Question

Topic: Strategy

Anyone Have Ideas On How To Monetize Services To B

Posted by Anonymous on 9/21/2007 at 5:05 PM ET 250 Points
Many of my prospects are startups that utilize my services to develop a strategic business plan, marketing plans and strategies and a business management framework. I collaborate with these owners to build businesses I believe have a real chance of making it. I charge them a monthly fee, much like a retainer to assist them.

I have larger paying clients that pay the bills. The startups I refer to are people I believe have a great little business or idea and solicit my services to help them grow it.

I also love this stage of business, it is my passion to help small business become all they can become, to launch a well thought out plan and engage in the process of making it happen with them.

If the company is up and running funds are not a problem, but many startups are cash poor as they poor all their dollars into product development, marketing etc. Often they want to utilize my services and offer to pay me in future revenues or some other creative strategy.

I need to get paid for my services so I need to monetize my services somehow. Does anyone have creative ideas on how to monetize services to bootstrapped startups other than the obvious credit cards, bank loans, taking equity etc?

Thank you for all your wisdom in this area, I need the ideas!
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  • Posted by CarolBlaha on 9/21/2007 at 5:12 PM Accepted
    First, I think the excuse "I'm a start up and can't pay" is a stall. Obviously one that works. They somehow came up with the cash to open the store and sign the lease-- they're working you.

    You could base a part of your fee on current revenues. Make it a sliding scale and increase the scale as they grow.

    I hear what you say-- the start ups are dynamic and fun. Work with them, put it in their lap-- but be clear-- you are in this business for the same reason they are. They wouldn't accept "I'm opening a company so can I get a discount" from their clients, and neither can you. There is a middle ground to find.

    Good Luck!

    Carol
    Sell Well and Prosper tm
  • Posted on 9/21/2007 at 5:32 PM Member
    Unfortunately, green backs are green backs...the universal exchange of all services rendered comes down to one thing...money, or what we interpret as money.

    If your start-ups are not equipped to come forward with some sort of compensation, they perhaps are not ready to launch a business yet. In the initial phase of anew start-up, and ESPECIALLY a new start-up, some marketing is essential for the business to get off the ground.

    Unless you have a "gut" feeling this business is the next big thing...such as U-Tube, (which incidentally was just purchased by Google...the original employees received $1,000000.00 each for being part of the original group)...
    I would think you would be more comfortable getting the money...instead of taking a chance on the business going belly-up, with you stuck investing the time and not getting any compensation.

    I guess it is your call... if you are in a position to forgo payments for your time until a later date...get down with it...or, there are always the normal compensation tactics other than "dollars"...stock options, part proprietorship in the company, use of the services rendered by the company for free, future compensations at another time after the business gets going...but in my world, as much as I know the feeling of benevolent service for the ya ya start-up, money is really the only source of compensation that pays my mortgage, car, insurance, or lifestyle as I know it.
    If anyone reading this knows if we have defined a New World Order and money is no longer the vehicle used for compensation, buying-power, debt relief , let me know, I wouldn't want to be the last to know, that would really suck.- Good Luck.
  • Posted by Lazenby on 9/21/2007 at 6:06 PM Accepted
    Very interesting question indeed.

    What would be interesting up front would be to negotiate the share or options up front. Once you have agreed to a value let them know that since they have not been able to develop a way of actually monetizing your effort that you will need to be able to sell them to another investor.

    There are lots of people chasing idea's and are interesting in these types of opportunities. If you have the correct setup you might know 3 or 4 people who would be interested in buying your positions.

    Hope you were able to find some value in this.
  • Posted on 9/21/2007 at 7:30 PM Member
    This is a very familiar topic. I've been through similar situations many times. My conclusion, after a number of attempts to find the solution, is that if the small business can't afford your fees, you shouldn't provide your services to them.

    They find a way to pay their accountants and their lawyers, and they pay rent, and they buy inventory, and they pay for technology and/or R&D. Why should marketing services be treated differently?

    Sometimes I'm tempted to take equity in lieu of fees, but then I realize that I will have absolutely no control over implementation or over any important business decisions, so the value of my equity is really ill-defined at probably at the whim of the founder anyway.

    I'm not sure that's fair to me, so I almost always opt for fair, arm's-length fees, paid in cash when services are provided. I recognize that there are always exceptions, and I wouldn't say I'll never swap fees today for a share of revenue or profit in the future, but I try to remember that things change over time, and I may never see the "bonus" and cut a deal that's as fair to me as it is to the business founder who needs what I bring to the party.

    Don't know if this helps or not, but I hope you'll find it relevant.
  • Posted by Jay Hamilton-Roth on 9/21/2007 at 8:44 PM Member
    For small businesses, I've found working on retainer is the way to go. I don't have to chase down the money, and it quickly weeds out people who want to string me along from those that honestly want my services.
  • Posted by antonio.alexandre on 9/22/2007 at 9:17 AM Accepted
    Hi.

    that's an interesting question indeed.

    I also face that dilemma. My company also has a part of its portfolio in start-ups. Whatever you say, start-ups are always short of money. I know that for sure since I was for several years the head of a business incubator.

    How do I solve this?
    1 - first, i must believe the business will indeed be a success in the short/medium term (2 years, at the most)
    2 - for every start-up account I deliver to one of my account managers, I deliver them with a high-value account. That's a practical way for me to know that I am not loosing money.
    3 - my company gets involved in every decision that may impact on the strategic direction of the company. This is crucial since this allows us to know exactly what's going on. The owner must allow this and follow our advice on our areas of expertise.
    4 - we only support companies that have managed to get venture capital into their core.
    5 - we review prices every 3 to 6 months. This way we usually manage to keep our fees tuned to the evolution of the Business itself.

    If on of these 5 points is not fulfilled, we jump off and move to another business. I must tell you this only happened once. Some of the start-ups we are currently supporting are already on their 3rd year and doing well. I like to believe we had something to do with their success. :-)

    Best of luck. I am available if you want to exchange some ideas, since we have similar "worries".

    Antonio
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