1. Developing Your Business Plan Appropriately
Arguably the hardest part of starting any new business venture is raising capital. However, while this process may take a significant period of time, it is not overly time pressure sensitive. Before you even start your business operations, you are going to need to develop an in depth business plan that outlines exactly what you will need to do to get your business off the ground. Most importantly, when you are developing your business plan – you are going to determine whether or not you have an economically viable venture on your hands. Many businesses fail due to the fact that they should never have been businesses in the first place. For instance, if you live in a small town with a small population then there is no need to try to open a large scale department store. The first pieces of advice that we can offer to you is that you need to honestly look at your business, almost from a scientific perspective, to make sure that your business will be able to start to turn a profit in the first two years of operation. As it relates to time management, you should spend at least a month (or about two full working weeks) dedicated to writing a business plan that has complete industry research and a reasonable financial projection.
2. When Raising Capital, Do What is Best for You
Given that it is difficult to raise capital, it is important that you always do what is best for you depending on the type of capital that you are seeking. Many people make the mistake at taking the first offer that comes to them when it comes to getting the capital they need. It is important to remember that if one person is willing to invest in your business then other people will most likely be willing to do the same. Many new business owners jump at any offer for capital that they receive thinking that they will never find another funding source for their business. Nothing could be further from the truth. Additionally, if you are seeking a loan – it should be noted that there are thousands of banks and funding sources that will be willing to look at your business venture in order to make a lending or investment decision. With the advent of the internet and crowd funding, you will find that you will be able to find the capital that you need. In regards to time, you should expect that the capital raising process will take three months to a year depending on the type of capital that you are seeking. It is far easier to get a bank loan than it is to source capital from a number of private investors.
3. When You Are Trying to Get a Bank Loan – Be Extremely Prepared
When you are raising capital for your new business venture, remember that investors are looking for a return on their investment while banks are looking to earn interest payments from you each and every month that the loan exists. Banks make highly scientific decisions as to whether or not you and your business can repay the loan without defaulting. Prior to approaching a bank for a business loan, you are going to want to have a properly prepared business plan, a list of all of your assets, a list of all of your debts, and two to three years of tax returns. This is a must if you are seeking a Small Business Administration Loan. Your bank may require additional information from you as they review your application. As such, having all of your ducks in a row is imperative if you are going through this process.
4. Your Credit Needs to Be In Good Shape At All Times
As it relates to raising capital, your credit can be your most valuable asset outside of your plan to start an economically viable business. If you are seeking capital from private investors then your credit is not as much of an issue. Of course, the downside is that you are going to need to sell a portion of your business to a third party in order to get the capital you need. When you obtain a business loan, you still own 100% of the business. These days, the minimum credit score you need is 650 (using the FICO scale). However, in reality, your credit score should be in the 700 range in order to get the best terms possible. If you have some outstanding credit issues that need to be fixed, you should have those issues fixed by a licensed credit counselor that can effectively and quickly remedy the situations with your personal credit. Remember, you will need to personally guarantee any new business loan that you are taking out and that is why your credit score is so important for this process.
5. If You are Working With Investors Then Make Sure You Have a Proper Terms Sheet
If you are seeking a business loan then the process is pretty straight forward. You submit a business plan, tax returns, and lots of other paper work and then you either get the money you need or you don’t. When it comes to investors, the terms are never straight forward. Some investors want a substantial amount of control as it relates to your business while others want to be more hands off. Some investors want to take dividends while others would rather see the profits reinvested into the business. As such, when you are working with a private funding source it is imperative that you have a properly formatted terms sheet that shows exactly what the investor will be providing, and how much control they will have over how the business operates on a day to day basis. Your attorney and your investor’s attorney should be involved in each step of the process. This will ensure that any misunderstanding or legal issue is kept to an absolute minimum.
