It’s been a very rough week for me, but I have had this on my mind and didn’t want to carry it over to the new week. It has to do with a challenge many emerging entrepreneurs face but no one seems to talk about even though it greatly inhibits the growth of ventures particularly in Port Harcourt, where my core interest lies for now.
Most young entrepreneurs keep having issues with clients when it comes to payment and terms of service (engagement). The reason is mainly because the entrepreneurs are unable to enforce the idea of formal agreements, they deal based on verbal discussions and agreements which often leads to dispute.
Why is this so?
Survival. When you are still doing hand to mouth business, you don’t care much about agreements or terms of service not to talk of insisting on it – you just want the money to survive. Your next meal, data, transport fare, and so on depends on it. You can’t walk away from deals when the client already proves troublesome by not wanting to have an agreement, you are gripped by that silent fear of losing the money.
I have been there before and I can tell you with certainty, you can’t go on that way. If you cannot deal with this basic, moving on to build a great venture that will scale remains just a dream in the cooler. Remember, everyone can dream, but execution makes the difference.
So what can you do?
1. Document Verbal Agreement and reconfirm before you execute. You can have verbal agreements, but before you commence any work, AT LEAST ensure to send an email stating what was discussed and agreed. It will save you a great deal of trouble.
2. Fold your legs to the length of your blanket. Live within your means, spend only on ESSENTIALS. Stop competing with those who are better placed financially. As much you can, seek cheaper alternatives that still serve the purpose, but remember that sometimes the cheapest option is the most expensive.
3. Build a cash reserve, no matter how little. When discussing with a new prospect or client, your next meal should not depend on the deal, but on your cash reserve. With cash reserve you will stop being at the mercy of clients.
You will have a better bargaining power, and you can say no with confidence when it is a bad deal.
These are seemingly simple issues, but I encounter lots of people trapped in this situation, so it is important to throw torches to light up the path for others. You can share to young entrepreneurs in your network.
I am considering doing a video to explain the four financial circles that every entrepreneur and individual belongs to and how it affects your marketing strategy, pricing strategy, business model, and even investment strategy.
Again, we can build truly great companies.