Written by Nadine Owens Burton of Owens Burton Consulting
So you want to start your own business. Great! It is one of the American dreams. But many entrepreneurs will tell you that along the way to that dream there can be some nightmarish lessons to be learned. Here are some of the Shoulda Woulda Coulda lessons from a few veteran entrepreneurs.
Most successful business persons agree, you’d better enjoy and be passionate about your business. You’ll need that love to carry you through the bad days. “Even if you’re doing what you’re passionate about – which you better be in the world of entrepreneurialism – some days will suck. We all think it’s hard. It’s ok. Tomorrow will be better,” says Andy Hayes (http://www.andyhayes.com/).
Having the Right People Is Important
In one of my favorite books, Good to Great, Jim Collins notes that one of the keys to a company – in fact any organization – making the leap from good to great, rests in their having the “right people on the bus and then the right people in the right seat”. This metaphor, quite simply, illustrates the role human capital or a human resource plays in the future success or failure of a company. Many small businesses owners first need to realize that they can’t always do it alone. Then once you’ve made this crucial decision to seek help, you have to choose the right partners and the right staff.
“Probably one of my biggest ‘wish I knew then’ moments would be know who the right people to hire are. As a young company with limited capital, you’re usually going to go for the cheapest option and one of those is your friends. I wish I realized that hiring friends is not only bad for your company, but also your friendship, “ says AmyLynn Keimach of Border7 Studios (http://www.border7.com/).
Brad Shepard, one of the founders of Innovar Partners (http://www.innovarpartners.com/), an operational improvement firm, is involved in his second startup. He admits that some of his mistakes from his first company, Eyeformatics, are benefiting his new venture. One of Mr. Shepard’s lessons learned? — Assemble the right team. He notes, “People! Very cliché, but so true. With Innovar Partners, that meant finding the right business partner, Shawn Coffman, and then surrounding ourselves with an absolute all-star team of professionals. Taking care to assemble the right team reaps more rewards than imaginable. Although you have to get the ball rolling to attract top people, once you do it is imperative that you find creative ways to get people excited and keep them engaged. At Eyeformatics I tried to play too many roles in which I had no direct background experience.”
Greg Stallkamp , (http://www.holosfitness.com/) “feel[s] that one of the most important things in starting a business is having the right resources at your disposal, especially human resources. I would never approach a business with the idea of, ‘we’ll find the right person after we launch’. Instead, I feel it is completely necessary to have the right resources lined up before launching. This will save a lot of time and headaches. And if you’re not able to find the right resources prior to launch, it’s only going to become more difficult as time goes on.”
And just as finding the right people is key, when you realize a relationship isn’t working, Act! “Don’t wait too long to get rid of people that aren’t performing well – they just drag the whole organization down,” says Mike Walker of WalkerTek Interactive Marketing (http://www.walkertek.com/).
Put it in Writing There is a saying that a goal is just a dream until your write it down. Sometimes small business owners underestimate to power of a business plan. “Boy did business hit me upside the head!”, says Ros Guerrero of Ficklets (http://ficklets.com/). “Having a vision in my mind is one thing, but not having it on paper isn’t visionary at all. What I would have done from the beginning is created a comprehensive business plan that included a comprehensive marketing plan. Now that our company is growing, working capital is needed to expand and g row with the demand. Having a business plan in place would have [helped] us prepare to seek funding from potential investors.”
Find a Good Accountant or Bookkeeper Leah Cochran (http://www.glocalconsulting.com/)— who has been in business since 2008 — believes that being proactive about your bookkeeping and taxes is very important. “Things I should have done, immediately — talk to a CPA about what is able to be written off, etc for taxes. I volunteered pro bono services (about $15,000 worth) after hearing other companies being able to write-off the work. When I got to my CPA this year, he said NOOOOO. It’s not income, so you can’t write it off.
Traci Ellis (http://www.traciellislaw.com/), an attorney, agrees that starting off with bookkeeping assistance is key. “My BIG regret was not having a bookkeeper for my business operating account. As a result of trying to save money and be a “DIY’er” (Do it yourselfer), I totally screwed up my accounting records, didn’t have a good handle on cash flow, and because I was busy practicing law, didn’t pay bills on time. Of course, by paying bills late, I was hit with late fees and added interest, etc. How dumb is that? Also, my idea of cash flow management was to sign into online banking, and if there was money in the account spend it! But, when a nice guy from the power company showed up one day at my office with a disconnect notice, I KNEW I had to make a change. So, I hired a bookkeeper. My financial life has been incredible every since! I have a good sense of what I need to bring in every month, what my monthly expenses are, and actually even have reserves now! I am now a REFORMED DIY’er (and proud of it)!”
Cash Flow & Financing
Even before you hang up your shingle or register your domain name, you have to think about how you are going to pay the bills when there are no profits. Jenna Oltersdorf of SnackBox (http://www.snackbox.us/) says, “Create a nest egg for your company. The first few years can be tough from a cash flow perspective. When times are profitable, put money aside to help out during the lean times.”
LaTron Brown (http://www.seniorlifestyleconcierge.com/) realized that whatever you think you need to start your business, add on to that magic number. “For my business, I wish I would have begun with more funding. I underestimated the amount that I needed, even as I was saving while in a full-time position. I found that as general rule if you are serious about diving right into starting your business, you should save up enough/borrow enough for an 8 month emergency fund for bills, one year of salary and startup costs. Otherwise, do it part time while you are working a full time job. If one is downsized from a corporate job like I was and can’t save that much because of [an] unexpected layoff, consider getting a job through a temp agency or a part-time job. However, if you have to borrow money, then try family and friends first; make banks loans the last resort. These are some factors that I wish I had considered.”