6. If Possible, Try Not to Use Capital from Friends and Family
This is always a difficult situation. If you have a great idea for a new business or new product then you may want to approach your friends and family for a loan or investment into your business. If other ways of raising capital are available to you then you shouldn’t. Friends/family and money rarely mix well. If your business does not end up working out as planned (and your friends and family lose money) then you may have resentment from them. On the flip side, if your business is extremely successful then you may have issues as well. First, if you were loaned the money then your friends and family may feel left out as you are now running a successful business on money that they lent to you (a loan does not entitle the lender to profits…just a loan repayment). This can result in jealousy. Two, if they did provide you with investment (meaning that they own a certain percentage of your business) then they may want to become an active part of your business. This happens more often than you would think. As such, unless this is really your only option for raising capital, then you should try not to use their money to start or expand your business venture.
7. Finding The Best Location For Your Business and Just Having to Deal with the Landlord
This is one of the trickiest and aggravating aspects of starting a new businesses. If you are operating in an online capacity then you do not need to worry too much about your location as you can work from anywhere. However, if you are starting a new business like a restaurant or retail store then it is absolutely imperative that you find the best location possible. Even if the location is more expensive than you budgeted for, you should make sure that your business gets the most visibility possible. You can expect that it will take one to three months to find a suitable location for your business. One of the issues regarding this matter, as it applies to time management, is that much of your negotiations will be at the whim of the landlord. As such, you can expect that you will be called during both working and non-working hours to handle these matters. This is just one aspect of starting a new business that is out of your control as it relates to time management.
8. Do Not Get Overly Anxious About Leaving Your Job
Now that you have spent a tremendous amount of time developing your business plan, sourcing capital, and finding your location – now it is time to leave your day job. For many new entrepreneurs, this is the most difficult aspect of launching a new venture. At your job you most likely had a salary, benefits, and a retirement program (all of these things if you are lucky in today’s job environment). The most important thing to remember when you are about to start your business is that you have done all of the necessary leg work to show that you will ultimately have a profitable business venture on your hands within one to two years. However, these one to two year periods can be extremely anxiety provoking. This is even more true if you have a spouse and a family that is depending on the success of your business. The best advice as it relates to this matter is to keep a scientific mindset when you are about to launch your business. You’ve put in the groundwork, now it is time to get this business running. This should be your primary focus.
9. Be Prepared To Work Like Hell For One to Four Years
The first one to four years of a new business venture are absolute hell. Between knowing that you have put a tremendous amount of time and effort into your business (not to mention money), you are going to need to work extremely hard to make sure that everything runs smoothly. During this time, you will be developing a number of protocols and procedures that will ensure that your business will become profitable quickly. You will be constantly looking at your monthly profit and loss statements while making sure that every employee is doing their job correctly. For me, it took four years of 80 hour work weeks before I actually felt comfortable running my business on a day to day basis. From there, I was able to better structure my work days and understand how to properly prioritize everything. I strongly recommend that you use a day planner to map out each hour of the day. When you are running a business, there are always going to be surprises, but when your day is structured – it becomes easier to deal with unexpected matters appropriately without losing your mind.
10. Learning How to Say No
When you are starting a new business venture, it is extremely hard to say no to customers or clients. This is because you are desperate for the business. In your mind, you are thinking that one bad customer experience or one bad customer review will bankrupt you. However, this is not the case. While customer service is the most important aspect of your business, you are going to need to say no to clients/customers that want to take advantage of you. For me, 98% of my clients are great and reasonable people. The other 2% cause about 80% of my business ownership stress. In many cases, these people are extremely unreasonable. While early on you will make the mistake of doing whatever these people ask of you – over time you will develop a extremely keen sense of what clients will become a problem. These clients or customers will eat away at your time.
11. Trust Your Employees
For many business owners, this is the toughest part of the job. The truth is that no one cares about your business as much as you do. They get paid first, you get paid last, and yet you care the most about what happens on a day to day basis. When you are starting a new business or expanding a venture, you should hire people that are extremely trustworthy. In time, you are going to have these people run your business when you are away, and by not micromanaging these people you will find that they like their jobs. Once someone has a complete understanding of what needs to be done and how to resolve small problems as they arise – they will feel a certain sense of ownership over their work. As such, once your employee(s) have reached this stage then there is no need to continually monitor them unless you expect that they are up to something suspicious.
