestones.
The answer:
Research is critical and the proper Consultant can point you in the right direction. I often accomplish 3 important goals each step with my clients:
1. I give them the direction they need to research and an idea of what the results should look like.
2. I assign them homework; they need to draft certain documents to present the results in a way that applies to their business.
3. I assign them tasks to complete (the last being my payment for the next step) before moving to the next step. Usually these tasks are action oriented like contacting or having lunch with key people.
The reason I have transitioned from labeling myself as an Entrepreneur Consultant to a Mentor is because I have found too many psychological characteristics that need be addressed in all of my clients to be just as important as the skills they need.
You can’t afford a Consultant, or Mentor:
Organize every aspect of your venture into steps. The more steps, the easier it is to implement your plan! Don’t be afraid of the work involved, or you have chosen the wrong profession. Research means a lot of reading AND meeting with key people! Focus on generating cash flow before focusing on growth, but keep the overall picture in mind at all times. I liken this last bit to a lessen I learned in driving school; keep your eyes high enough to see miles ahead and your peripheral vision will keep you straight in your lane.
Finally: Understand that whatever you focus on (especially your venture) will happen. If you focus on just getting by on your expenses, guess what, your gonna just get by. If you focus on a gross profit of $25 Million, you will achieve it. Writing down steps facilitates success, just keeping track of them in your mind is not enough. Stop bartering.
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