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Why Do Start-Ups Need To Learn The Power Of Saying “No”?

Those of us who have started businesses and run them, and managed to survive or thrive, for a few years have had to learn this lesson. We have learned the power of saying “No”. Usually, we’ve had to learn it the hard way. If you’re about to start a business you’ll have to learn it too. It may seem like the last thing you need to think about. Isn’t it much more important to think about how you’ll keep your customers happy?

The key to our success as business people is to maximise the return on our investment. Most people think of this as measuring their investment in terms of money, but that’s a very simple view. When we start our businesses the chances are that we will be working alone as sole traders or with a very small group of colleagues or employees. What we are selling to our customers is our effort, our time, our skill and our creativity. These are the things we sell, so they have to be paid for. Yet they are often the things that start-up businesses give away. We find that we give them away without even realising. Let’s break this down.

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The Power Of “Yes”

Power of NoSigning a new deal for your company is always exciting. Saying “Yes” to working with a client has the promise of a partnership and creativity and the future. We have all seen the look of pleasure on a client’s face when we say “Yes”. Especially when we say yes to working for a lesser amount of money than we wanted. When we say yes it must be because the deal we have made is of mutual benefit. If the deal is for the benefit of your client but to your detriment, it is a bad deal. All transactions are about transfers between parties. We give skill and time they give money. We need to know why our clients are willing to pay for our services or products.

If our client is another business they are paying because our efforts will increase the return on their investment. Out of that increase comes the budget to pay for our work. If our work costs more than the increase our services are unfordable to the client. If we ask for only a tiny percentage of the increase then we have undersold our value and the deal is a huge opportunity cost to us. To Succeed we have to understand our value and make sure any deal gives us what we’re worth.

The Power Of Compromise

Power of NoA good compromise allows both parties to gain from the interaction and shares the gain in the most equitable way. This is where we have room for negotiation. If we are supplying building services to a homeowner they gain from the increased value of their property, but unless they are selling right away this is the wrong way to measure the transaction. Our customer is actually measuring the transaction by the benefit to them in terms of their living conditions or lifestyle. This is a much harder metric to measure. How do we negotiate using this knowledge?

We have to consider our base materials cost, our physical labour and our creativity. We maximise our return on the deal by leveraging our creativity. Does the customer want the simple/cheap option? Here are the pros and cons of that decision. Do they want the middle-cost option? Do they want the best option? The decision has consequences which we can explain and costs associated. This is our sales task, to persuade our client of the benefit of the option that maximises our return in terms of the way it will maximise their return. Compromise occurs when we try to balance the equation. Less cost for them equals less effort by us. Less cost for them equals cheaper materials for us. Lower satisfaction with the product/service equals less time spent by us. There are many balance points to be considered in the compromise and many beneficial outcomes for both parties.

The Power Of “No”

Power of NoOur client is looking to maximise their return just as we are. A problem occurs where either they or we cannot or will not see the other side of the equation. As a supplier, I find it often starts will an adjustment to the task. A little extra effort required to meet the client’s expectations. That’s ok, but the balance must still be struck. If one side needs more out of a balanced deal they must also put more in to maintain the balance. It’s easy, as a start-up business, to just go along with a client demanding more and more for the same money. They may even add extra tasks for no money. Sometimes our clients don’t just ask, they demand.

It often comes in the guise of preparation work that the client claims the contractor should have performed and budgeted for within the original task. What do we do when this happens? How do we maintain our fair share of the increase in value that we are creating?

We must not be afraid to renegotiate. What has been agreed before must be paid for. We as service/product providers have the right to be paid just as our clients have the right to good work. Those of us that are in business already understand that at some point all of us have had to say “No”. It’s just a thing that happens when a client won’t compromise or be reasonable. It’s OK to say “No”.

The Power To Protect

I never like these situations, and you’ve probably never considered them if you are just planning on starting your business. But you should consider the possibility because this situation will occur. Don’t be afraid to say “No”, it’s the power you have to protect your business interest. More fundamentally it’s where your power lies to protect your own dignity. Some clients will try to exploit you by cutting your slice of the pie so thinly that it barely exists. Thankfully they are few and far between but they do exist. When that moment comes, remember that you can say “No”. Say it for your own peace of mind. Say it to maintain your business value and say it for all the other small businesses that will have to deal with that client in the future.

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