This post originally appeared on startupnation.com/grow-your-business
Brands have always waged war over customers’ attention, trust and loyalty. They’ve competed on just about everything — from features and specifications to special discounts and service plans. But in today’s marketplace, product and pricing often take the backseat in favor of customer experience and customer service.
That’s to be expected in a buyer-centric economy. When buyers call the shots, business survival depends not so much on how affordable or souped up your product is, but on how much your customers love your service. In this environment, a new mantra emerges: Treat your customers with superior service and you win half the battle.
Which begs the question: How exactly do you do that? How can startups provide customer service that delights audiences and compels them to come back for more?
One possible answer: own the game by bootstrapping your business.
Start with virtual ownership. When everyone in the team owns their specific function, the business can’t move anywhere but forward. When everyone strives for excellence because they take their role as stakeholders seriously, high performance becomes achievable. When everyone takes full responsibility and feels accountable for meeting expectations, good results happen.
For some companies, great customer service requires extreme ownership. Coined by author and former U.S. Navy Seal commander Jocko Willink, extreme ownership builds a winning mindset for leaders.
And what better way to put extreme ownership to practice than by bootstrapping your business? When you literally own the business, the stakes go higher, you ignore the noise, and you focus on what truly matters: your customers.
In a bootstrapped business, you have no choice but to depend on customers for operational funding. Unfortunately, you’ll never get that without earning their trust and loyalty. Customers keep their wallets open only if you meet their expectations and provide superb customer service.
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What does bootstrapping mean?
Bootstrapping refers to the practice of building a business from scratch, largely using the owner’s personal savings and the company’s initial stream of revenue. In the vast majority of bootstrapped businesses, operations make do without outside investment, credit and bank loans. Forced to embrace a minimalist approach, bootstrapped companies need to rationalize every dollar of expense and to find clever alternative solutions to business challenges.
As reported by Investopedia, more than 80 percent of startups are personally funded by entrepreneurs with an average capital of around $10,000.
Bootstrapping is tough. It severely limits resources and places the bulk of financial risks on the owner. However, it also grants full control of branding, product development and customer engagement to the entrepreneur. Because of resource limitations, bootstrapping encourages cost-efficiency and out-of-the-box thinking.
Caution: Bootstrapping is not a foolproof formula for success. Far from it. Bootstrapping works for some business contexts and fails miserably in others. Note that nine in 10 startups fail. That means getting things right at the onset (especially your finances and cash flow) is imperative.
Do not bootstrap your business if you have a long sales cycle or if total sales receipts can’t help you break even. A team or employees with low commitment or motivation will hinder you from sustaining a bootstrapped operation. So will logistical requirements and operational inputs that require substantial working capital.
How can bootstrapping improve customer service?
In a nutshell, bootstrapped companies need to become profitable fast. Otherwise, they’ll fold even quicker. Limited by these restrictions, entrepreneurs have to rely on a combination of focus, cost-efficiency and improvisation as the main lifeline of their business. Because they rely on customers for virtually every funding need, bootstrapped companies need to put customers at the center of their daily operations.
As CEO and co-founder of SEMrush, Oleg Shchegolev said:
“Having limited resources means you won’t survive unless you only focus on what brings the most value … you are forced to always look for innovative ways to grow your company.”
Here are six reasons bootstrapping your business will help improve customer service
- You focus on profitability
Money talks and it speaks the loudest in bootstrapped companies. Owners of such businesses are fixated on the bottom line. They focus on money coming in and money going out. Their constant aim is minimizing costs and maximizing profits.
As a result, bootstrapped businesses can’t afford to waste money. Neither can they afford to let revenue opportunities and customer interactions pass by without selling a product, solving a problem or managing expectations.
Because brand reputation and customer experience impact revenue performance, bootstrapped companies can never neglect customer service. Moreover, smart entrepreneurs will do everything to keep existing customers happy because it is far more costly to acquire new ones. Being the primary tool for retaining customers, customer service plays a crucial role in keeping businesses profitable.