Be careful of relying on credit cards to help with cash flow. For every story of the successful entrepreneur or film maker who financed their project with credit cards and then became a big success, there are countless business owners for whom that doesn’t work. And don’t think you’ll make up for it later with a bank loan. That’s not necessarily always an option. “If I would have known that I could EVER be turned down for a loan (I had perfect credit) I would NEVER have used my credit cards to get me through the recession,” says Becky Sturm (http://www.stormsister.biz/).
Always remember to follow the money, “When overwhelmed with a ‘To Do’ list, remember: what’s the next thing closest to money? E.g. if you need to do this marketing campaign, or take five minutes to send out invoices, shouldn’t you really take a deep breath, do the invoices, then move on? Get organized, because at the end of the day, even if your ideas are good and your plan is solid, if you run out of cash, you lose,” says Mr. Hayes.
Marketing Marketing Marketing
Let’s face it. You are not going to be successful if no one knows you exist. When it comes to marketing Shoulda-Woulda-Coulda’s, Carolyn E. Stys (http://www.bluemontcapital.com/) just wishes she had hired a true marketing pro and started networking SOONER!
Eugenia Francis (http://www.teachildmath.com/) wishes she had learned the value of press releases sooner. “A well written press release is a good investment. ‘Times Tables, the Key to Your Child’s Success?’ (which I wrote) was blasted over the internet. Not only has [the press release] appeared in several languages, but [it] was reprinted in EDUCATION MATTERS, a periodical for teachers. I should’ve done this earlier,” says Ms Francis.
Press releases are important, and with so many free and low-cost press release distribution services online, it is possible for even a small business to develop a strong marketing campaign that includes press releases. Just know that to see tremendous return on your investment – like anything in life – it’s not just quantity, it’s quality. Send out press releases often, but you have to have a great story to tell before you decide to send out a press release.
And don’t do any new marketing strategy unless you can evaluate its effectiveness and your ROI (return on investment). Ms. Francis suggests adding coupons to your newspaper ads. “Advertising in magazines [and newspapers] is expensive. Every quarter, the ad exec would beg me to renew my ad. I decided to include a coupon in the ad. When not one coupon was redeemed, I dropped my ad. My advice: include a coupon in your ads to see if indeed you are reaching/persuading customers.”
Getting Feedback Most veteran entrepreneurs would agree that you can never do too much networking. One of the outcomes of networking is getting feedback on your work. This is especially true for creative types of business ventures, where your success depends on pleasing the aesthetic sensibilities of your target market – or at least the professional buyers and gatekeepers of your target markets.
According to Marybeth Wydock of Velvet Lime Designs (http://www.velvetlimedesigns.com/), “ You’ve got your vision…your ‘pie in the sky’, but getting in front of retail people and getting yourself into a showroom is literally a dog-eat-dog world. You’re fighting trying to make yourself completely different and stand out from the crowd so that people notice you. I think a lot of it is about networking and getting the most opinions — good and bad — from anybody you can. Once you go through the whole process for a while, what you originally envisioned might be completely different from what you end up with and that can be a very good thing sometimes!“
The Customer Relationship Is Not Always Right
They say that the customer is always right. Well that’s not exactly true. However, in customer service your goal may be to figure out a way to make the customer right, or at least satisfied, so that you can keep them. But sometimes, you have to admit that some customers are just not right for your business. Ms. Oltersdorf believes that sometimes you have to “[k]now that it’s okay to fire a client. If they aren’t a good fit for any reason, it’s more than okay to sever ties and move on. Knowing how to go about firing the client would have been incredibly helpful [to me].”
Knowing when to fire a customer goes hand in hand with the realization that you cannot be everything to everybody. You have to have focus. If you try to make your product or services fit everyone, you actually dilute your worth. Sometimes your better served when you figure out “Who is the right customer for my product or service” and focus on being the best for them.
Likewise, figuring out what business you are really in helps move you toward success. Did you ever hear why lion tamers use a stool as a prop when they enter the arena? It’s because the lion tries to focus on all four stool legs at once and the lack of focus helps the trainer keep the lion from his natural goal, devouring the trainer. If you lose focus you lose your ability to devour the market.
Jared OToole of Under30CEO (http://www.under30ceo.com/) states, “ When I started a business I wish I knew the importance of focusing on one area. It’s so crucial to pick a path and put all your efforts into it. We spent a year in the beginning changing plans and biz models. Once we picked a path and made the leap 100% we saw explosive growth and haven’t looked back.”
Learn From Your Mistakes
I love the Sesame Street song, “Everyone Makes Mistakes,” sung by Big Bird. I even use it in my Power of CARE™ motivational/quality improvement speech and workshops. The basic message of the song is, hey everyone makes mistakes, so why do you think you’ll be any different? The key to success is not that you will never make a mistake, it is what you do after you make those mistakes. What did you learn from it? How are you going to do better tomorrow?
As Mr. Shepard put it, “In the end it is not one single element that I think makes a difference between success and failure. It is the combination of several working together. In my case, the experience with Eyeformatics has deeply impacted our Innovar Partners success. Without the prior failure, Innovar Partners would be a different company if it existed at all.”