Ever notice how panhandlers always have a few coins in their cup. This is actually very smart as it shows a fundamental understanding of humans – we hate being the first to tip our money in.
This neatly describes one of the key dilemmas most startups face in signing up new customers and raising funds.
Basically, you find a lot of interested parties who aren’t willing to sign up until they have the comfort that other and hopefully bigger name companies have signed up.
Remember, most decision makers, and especially their procurement people are risk averse. After all, that’s part of what they get paid to do.
If you are literally fundraising for a project then follow the panhandler strategy of putting a bit of your own money in – also known as putting some skin in the game. Most funders will not speak to you again if you are not showing this willingness to put your own funds at risk.
When you are talking to funders it is also normal to talk as if they are the putting the last few coins in. It is never directly said, but implied through a relaxed approach that is clearly not desperate. There is a fine legal line to be walked here, but pretty much most company IPO’s, property deals and major industrial projects use just this principle. Basically you never let them know where you stand with other investors.
A similar approach can be used in signing up customers for something such as an online business.
For many this approach is really uncomfortable and feels like being a con artist. Remember, you are offering them a deal and they only get so much information till they sign up – after all they need to take a risk too.
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