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Guest post by: Karen Scharf Become an Author

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If you're like many entrepreneurs I've encountered, you probably started your business because you are really good at what you do. At some point in time, you might have decided you were sick and tired of bringing home the bacon for your boss and you figured you'd be better off starting your own business and keeping the bacon on your own kitchen table. Or perhaps you have an exceptional skill, something that comes so naturally to you that all your friends and family have always said, "You should be making money with this. You should start your own business."

So you entered the world of entrepreneurship. You came up with a catchy business name, had a logo designed, created an eye-catching brochure, invested in a new computer system, printed up some great business cards. And now that you've been "working" at your new business for several months, tweaking the perfect shade of blue, contemplating a new logo design, reconsidering a different brochure - you realize you don't really have a business yet. Because, quite frankly, you don't really have any customers.

Finding Your First Customer

Before we go much further, I want to clarify something very important: a customer is someone who pays for your product or service. This is so crucial, especially with a service business. I chat with many entrepreneurs who claim to be working with a certain number of customers who aren't really customers at all. It's usually very easy to find people to sample your product or service for free. But finding people to actually give you money is another story entirely.

One of the best sources of new customers is through referrals. But if you haven't found your first customer yet, you don't really have any one who can refer you. And that's where the trade association or business organization for your niche comes in.

Almost all trade associations and business organizations distribute a membership directory, which is an absolutely invaluable resource. When ever I mention this to a new entrepreneur, I almost always get the same answer: "I already joined the trade association and I didn't get a single call from my ad in the membership directory."

And I generally reply with something like:

"The membership directory is a great resource, but not in the way you're thinking. Most entrepreneurs get their business information listed in the directory and then wait for the phone calls to come pouring in - which almost never happens."

Create a Referral Alliance

Instead, I recommend that you use the membership directory proactively. Review the directory and find four to six other businesses who seem like they'd be a good fit. By good fit I mean other businesses who are attracting the same type of clientele you are looking for without being a direct competitor to your own services. If you're a plumber who focuses on multi-level townhomes in the Meridian Hills neighborhood, look for a carpet cleaner and a home painter and a window washer and an electrician who all service multi-level townhomes in the Meridian Hills neighborhood. If you're a bakery specializing in wedding cakes, look for a bridal shop and a florist and a limousine service and a caterer. If you design custom-made handbags, look for a jewelry designer and a wardrobe consultant and a color analyst. You get the idea.

Now that you have a list of potential referral partners, you want to craft a very compelling introductory letter that briefly describes your business. The rest of the letter should focus on your potential partner and his business and his customers. Point out how you would like to help your new partner grow his business and how you can be of service to his clients. Mention the fact that you are both targeting the same customers and you would like to create a mutually beneficial referral partnership.

I suggest that you meet your potential partners in person; go out for coffee, or offer to take him for lunch. You want to get to know your new partners on a personal level so you can feel confident in their services before referring them to your own future customers.

When you do meet with your potential referral partners, be careful how you come across. Be sure to present a self-assured image of yourself and your new business. Don't sound whiny about not being able to find new customers. If you're not confident about your services and your business, why should your referral partners be?

Next, make sure you have a very clear understanding of your referral partners' target market. Ask for a very detailed descriptions of their best customers. Right now, you don't have many referrals to send their way, so you may be tempted to refer customers who aren't such a great match. The detailed description will help you focus on the right target customer, which will make your referral program stronger and last longer.

Ask your referral partners to craft an introductory letter about themselves and their services, and offer to send the letter to the people you know who fit their target profile and could possibly benefit from their services. When you're starting your new business, you might be hesitant to let your friends and acquaintances know about your own new services fearing that you'll seem pushy. It's so much easier to introduce them to your new referral partners and let them know about those services. Be sure to print the introductory letter on your own letterhead and include your own signature. You want it to be a personal introduction from you about a service you would recommend.

Include information about your referral partners on your website. And track the page views and outgoing links so you can let your partners know how much web traffic you are sending their way.

Then craft a letter about your own services and ask your partners to refer you to their current clients. Suggest that they include the letter with invoices, monthly statements or quarterly newsletters. As soon as you start getting new clients, you can do the same. You'll want to track the source of each new client so you're not referring the jewelry designer to the client who was referred to you by the jewelry designer.

And speaking of new clients, once you do start working with your own new clients, it's a good idea to create a program to request referrals from your clients as well.

Because referred clients are easier to market to and easier to sell to, a solid referral program is an excellent way to grow your small business. Create a solid referral program and be consistent with executing it, and soon you'll see your business grow and your revenue soar.

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