12. Don’t Be Paranoid
While this may sound strange, it is important that you not become paranoid when it comes to your employees. This is one of the things that I have noticed among some business owners. The truth is that many people simply want a day job that they can rely on and get paid for on a biweekly basis. I once had a client that made every one of their employees sign a non-disclosure agreement and non-complete cause (no matter what the job was) as soon as they were hired. I’m not even certain that those contracts were legal. However, he was only running a small consignment store (not a high end technology firm), and he was convinced that employees were there so that they could get an understanding how his business worked in order to start a competing business for themselves. While these events do happen from time to time, they are extremely rare. Unless you are running a business that uses highly proprietary information or trade secrets – try not to become overly paranoid about your employees’ intentions. They want a stable job that they enjoy.
13. Incentivize Your Employees
People like getting their paychecks every two weeks and a nice bonus at the end of the year. However, if you truly want to run a strong business then it is in your best interest to provide them with financial incentives when the business does well. This will not only increase productivity, but you will have a much happier staff. The incentives do not have to be large, but if you develop a proper structure for providing financial incentives – you will find that amazing things will happen. Most importantly, your employees will feel that they have an ownership stake in the business. While this may be as simple as a profit sharing program, by implementing this type of program you are aligning your interests with those of your employees. They will want to work harder for the business, and in turn you will most likely have a much more successful business venture in the long run.
14. Frequently Meet With Your CPA
If you are a small business, you most likely do not have a chief financial officer on staff. When you launch you new business venture, you will be amazed at the number of regulations and laws – as it relates to taxes – that you will need to comply with on a day to day basis. Personnel taxes, sales and use taxes, and business income taxes are extremely complicated. As such, you should find a CPA that you can work with on an ongoing basis, and in a sense you should treat them as if they are a partner in your business. They will be able to provide with an invaluable amount of information and assistance as it relates to running your business on a day to day basis.
15.Use a Payroll Company
Although it is somewhat expensive to have a payroll company – you will save yourself a tremendous amount of hassle as it relates to having a third party produce your paychecks and file all necessary local, state, and federal filings when you have employees. The paperwork that is associated with hiring and maintaining an employee base is massive. With my small business, I generate upwards of a 1000 pages a year in documentation regarding employee timesheets, payrolls, paycheck stubs, and other documents that can drive a person mad if they do not have a business that is dedicated to maintaining this aspect of a business. If a business owner was to do this on their own – it would easily eat up 25% of their work day. The expense is worth it.
16. Remember that Being an Entrepreneur is a Profession
When you decide to become a business owner, you have decided to enter into a profession. You are no different than a lawyer, doctor, or accountant. Although anyone can run a business, the best advice is that you treat what you are doing in your business venture as if it was a professional practice. You are professionally engaged in the business of turning a profit. As such, you should have the proper understanding of all facets of running a company before you decide to go into business for yourself. Although many aspects of running a business are intuitive, many are not. As such, you should become an expert on matters pertaining to accounting, marketing, and business management before you start your new business venture.
17. Learn About Accounting
Everyday, I speak to people that want to run their own business and have a business plan developed. Among my clients, there are often times when individuals have no understanding of how to properly read a profit and loss statement, cash flow analysis, or balance sheet. Prior to starting a business, you should become an expert on basic financial statements. When I see businesses fail, more often than not, the owner was not at all attuned to how financial statements work. In the long run, you will save yourself a great deal of headache when it comes to running your business, on a day to day basis, if you have a strong understanding of financial statements. Again, you are becoming a professional business owner – regardless of your industry – and you need to have a full understanding of how well your business is doing from both a profit and loss statement overview to how you are doing as it relates to your cash balances. This is especially true if you business sends out invoices for work that has already been completed and you now need to collect on outstanding invoices.
