How much money do you need to start a business? It’s a question many aspiring business owners are eager to know the answer to, especially since 2020 saw a huge uptick in profits for many people working in the trades.
Recently, Mike Michalowicz, author of Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine, spoke at the Roofing Process Conference in Orlando, Florida to talk about this same topic.
Michalowicz, a charismatic orator who has started and sold multiple businesses during his time as an entrepreneur, was joined after his keynote speech by Roofing Insights CEO Dmitry Lipinskiy for a Q & A session.
The two dished on a number of topics, but most important was providing audience members, many of whom are hoping to become successful entrepreneurs, with the knowledge they could apply to their own futures.
Less is more,
Michalowicz began when asked for a specific dollar amount needed to start a business.
With service-based businesses, you can start with zero. You have the assets already. I can start a cleaning company and all I need to do is buy a mop, but even then, I could probably use the customer’s mop to do it.
Michalowicz then applied that same formula to the roofing industry.
If I was starting a roofing company, what I would do is called the sell-the-tell technique,
The sell-the-tell method involves approaching customers and offering to perform work at or below cost. The idea is that customers will also pay much of their bill upfront and will be willing to work with someone new to the industry because in turn they are receiving a service at roughly 30% cheaper than market value.
Michalowicz stressed that there is one huge step business owners must take in order to make the sell-the-tell technique work:
Ask that you become a reference for them if you do an excellent job.
The mistake is we think we have to be proficient and excellent at something before we roll it out,
I would just be very candid with my initial customers.
You become your own apprentice that way,
Lipinskiy then shared how when he was first starting out as a business owner, he hired a man to help him learn how to do gutter repairs. Then, after he completed his first job, he paid the homeowner $50 to write his company an online review.
But things didn’t come full circle for Lipinskiy until three years later when that same customer called him and had him do an $8,000 fascia job.
That’s a funny story, but it’s also an amazing story,
I think the biggest source of marketing we have is our reputation. In the beginning, it’s worth it to work for free or at cost just to get things done. Look what it did for you, [Dmitry]. You’re doing okay.
Want to see the rest of the video with Mike Michalowicz?
Go to the video at the top of this page to view the entire Q & A between Mike Michalowicz and Dmitry Lipinskiy!