I’ve been in business more than 20 years, and every so often I think back on when I was a young business owner, reflecting on what I wish I knew back before starting a small business. I decided to write this blog post as a message to my younger self. Although it is a little late for me, hopefully, some of you new business owners out there can benefit from this advice!
12 Things I Wish I’d Known Before Starting a Small Business
Running a successful business is really about figuring out what you don’t know about business, which is a process that can take months if not years. So here are the 12 things I’ve learned along the way and wish I’d known before starting a small business.
1. Be Careful With Your Time
Time is money! So do not let people waste your time. Qualify leads before agreeing to a meeting. Keep your conference calls to 30 minutes, no matter what. Even when it comes to volunteer service, remove yourself from boards or activities that don’t allow you to make a valuable connection that can help you in business. Focus on profit-generating activities.
2. Develop a Niche Target Audience
In my early days in business, I wasted a lot of time and money chasing all kinds of different customers. Don’t pursue any and all opportunities. You must be known for something. If everyone can use your product or service, no one will. It’s much more profitable to learn everything you can about your niche audience so you can become an expert in solving their problem. Figure out how to become their “go-to” resource.
Cash is king. It is the engine that drives your business. Know your monthly cash sources such as client payments, owner investment, loan funds. Track your expenses, including payroll, inventory, shipping, and even your salary. Positive cash flow is driven by two things: organization and planning. It is important that you know how much cash you need to operate monthly, so you will also know how much you need to sell weekly to pay the bills.
4. Never Let a Customer Down
This might seem obvious, but it really isn’t. You need to go above and beyond to meet a client’s need or to keep a promise you made to them. That might mean you to stay-up all night to re-do work that was not done properly in order to meet a deadline. You might need to eat rush fees or get behind the wheel of the delivery truck yourself to drive a package one state over. It’s doesn’t matter; you are only as good as your word. Make sure it means something.
5. Double Your Price
Pricing is not easy, but I find that most new business owners lowball themselves. Don’t be too quick to discount your prices to get clients. You want to sell on value, not price, so double your fee. It’s better to figure out how to include value-added services that don’t cost much to make it a win-win. The only exception is if a client told you what they had in the budget specifically.
Use your line of credit for short term expenses only. You want to borrow money on a line of credit for no more than 90 days at a time. Your goal should be to get it back down to $0 as soon as possible, that way you’ll always have access to it when you need it, especially if a customer is paying you late. And if you do run a balance, make sure you are making principal payments and not just interest payments. Otherwise, the bank can pull your line of credit at any time.
7. Use Your Accountant as a Business Advisor
If you only talk to your accountant at tax time, you are doing your business a disservice. Use monthly financial statements to run your business. Meet with your accountant at least quarterly to strategize about your business. In the fall, you should meet with them to discuss tax planning and budgeting for the coming year. If you wait until tax time to talk, it’s too late to talk tax strategy.
8. Treat Your Kids and Spouse Like Your #1 Customer
Do not let yourself become all-consumed with your business. Set aside time to spend with your family at least once a week. Date night is still important. It’s all about keeping family buy-in. Make sure your family understands that your business is not only your personal mission but they are also part of your success team. Empower them to make dinner, pack their own lunches and generally become more independent because sometimes you will need to be head-down in your business. Be prepared for a few complaints in the beginning, but over time, they will become proud of your accomplishments.
Running a business can be a very lonely road, especially when you are a one-woman (or man) army. As the owner, you need to focus on your most highly-valued activities like sales and talking to existing customers. Tasks, like invoicing, blog management and preparing your weekly newsletter, are things you can outsource. Getting support is the fastest, most profitable way to navigate the administrative side of business ownership. Hire yourself a virtual assistant as soon as possible to help out.
10. Hire Good People
If you want to grow your business, you must hire good people. Often you might want to hire whom you think you can afford. But hiring the best people you can find will grow your business. They are your front line to your customers. They represent your brand, but they need to be trained to know what to do. Don’t assume the skills of your staff. Demonstrate how you want them to deliver your goods or customer service.
11. Focus on One Thing
When you become an expert at one thing, you become the obvious choice to work with. For example, who gets the work with the Army: a generic XYZ video production firm with industrial production experience, or Army Productions, a veteran-run video production firm that specializes in military videos? When you focus on one service for one audience, new clients come to find you.
12. Failing Doesn’t Mean You Are a Failure
In business, it is easy to take things personal. Don’t; it’s just business! You are going to make mistakes, but don’t dwell on those things. Give yourself one hour or one day to be angry or disappointed and then keep it moving. Just make sure you learn the lesson. Dwelling on a mistake is like letting a hater live rent-free in your head. Keep your self-talk positive. You might have done a dumb thing, but you are NOT a dummy. Failing doesn’t mean you are a failure—it actually means you’ll be smarter next time.
I hope these 12 things have shed light on what you need to pay attention to before starting a business. You are taking on a lot of jobs when you put your sign out and say you are open for business. Be patient. Money never seems to come in as fast as you thought. Get yourself a kitchen cabinet of advisors. You will achieve your goals faster with a community of peers, accountability partners, and mentors. And stay focused on your customers—never let them down. If you focus on that motto, you can’t go wrong.