18. Keep Your Accounts Receivable to a Minimum
Wouldn’t it be great to order something that you needed and then never pay for it? Although this may sound like a ridiculous question, it is very common among businesses. For instance, what if you are a contractor and your provide someone with a new deck that they need? You send them the invoice, and the never pay. This happens far more often than you would think. In these instances, you have already paid your staff and for materials needed to complete a job and now the person who wanted the work didn’t pay you. In some cases, you may need to take the person to court. As such, when you are starting a new business – you need to keep your accounts receivables to a minimum (the people that owe you money). It is not unreasonable to ask for certain aspects of any job to be paid upfront. Additionally, if you are a product based business – it is not unreasonable to ask for the entire amount of the order to be paid upfront before you send merchandise. You wouldn’t walk into a store and tell them that you will pay them 30 days later, and nor should your clients. Only after years of trust should you provide your clients with credit.
19. Retain an Attorney
In the long run, you will need to have a individual that is very well versed in business law at your side. Our previous tip should illustrate that greatly in that there are going to be instances where your business did what was promised only to not have a client pay for their goods and services. Although there is some upfront cost of retaining an attorney for your business – the benefits are tremendous. Foremost, they will be able to draft legally appropriate letters to non-paying customers while also providing you with advice as to how to handle certain legal matters. Even for small businesses, you may get a lawsuit. As such, your attorney (along with your CPA) is one of your best business partners. They will provide you with forward looking advice regarding how to deal with legal matters while concurrently ensuring that a small legal matter does not get out of hand from an expense standpoint. Additionally, you have complete confidentiality when you speak to an attorney regarding any matter.
20. Your Best Asset is Customer Service
My business survived the worst recession since the Great Depression. The primary reason being, I think, is that I have always strived to offer unparalleled customer service. I am usually always available to my clients (within reasonable time frames). Unlike large corporations, you cannot afford to lose a customer or a client. Again, some people are unreasonable and you will learn to deal with those people (the best methodology is to provide them with a refund). These days most of my business comes from referrals due to the fact that over the past ten years of being in business – I have always been a constant source of help to my clients. As such, you should treat your clients (as should your employees) with the utmost level of respect at all times. These are the people that are making you a successful business owner. One of the benefits of operating a small business is that you are able to provide a level of customer service that is not found at large corporations.
21. Remember that Revenue Is Not Profit
Recently, I had a client that launched a highly successful retail store. Although this is highly unusual, the business started to take in about $75,000 per month in gross sales. This was more money than the individual every thought imaginable. He started to spend money like a lottery winner. What he neglected was the fact that the business was generating substantial revenues, but no profits. His cost of goods sold was about $50,000 per month. Quickly, he started missing deadlines on inventory invoices and soon the business went bankrupt. He could have had an extremely successful business on his hands, but he got caught up in how much physical cash was coming through his door. When you own a business, you are paid last.
22. Become a Marketing Expert
Although this is a quick tip, it is imperative that you become an expert in marketing your business to the general public. As we discussed earlier, no one cares about your business as much as you do, and getting the word out there regarding what services or products you provide is absolutely necessary to running a successful business. When it comes to running a business, you should be absolutely shameless in your marketing efforts. If you run a small business then you should distribute postcards and flyers frequently. If your business operates on a larger level then you should maintain an expansive web presence that tells people what you can provide for them.
23. If You Run A Service Business, Provide a Set Price For Some of Your Services
Everyone wants to know that something will cost them. Whether it is providing someone with a new roof or doing their taxes, they want to know the expense. If you are a service business then you should develop a program that provides a set price for a specific service. You will be amazed at the number of customers that flock to you door because you simply set a definitive price for your services. This is often a fact overlooked by so many businesses. People do not like open ended billing. As such, if you operate a client based business then have a few services that you offer at a set price. You will many more inquiries about your service.
