Building a Design Consultancy Business (Part 1)
We’re now into our 12th year of business as Vesess, and we’ve been doing design consultancy right from the very beginning. In fact, since starting in 2004 until very recently it has been our main stream of income. We still continue our consultancy projects at a limited scale, accommodating one or two clients at a time. Our most recent undertaking was to redesign the Dialog website: this project is still ongoing, and Prabhath has a post coming up about it (Edit on June 25, 2015: Dialog.lk redesign case study).
In this series I am sharing some of the lessons we’ve learned over the last 12 years from running and growing our consultancy business from zero to several hundred thousand dollars per year. In this first part, I talk about how we made that crucial breakthrough in acquiring our first client, and what we could have done better.
Winning Your First Client
Back in 2004 we were a small team of five guys just out of school. We had crazy ideas in our minds and a burning passion in our hearts to stand on our own feet, build super-awesome websites, become one of the best design agencies in the world and eventually create a global brand that could be extended to many other industries. We wanted to be like Virgin one day. I know that sounds crazy for a bunch of 18-year-olds from the Third World, but that’s in fact how we started. I’m sure many young entrepreneurs can empathize with us.
“I like thinking big. If you’re going to be thinking anything, you might as well think big.”
— Donald Trump
We opened a single-room office in our co-founder Asantha’s home and launched our website. Then, with a sackful of ideas and ambitions, we looked to secure our first client.
Our sales and marketing budget was zero, so getting in the Yellow Pages — by far the most popular business directory at that time and where businesses secured most of their local leads — was not an option. Instead, we simply tried spreading the word through our personal contacts that we had opened up shop and were available for hire.
After a couple of weeks we started receiving our first few inquiries asking whether we could do a logo, design some business cards, create an advertisement to be published in a business magazine, come up with a website for a restaurant — quite a variety of small requests.
We wanted to secure our first business, so our answer was always “yes, we can do it.” Prabhath and I got appointments fixed every week and made sure we were always on time so that potential clients would have a good first impression of us and also see how disciplined we were.
By the end of the second month we had gone to about 20 meetings, yet had failed to secure that very first client. What had gone wrong?
A Problem of Credibility
Firstly, we were new and only a few weeks into the business. We had no track record, no references, and no portfolio to show. The only things we had were belief, self-confidence and a “yes, we can do it” attitude. That wasn’t enough to convince potential clients: we were considered too risky for projects in the range of $500−$1000 (a big deal for us at the time), and we promptly got rejected.
Secondly, something else became the stumbling block on our bids for small projects (valued at less than $500) — even before having the first meeting with our potential clients, we had a formal contract drafted and an internal policy established to ask for a 50% advance payment up front and the balance payable on delivery. It was a fair arrangement — and we still have it — but at that early stage it didn’t work for us.
No potential client was willing to pay that kind of advance. They wanted us to deliver the work first so that they could pay the full amount only if they were happy with what we delivered. We had to walk away from several meetings due to this, not because I had any doubts about the capabilities of my team but because I thought it was an unfair arrangement. I wanted to deal with clients who could place their trust in us rather than doubting us from the first step.
Going from Bad to Worse
Three months into business, we had yet to open our first account. Pressure was mounting, and our team was losing both self-confidence and confidence in me.
I still remember one of my teammates getting depressed after one meeting we had with a local bank for a project to develop a fairly simple system. This guy was the best programmer on our founding team, and I wanted him to go for that meeting with Prabhath as I was occupied with another assignment at the time. After the meeting Prabhath called me and said, “Damn, that was terrible. They just treated us like a bunch of kids and we got thoroughly humiliated.”
I had to do something immediately. Fortunately there was another appointment coming up with the Institute of Human Rights (IHR) in another two days. I made up my mind and challenged myself to win this one at any cost.
The Critical Meeting
As usual, Prabhath and I were there right on time to meet with the IHR Director, Ms. Malati Ratwatte. Introducing ourselves was quite easy, as we had been doing it over and over for several weeks. She explained her need to build a case-tracking system. IHR had allocated $500 to get it done.
The budget was too limited given the scope of the project, but I wanted to go for it anyway. At that point it was more critical to win that first client to keep my teammates positive than to make a profit from a money standpoint. I said we were ready to start, and briefed her about our payment terms. Then for the next ten minutes I heard the same stuff I had heard in meeting after meeting over the past three months.
“I’ve worked with young guys like you before. They just took our money and never delivered what they promised. I don’t trust anyone anymore. If you want to work on this project I am ready to sign a contract, but payments will come only after delivering the solution.”
I agreed. We had finally won our first client.
Lessons Learned
- Looking back now, I see how important it is to secure your first client as soon as possible, especially if you’re starting with nothing. If you can make that happen in the first week, go for it, rather than waiting for three months like we did.
- You have to be flexible when you know you’re at a disadvantage. You may know who you are and what your team is capable of, but your clients have no way of knowing that for certain. Appreciate the risks they’re taking when betting on you, and be willing to make reasonable compromises.
- Don’t worry about the money at first—worry about the first few clients you are going to work with. Can they be used to attract more clients? Securing one or two popular and well-established clients could be more useful than getting higher-valued projects from relatively unknown businesses.
- Try to avoid dead ends. Some big companies love to have young, energetic teams to do their work for just peanuts. They will impose non-disclosure agreements and prevent you from revealing the work you do for them. It’s better to avoid them and look for other opportunities.
- It never hurts to under-promise and over-deliver. You could be working on design or software, but make it a point to help your client achieve new heights. When we started working with IHR, email was only available to their management and fax was the preferred method to communicate any important information. We encouraged them to change, offering them free email, and they responded by wanting us to do their website. Go that extra mile whenever possible — it can really pay off.
- Build strong relationships that last for years. We are proud that the first few clients we secured in 2004 are still with us and that we have strong relationships with them even today. I still receive inquiries from the IHR staff asking how to configure their email client or what to do when their Internet connection goes down. I do my best to help them whenever possible.
Winning your first client is a great achievement and a validation of what you’re trying to achieve as an entrepreneur. I’m sure you too have memorable experiences from those early days in trying to go from zero to one. Please feel free to share them here with a comment!
In the next post in this series I’ll share more insights about getting your pricing right, how to justify it, and how we improved our leads and revenue after the initial years.
