When starting your own company your first goal should be to of course generate revenue. Mine was to generate revenue and find a way to survive on my own without venture capital or loans. Throughout the years of working around the clock in a basement and at my mother’s kitchen table, I experienced a few things that I did not plan for.
1 – Don’t Let Taxes Sneak up on You, Save for Them Monthly
You’ll get caught up trying to chase money and break even. Once you start generating revenue, the government comes into the picture again. When you’re creating your revenue model, it’s important to remember that a part of your profit will instantly go to taxes whether you like it or not. So look at how much you want to make after taxes when adding your margin to your products or services. Create a plan to pay your taxes quarterly so you don’t end up having to owe thousands of dollars come April.
2 – People Lie
Trust is important in business, especially with your suppliers, customers and staff. However, people have flaws – and many people will only look out for their best interest at the end of the day. Study people. Try to understand each person’s motivation and hot buttons. Create deliverables for staff so you can track accountability to prevent liars from smothering the truthful.
3 – Always Identify the Stakeholders
In the services industry, sometimes your clients should not be in the position they’re in. They may have known someone to get the job or simply have bragging rights from a college degree. You’ll see this more than once in your career – some people are just not fit for the role they are in. Those people can be a disaster for your projects if you are offering services to another company. They’re not skilled enough to make proper decisions and may not have the final say at their company. This leads to inefficient time management and a loss in revenue.
4 – Cash Flow and Profit Are More Important than Revenue
It’s simple math, but if you ignore this simple accounting your business is doomed. Revenue looks great: it’s cash or accounts receivable – it gets you excited to see all those dollar signs. As you may know, revenue less costs of goods sold and expenses equals your profit. Successful CEOs focus on profit as it allows for reinvesting, diversification and growth.
5 – If You Get Sued, Weigh Your Options Before Going to Court
If one of your products has a flaw, or even if you give bad advice – you’re liable to get sued. When you first hear this horrible news you’ll panic. You’ll think your world is going to collapse and your baby (your business) is going to be taken away from you. Consult your lawyer immediately for their advice, tell them the entire story and tell them everything (the truth). Weigh your options to fight the battle in court or to settle outside of court, as the legal system is VERY expensive. Outside of the legal fees you’ll be wasting time outside of the office, opportunity cost for generating more revenue. Weigh the options and pick the option that costs less, but make sure that option is ethical.
6 – You Can Do Business From Anywhere, but Brick and Mortar Establishments Are Still Important
This was one of the biggest surprises to me. I found out I lost a bid for a new client because we did not have a physical establishment and it destroyed me. I knew our team was better than our competitors and we had a great solution for the client. In today’s world people can work from home, work from coffee shops – wherever there is a Wi-Fi connection. However, to midsized and enterprise businesses it’s vital that you have an office. Why? It builds credibility and shows that you’re not a fly-by-night start-up that will be able to support the product you sell tomorrow. There are tons of affordable options today: flex space, incubation hubs and start-up offices that allow you to share collaborative space with other small companies. Look for a place with a small desk but a nice shared conference room to meet with your clients. A professional appearance makes all the difference.
7 – Homework Still Exists After You Leave School
Remember the days you would go to school and forget to do your homework? In those days you would be penalized by maybe a sharp reprimanding, or simply a few points off your late homework. Homework in the business sense is different, and those who do their homework on time – or ahead of their competition – win. Doing your homework could mean various things, such as competitive research, staying on top of trends within your industry, or simply just tying up loose ends. Today if I don’t do my homework I could lose my competitive advantage, lose a bid for a new client, or get penalized from the government from not submitting my taxes in time. Do your homework on time, or better yet before it’s due in order of highest priority.
8 – Protect Yourself Legally
As with #5 on this list, make sure you protect yourself legally. Register your business, trademark the name and comply with state and national laws. It takes time and money to protect yourself, but it is worth every penny should anything ever happen. Find at least one good lawyer who specializes in your industry. Have them advise you on current legal matters and help you prepare the legal contracts you’ll need for employees, supplier agreements, confidentiality agreements, etc. Good lawyers will help you think of things you may never have.
9 – Prevent Burning Out, Take Time for Yourself
One of the biggest challenges I found was time management, especially making time just to do nothing. I had to plan to “do nothing.” If you’re focused on your business 24/7 you may lose sight of the big picture and only focus on the details. Take the weekends for yourself. Take a mental health day every few weeks. Unplug yourself from your phone, laptop and relax your mind. You’ll be surprised what new ideas arise.
10 – You Will Fail
You will not know everything, and you’re not supposed to. Especially at the speed of technology today, one cannot keep up with every aspect of business by his or herself. That’s the beautiful part of building your dream team. Failure is not necessarily a bad thing – one learns from failure. From what I’ve learned, when you fail – fail fast. Don’t drown yourself in pity and tackle the situation head on. Quickly make a decision and determine how to correct the issue, then learn from it so it doesn’t happen again.
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