24. Take Advice from Others with a Grain of Salt
When I was a younger man, I took a lot of advice from people that had degrees from fancy colleges. Although I started one business, I decided to start a subsidiary business that would compliment my main business. One of my business friends that had graduated from an esteemed business college told me that starting that type of business would hurt “my brand.” I took her advice to heart, and after sitting on my hands for a few years with a great business idea – I decided to build the business. It eventually became my most successful business. The individual that had provided me with the advice eventually ended up driving her own business into the ground. My secondary business ended up becoming my primary business, and the best business that I have launched. Long story short, trust yourself and be somewhat wary of people that tell you that you will “ruin your brand.” If this is a concern for you then start a business under a different brand name or corporation.
At the end of the day, you are the one that owns and runs the business – you know what is best to do.
25. If Possible, Do Not Attach Your Name to Your Business
If you are a small business owner – you should be extremely proud of your business. You worked extremely hard, took a risk, worked like hell – and brought a business to profitability. Unless it is absolutely necessary, I usually do not recommend that a business owner attached their own name to their company (unless you are a professional like a lawyer). When it comes time to sell your business (hopefully for a substantial profit), it will make the transition easier to the new owner. In cases where the owner has become the centerpiece of the business, it may be difficult to sell your company because your clients/customers feel like they are dealing with you personally and not your corporation.
26. Learning When To Give a Refund
As it relates to time management, the worst scenarios you are going to encounter are difficult clients. It is very hard to have completed an outstanding project for a client only for you to hear that they hate it or it was not what they expected. It is even more anxiety provoking when the individual is angry about the situation or fails to give you constructive criticism. When I encounter these people (which is rare), I find that remaining calm is imperative. Despite the fact that they may be angry, the best thing for you to do is to ask what you can do so that the project meets their expectations. After some additional work to try to resolve the issue, present the work to your client. If they still aren’t happy – offer to provide them with a full refund. Although this not ideal, it will get that person out of your life so that you can resume working with normal people and getting new clients. Generally speaking, 10% of your clients/customers are going to be 90% of your problems. As such, giving a refund puts a quick end to the problem and the angry client walks away feeling unhappy – but not feeling like they were ripped off. I have even had clients thank me for providing them with a full refund.
27. Hobbies Make Bad Businesses
All of us have hobbies or things that we enjoy doing. In some cases, I see people that want to turn their life long hobby into a business. This is generally a mistake. The love of your hobby is something you enjoy because of its simplicity. A hobby should cost you money, not make you money. Running a business that sells the hobby that is your interest is entirely different. As such, you should keep that in mind if you are thinking about turning your hobby into a source of income. However, if you intend to keep the business small and sell your wares on a small website, Etsy, or eBay then it might not be a bad idea to have your hobby produce a small amount of secondary income. Again, this is totally a personal choice but more often than not I see hobbyists unhappy when they try to turn it into a genuine small business.
28. Use Social Media to Promote Your Business
In today’s world, you need to be connected to your clients and customers. As such, it is imperative that you maintain a strong presence on FaceBook, Twitter, Google+, and other popular social networks that will spring up as time goes on. It is no longer enough just to have a website and use search engine optimization. The best benefit of using social media is that you will be able to connect with your existing customer/client base while attracting people that need or want your services/products. Additionally, without too much effort you can promote discounts and specials that your business is offering. Again, the ability to connect at anytime with your customers will give you a tremendous advantage over your competitors. If you are not familiar with social media then you may want hire a social media marketing firm to help you get this aspect of your business off the ground.
29. Maintain a Website and Use Search Engine Optimization
If you are small business then you need to have a properly developed website. Although this may be somewhat of a large upfront expense for a professional website, the benefits will be substantial. Almost everyone finds local businesses via the internet these days. When you look for local businesses, you often find haphazardly put together sites that look awful. As such, make the investment (usually $1,000 to $2,000). Additionally, the same firm that puts together your website should also help you with search engine optimization. This type of marketing seeks to have links directed to your business’ websites. These firms will enroll in local business directories while also producing content that is quickly found by search engines. As such, when some one does a search for your type of local business in your local market – you will appear on the first page (and hopefully be the first result) or the search.
30. Don’t Look At Your Revenue Everyday
This is so much harder said then done when you first start your business. You will be tempted to look, everyday, at how much money came through the door. At first, you will become extremely anxious if you have a slow day or a slow week. It is important to remember that as a business owner – you are going to have a slow day, a slow week, or even a slow month. If you are a highly established business then this may be part of your normal yearly business cycle. For me, summers are the slowest. Instead of worrying about the lack of business I have come to understand that it is simply because people are out doing summer activities and are not in need of my services. I use this down time to develop new service and take a break myself from my standard 50 to 60 hour work weeks. When you are new, you want as much business to come through that door every single day without realizing that on some days that is just not going to happen. You should only start to worry if start seeking declines in your established business cycle. If you are new – realize that you will notice that certain days of the week are typically better than others. On the days that are slower, and do not generate as much revenue, rather than worry – focus on doing something that promotes your business.
31. Stay on Top of Tax Filing Deadlines
If there is any part of my business that I hate the most, it’s filing taxes and other government documents. Sometimes I procrastinate, which only makes the process that much more nerve racking. When it comes to any type of document that you need to file with a government authority, it is in your best interest to say on top of it at all times. The worst thing you can do is not file important documents that are required by your business in a timely manner. You and your CPA should make a chart of when each type of filing is due for each month. Some states, as it relates to sales tax payments, require that payments are made monthly or bi-monthly. It can get very confusing, very fast. As such, make sure you are aware of each deadline and make your filings before they are due. As it relates to your payroll, make sure that your chosen vendor does this for you. Again, payroll companies are expensive to use but they will save you a world of time in the long run.
32. Be Careful with Advertising Agencies and Marketing Firms
Advertising agencies and marketing firms are great when it comes to developing new promotions and advertisements for your business. However, they are very expensive. Many firms require a retainer or a percentage of how much you intend to spend on marketing your business to the general public. One common issue that I have found with marketing and advertising companies is that they continually want you to increase your budget. Sometimes this is justified, but sometimes it is not. When you are approaching a marketing firm or advertising agency to assist you with marketing your business, you should make sure that they use a metrics-focused approach to determining how successful their developed campaigns have been for your business. This includes showing you figures such as Cost Per Thousand Impressions and Conversions to Marketing Dollars Spent (ie…how many people became customers and how much did it cost you). If you advertising firm is focused solely on having your new ad “go viral” or something of that sort then you may want to find a firm that understands that you are looking to gain the greatest reach without breaking the bank.
33. When You Close Your Doors for the Evening – Do Not Continue to Work
As we have said earlier, when you run a business, it is easy to have it become a total obsession. You are going to be working constantly throughout the day. In order to maintain your sanity, you are going to want to set specific times of the day when you are working. For instance, when I am having dinner with my family – I always put my phone on silent. Even though I leave my office around six, I completely stop checking emails at 9pm. This allows me to relax and unwind. If you start checking your emails right up until the point when you go to sleep then you will not be well rested for your next day. Getting enough sleep is often an issue that is overlooked by most small business owners. If you are not well rested then you will, without a doubt, begin to make mistakes. A sharp mind operates a well run business.
Of course, from time to time there is a going to be an emergency or an issue that just takes up more of the day than is expected. This is natural, and you just have to deal with it from time to time. However, these days should be limited and not how your normal day to day business operates.
34. Take Vacations When You Can
This is by far the hardest thing that you can do as an entrepreneur. When I first started my own business, nothing struck fear into my heart than being several hundred or several thousand miles away from my business. Each time I would travel, at least for the first four years I was in business, I would pack up a computer and printer so that I could be ready for any situation that would happen. I would have my office line forward directly to my cell phone so that if a client called – I would be immediately available. As such, I never really felt like I was on vacation. I was merely working from a different location. Now, ten years in, I trust my employees to run my business in my absence. My clients know that I am on vacation, and very rarely will they call unless it is an absolute emergency. Additionally, the most important thing that I learned, is that my business runs better when I am away. Each employee knows what they need to do and they do it well. As an incentive, I pay a small bonus to my staff for keeping the place in running order while I was gone. Also, I get the best ideas for new products or services to offer when I am away from my company. I am not wrapped up in the day to day operations of my business, and it gives me the opportunity to review things with new perspective.
