Managing Expectations – Yours and Theirs
Dramatic founding stories of entrepreneurs who cooked up a secret formula in their garage one day and launched an IPO six months later gain traction because they speak to every founder’s dream. They are also unrealistic, often embellished and hide the long haul usually required to build a business.
Managing expectations is one of the greatest skills a founder can nurture to alleviate pressure and communicate honestly on goals, deliverables, timeframes and results with team members, customers, investors and, perhaps most importantly, yourself.
Start with you
As an entrepreneur, you see something in the future that does not exist right now. When it all works out, we call that being visionary but, in the meantime, it can look very much like your own strange version of reality. It’s more than okay to dream big and imagine your company as the next billion-dollar standout — as long as you pair that vision with a realistic sense of the work, hours, expense, challenge and setbacks you will likely encounter along the way.
The Great Lakes Innovation & Development Enterprise (GLIDE) cautions would-be founders that it is likely to take more time and more work to become profitable than you realize. Based on their experience investing $11 million in 165 companies through their Innovation Fund, only about half have been cash flow positive by their third or fourth year. They suggest year five or six as a more accurate target. That may sound daunting, but it’s important to know and will help you stay motivated over time.
GLIDE has also found that their most successful companies have raised significant funds during their first five years. Some of their biggest takeaways for founders include:
- Recognize the length of time it will take to succeed.
- Find advisors who know the funding sources that fit with your business model.
- Don’t quit your day job (and get one if you don’t have one) to generate enough cash flow until you can dedicate yourself fulltime to your business.
- Know that, after the first few years, the odds for success really turn in your favor.
Another sound piece of advice is to connect with a community that can help you better navigate the journey, provide access to critical information and resources, and enable you to gauge your experience against those a bit further along. MonicaMotivates provides that kind of expertise and support to increase your odds of success.
Manage customer expectations
Even once you set your own expectations to motivating but still realistic, it can be tempting to promise customers the moon to secure their business. If you aim too low, you risk losing competitive advantage, but over-promising can lead to under-delivering.
Research faculty writing in the MIT Sloan Management Review point out that customer expectations play a significant role in determining how they perceive actual service and quality. Consider these tips for finding the sweet spot where your business can shine.
- Ask a lot of questions.
You can’t meet customer expectations until you know what they are. Find out as much as you can about what the customer expects in terms of deliverables, timing, pricing, and what is their responsibility and what is yours. The better you understand their needs and expectations, the better you can match your time and price estimates to them. - Talk to your team.
If you have other people working with you, get their input on what they can realistically produce and when. If you repeatedly saddle staff with absurd timelines, quality will suffer, deadlines will be missed, customers will be disappointed and team members will walk. - Focus on your own best offering.
If a competitor launches a compelling new product, resist the urge to automatically mimic it. Instead, test it out yourself to see if reality meets the hype. Then, focus on making your product or service the best version of itself that meets the most critical needs of customers. You can’t jump on every bandwagon and maintain a critical point of differentiation and advantage where you can excel. - Explain your process in depth.
Even for what may seem like a relatively straight-forward product or service, the devil is likely in the details. Get into them. If you run a cleaning service, does the team show up with their own products or does the customer provide them? If you run a print shop, do you deliver big jobs or does the customer need to arrange for pick up and transportation? As a graphic designer, how many revisions are included before the client is charged for new work? - Address issues with transparency and speed.
Even well-thought-out plans sometimes meet with unexpected hiccups and delays. Talk with customers early and often to alert them to potential snags, recommend your best fix and explore any ways to ameliorate the impact of unexpected circumstances. - Anticipate future needs.
One of the most effective ways to meet and exceed customer expectations is to anticipate what they may need next. You can surprise customers in a positive way by offering solutions that meet current needs in a better way or meet needs they may not have articulated yet but could benefit from addressing.
Adopting a realistic mindset grounded in available data, related experiences of other founders and an objective assessment of your capabilities is one of the most effective ways to weather the ups and downs of owning a business and prepare for long-term success.