- You prioritize customers
A bootstrapped business is practically owned by its customers. Funding for day-to-day operations comes from customers’ willingness to invest in your product. Without customers, a business simply dies — bootstrapped or otherwise. And because customers hold the key to business survival, they deserve the top spot in your list of priorities.
The business learns to value customer feedback and reviews. For example, when a business personalizes their communications with a customer or solicits their feedback, the business gains deeper insights about what keeps customers motivated and engaged, versus what pushed them away from using the product.
Because of this, bootstrapped startups can build products that squarely address customers’ problems, fulfill their needs, or make their lives better. Beyond product design, a genuine connection with buyers leads to better customer service performance when you need to resolve issues or manage expectations.
- You become more resourceful
As the saying goes, adversity makes you stronger. In a business context, companies need to become more resourceful as challenges become more difficult and complex.
Not all startups survive their third year. But those that do generally find clever solutions to their problems. Owners of bootstrapped companies overcome limitations by being resourceful in almost every aspect of their business. They learn to seek free tools, adopt clever approaches and execute ingenious strategies.
For example, many entrepreneurs who run bootstrapped companies build wide-ranging social networks and professional relationships. This enables business owners to connect with domain experts and influencers who can share skills, give referrals, promote products or help overcome specific challenges.
Bootstrapped companies also become very proficient at finding business solutions that adopt affordable or even freemium pricing models. They optimize social media to build their brand, market products and advertise their services at reduced costs.
With insufficient funds to hire additional staff, many entrepreneurs also choose to implement solutions by themselves. This hands-on attitude builds their DIY credentials and broadens their skill set.
The benefits of being resourceful carry over to the field of customer service. Because owners of bootstrapped businesses evolve into highly resourceful entrepreneurs, their team can engage customers with confidence and strong problem-solving skills.
- You improvise, innovate and iterate by default
Necessity is the mother of invention. For bootstrapped companies, their persistent need to keep customers satisfied promotes a culture of creativity and innovation. When budget prevents them from acquiring an expensive solution, they’ll find or build a clever workaround that costs far less and works just as well.
Teams in bootstrapped companies also learn how to iterate their processes and products in a continuous cycle of improvement. They need to because their competitors have ample research and development (R&D) budgets. But being left far behind on product fit and customer experience will become a death sentence for the company. To compensate for limited resources, bootstrapped startups leverage their stronger relationships with their customers to gather feedback and determine market sentiment.
Free from the control of venture capitalists and other external investors, bootstrapped businesses have the power to determine the direction and scope of their innovative efforts. This way, they can build products that customers (not investors) actually want.
- You have more control of the business
Budget severely limits how a bootstrapped company can operate and how ambitious it wants to be. However, business owners have absolute control on how the business is run and on which direction it is heading.
Bootstrapped companies are agile and can adapt to market changes more readily than lumbering corporate giants. They do not answer to a board of directors but to their portfolio of customers. Owners can direct any aspect of the business and participate in its processes. They have the final say when it comes to corporate culture, hiring, training, marketing and customer engagement strategies.
Most importantly, owners of bootstrapped businesses can set the standards and best practices for their customer service apparatus.
- You become more passionate, disciplined and persistent
As an entrepreneur, you’re playing a risky game where the stakes are high, and where failure can lead to bankruptcy. This possibility drives many entrepreneurs to become more disciplined in their financial and strategic decisions. It also forces them to be more persistent when pursuing goals and prospects.
Having full accountability for their company’s success, entrepreneurs become more passionate in following through and making things happen. They realize that customer service plays an important part in achieving success.
Bootstrapping is not for everyone. But for many entrepreneurs who qualify, it can improve customer service. When you deliver superior customer service, positive words about your brand will spread and profits will come streaming in.
Any business running on a shoestring budget will face tremendous challenges nearly every step of the way. But it is this sort of adversity that can send a jolt of change to products, processes and people. When you combine customer-centricity, cost efficiency and creative thinking, you get the recipe for meaningful innovation and business growth.
Bootstrapping your business transforms your mindset. It helps build a habit of discipline, resourcefulness and excellence. And it all starts when you ask, “What is best for my customers?”
The post 5 Reasons Why Bootstrapping Your Business Helps Improve Customer Service appeared first on StartupNation.