35. Keep Employee Meetings Short
There is nothing in this world more boring for an employee than having to attend an employee meeting. No one likes it, and everyone is afraid to be called upon. Some business owners feel that they are not properly meeting with their employees if they do not hold a daily meeting. Unless it is necessary, try to keep meetings to no more than 20 minutes. During this time, people will remain alert and focused on what is being said. These days, the attention span of people seems to be very limited. After 20 minutes, employees will start thinking about other things (mostly non-work related matters). Additionally, the longer your meetings run – the less time your employees have to complete their assigned work. Some business owners prefer standing or walking meetings. These typically work very well for certain situations.
36. Never Reveal Your Competitive Advantages to Anyone
Give a man to fish, and he will eat for a day. Teach a man to fish, and you just created a competitor for your fishing business. For some entrepreneurs, there is a drive to mentor others that are trying to launch a new business. While advice is important, you do not want to reveal how your business remains successful at all times. Maybe you use a selected vendor to keep certain costs low, or you have instituted a protocol that keeps what is normally a time-intensive task into a short procedure. As such, once you have been running your business for a significant period of time – you are going to have developed strategies that minimize the time needed to do something or something that sets your business apart from your competitors. As such, when doling out advice to new business owners keep anything proprietary out of the conversation.
37. Use Technology But Do Not Overuse It
My business requires that each of my employees have access to a computer that uses high speed internet. They need Microsoft Office and access to email programs. We have not updated some of the programs that we use for years. The primary reason being is that we do not need to. Now that technology has entered each part of our lives, there are numerous advertisements that you will receive as a business owner that pitches their software as the newest, latest, greatest cost savings program that you will ever need. If you continue to read about each and every program that can help you run your business – your head will start to spin. As such, for each technology category type – keep it simple. If your employees need computers – use the same brand. If they need cell phones – they all use the same model. Email software – everyone gets the same. Once in a while you will need to update what programs and computers that people use, but this should be done all in one swoop. I had a client that continually had his employees using new applications and programs every few weeks because he was sold on one certain feature. The end result was absolute chaos with every employee using different applications and wasting time figuring out how to use the new ones that he demanded his employees use.
38. Keep and Pencil and Paper Day Planner
I have found that simply using a day planner with a pencil is the quickest and most effective way for me to manage my day. Each week, I write out which clients I am seeing and when, which people I need to call and on what day, and what other matters to be dealt with during that week. In the same planner, I keep a list of the bills that need to be paid each week. This system has never failed me, and if I lose my day planner then I have only lost a week of scheduling. Each time I complete a task, I scratch it off or write a double check mark next to it. I can feel a little hit of dopamine hit my brain when I write out that double check mark next to a completed task. While this system isn’t for everyone, it is simple and it has worked for business owners for hundreds of years. Again, I don’t like being tied to applications when it comes to running my business on a day to day basis – and it is much faster just to write something down than it is to type into my smart phone.
At the start of each week, I have my assistant enter the information into our database so that employees are aware of what is going on and what needs to be done.
39. Keep Your Expenses As Small as Possible At All Times
It is incredible how quickly a business’ budget can grow once a decent amount of revenue starts to come through the door. While many of your costs are fixed (such as rent, salaries, and some utilities), many of your expenses are not. If you do a lot of business online then you may find yourself signing up for small services that cost $10 to $20 per month. While these may seem like a good idea at first, you will find that they will start to tally up on your corporate credit card pretty quickly. When my business was growing, I signed up for a number of services that helped promote my website (to varying degrees of success). After reviewing my credit card statement, I realized that I had signed up for 15 different services that were charging my credit card anywhere from $10 to $40 per month. When you are running a business, it is easy to forget these service providers. When you do remember, you think to yourself that you will cancel that subscription or service at the end of the month. However, you will forget and hundreds of wasted dollars will go out the window.
