Most of my work is with startups in the high-technology sector, but I also volunteer as a trustee and non-executive director for social enterprise charity Forth Sector. There we have a number of enterprises including a laundry and a garment embroidering business, and recently I’ve been reflecting on how different these enterprises are from the startups I work with daily.
Product vs. Idea
In the laundry and embroidery firms we know exactly what we are selling. We know exactly what our materials and labour costs are, and we have a large customer base with established pricing.
In the startup world, what we are selling is usually less concrete. Product specifications are flexible, service offerings are improvised or adapted on the spot, and sometimes we end up delivering a product as a service or vice-versa to satisfy a customer need. We don’t yet have robust and proven pricing models, so we have to do a lot of quick thinking!
For Forth Sector’s firms we have a well-known set of competitors, and we understand pretty well who is likely to buy from us and why. We also understand why we lose some deals, and which deals aren’t worth pursuing in the first place. In almost all situations the purchaser is definitely going to buy – it just may or may not be from us.
In startups we have a theoretical understanding of our competition, but we are usually trying to position our offering as being unique. As such often we try to avoid direct competition, and so our real competitors are “do nothing” or “do something completely different”. We are usually still trying to build a detailed picture of exactly who will buy, who won’t, and what we can do to change that.
In the laundry or embroidery firm, we have a fairly good idea of what we can do to bring in more business and what the lead times are. We might use mailshots or lead generation to get meetings, most of our customers are local and easy to meet, and we know how long it is likely to take to win business.
The startups are, once again, a bit less clear. There is certainly a relationship between how hard we work to sell and what we achieve, but we don’t have a mature enough process to outsource or to accurately predict the effect of a particular campaign.
All business is uncertain, and in the Forth Sector firms we certainly have our ups and downs. Businesses like laundry are quite low-margin, although we manage to derive a lot of social benefit from the jobs we create in addition to the income we generate.
The startups however are hugely uncertain – there is so much we are still learning that sales are inevitably unpredictable. There is the potential for huge success, but everyone in the startup world is familiar with companies that have failed or been forced to change direction when sales didn’t materialise as hoped.
Different Types of Sales
All this emphasises to me once again why the sales skills needed in startups are different from those in more established companies – a different set of skills is needed to deal with the high levels of uncertainty.
This might help to bring to life some of my other posts on this topic: