To my true amazement, this week marks my 18th year in business, and I must say it’s been a wild ride. In 1999, I was scared to death, I had a laptop, a fax machine and a dream and set up shop in the basement of my house. My neighbor, who was a contractor, came over and built a few shelves for me, so I could store some stuff.
That first year, I made $38,000, and my first clients were all people I knew. My first resources to invest in my business came from my personal savings, then I took out a home equity loan and paid off all my bills, even my car. Then, once I was in business six months, I received a micro loan for $25,000 from Ben Franklin Technology Partners in Philadelphia.
Those early years were really something. I wore out a hole in my bedroom floor stressing over cash flow. Surviving in business all comes down to figuring out what you don’t know about business, and learning that as fast as you can. With God’s grace, I made it, and I believe I’m still here to help all of you minimize your expensive lessons in business. Here are my 7 best pieces of advice after 18 years of running a successful business.
- Never Let A Customer Down: If you are in business, sometimes thing are hard, but it doesn’t matter you must keep your word, honor your contract and hold up your customer. Even if it’s not in your scope of word, if you see a problem, you fix it. In the end, you will be rewarded by the client, not only with repeat business, but with a bigger piece of business. I was recently on MSNBC’s Your Business talking about this.
- Borrow Money Before You Need it, But Be Smart: When you borrow money, it’s best to start with a micro loan, then a line of credit, and then a significant business loan, but understand how to use all these types of money. Microloans are usually start-up funds that you can get with decent personal credit and a solid business plan. You can apply for a line of credit once you’ve been in business two years, and can show some track record, but realize that you can only get a line typically for 10% of your gross revenue. When you apply for a more traditional loan, there are lots of options, including banks, CDFI’s and alternative lenders like Ondeck, but depending on your business, this is really expensive money. You could get hit with 10%-30% interest, some with aggressive payment terms, so read the fine print.
- Don’t Be Cheap: There really is something to the phrase, “You get what you pay for.” When it comes to hiring staff or investing in technology that saves you time and money in your business, don’t be cheap, get the best. When you get the staff you think you can can afford, your business will suffer. Borrow money if you need to, so that you can get employees who can revolutionize your business. You need to get great people, and it takes money to do that. Also, don’t be afraid to hire a firm to help you with hiring. Doing another search is draining, and onboarding staff is really expensive and time consuming.
- Know Your Numbers: You must know how much profit is in any deal. In business, profit is how we keep score, so you must make sure you are making money every way you can. You should be looking at monthly financial statements and using a budget to run your business. If you bring in a partner on a project, mark up their fee. And raise your prices every year; you are not running a charity.
- No Matter What You Sell, You Better Be Selling Online Too: Your website should be a cash register, not a brochure. You need to have product to sell online to give people a taste of what you could really do for them. Often I look for subject matter experts to work on projects for my consulting clients. When I come across experts, and one of them is selling a book on the subject on their website, and the others just have testimonials about their work, who looks better? The people who have online course and products set themselves apart.
- Pay Yourself Consistently: I know as the business owner, there are always things that come up, but try hard not to skip paychecks. You need a W2 also, and your family needs money to operate. For years, I would always skip 3-4 paychecks a year to pay a vendor, taxes, or some other bill, but you know that put a lot of stress on my life. Don’t do it. Institute a pay when paid policy for all vendors, and pay yourself consistently, and give yourself an annual raise too.
- Develop an Onboarding Process: Too often we as business owners, hire folks and throw them in the deep end of the pool. That’s a great way to drown someone. Take the time to set up at least a 2 week, but ideally a 2-month, onboarding training for new hires. Make sure they have the skills you need and that they understand your expectations. The more time you spend with new employees, the better they will perform ultimately.
Congratulations on being brave enough to run a business, it’s tough stuff. I hope this advice helps you move more mountains in your way. The most rewarding thing I’ve done in my career is become a business owner. All of us are only one idea away from total freedom, but everything comes at a cost. With the advice I’ve shared, things should get a little easier. Here’s to your business success.
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