As such, you should keep a detailed spreadsheet of every vendor you use. This includes your landlord as well as that service that costs your $10 per month. Believe me, these charges will add up in the long run unless you keep a tight control on them.
40. Only Give Trusted Employees a Credit Card
Unless you absolutely trust the person, don’t give employees a corporate credit card unless it is absolutely necessary. The only individuals that can have access to spending my business’ money are those that have been employed by me for at least a year and hold a managerial level position in my business. Early on, I gave certain employees corporate credit cards just to make my life easier. I once told an assistant to run over to our local office supply store to get what we needed for the next few weeks, and she came back with more than $500 worth of paper, coffee, pens, pencils, and organizers that no one needed. If you do give lower level workers (and I am not implying that they aren’t trustworthy or will steal from you) then make sure that your financial institution puts a limit as to how much can be spent on that card. Additionally, you should make lists of what should be purchased using that card. If you aren’t comfortable at all with giving out corporate credit cards then you should maintain a petty cash box that requires that receipts are deposited at the end of each day for all purchases made. You should have your bookkeeper review these receipts each time they come in (provided they are not a staff employee).
41. Hire a Great Bookkeeper
Outside of your CPA (who gives you tax and financial advice), your bookkeeper will be one of the most important people in your company. In many ways they will act as the comptroller of your business when as it relates to making sure that all receivables are coming in and all bill payments are going out. Additionally, many bookkeepers (especially the experienced ones) are generally very well versed on tax issues. They can assist you, on a day to day basis, when you need to deal with certain routine filings. Although your CPA should be the one to have all final say as it relates to tax matters, your bookkeeper will be invaluable to you in these matters as well. Additionally, during tax time, your bookkeeper can work directly with your CPA to determine how certain transactions were booked. They will also be able to assist in clearing up any confusion regarding any specific type of transaction (such as refund). There will be confusion from time to time, and as such having a bookkeeper is of the utmost importance. Much like with using a payroll company – bookkeepers aren’t cheap. You should expect to spend $20 to $30 per hour for anyone that comes into your business to do your accounting. A person that holds this position should have at least two years of experience as a full charge bookkeeper. When you meet with your CPA, you should try to take your bookkeeper with you. It will make those meetings extremely productive.
From a time management standpoint, you will be very grateful for this person’s work with your company.
42. Avoid Books on Managerial Style
I don’t know why that every billionaire and business magnate needs to write about their managerial style. Typically, these books focus heavily on the success of the individual that wrote it (or the ghost writer that did it for them). As it relates to running any business, it is going to be solely on the owner’s shoulders as to how they run their company on a day to day basis. Some people are micromanagers and some people like to make upper level decisions and let the employees do the rest of the work. You are going to need to develop a managerial style that works best for you. Books on how to properly manage a business are difficult because every business is different. Corporate cultures are different from small business cultures. As such, while these books are interesting to read – try not to put too much stock into them. I once had a client that would read one of those books every other week and then want to reinvest his business in the image of the author that he just read.
43. Some Days You Just Aren’t Going to Want to Be An Entrepreneur and That’s Okay
Everyone gets burned out. Whether you have a 9 to 5 job or own a business (of any size) there are going to be those days when you just don’t want to go into work. This is usually due to the fact that you have been putting in long hours, are mentally exhausted, and you are in need of a good vacation (remember our tip about taking vacations). The short answer is that it is perfectly okay to have these days sometimes. Running a business is not always about trying to make as much money as possible or launch off new products and services every quarter. Some days, when you are running a business, you should take the approach that it is a 9 to 5 job. You will clock in, run the business, deal with employees, deal with customers/clients, and then go home and relax. For me, about two months of the year I act this way. I certainly don’t neglect the business, but I take a bit of breather from my usual breakneck pace. If I didn’t do this once in a while I would have sold my business a long time ago or worse – had my business fail because I was trying to go in too many directions at once. Once you are established, you will have the luxury of taking it easy from time to time.
44. Don’t Go In Too Many Directions At Once
Although this may seem intuitive, if you are running a business then it is very easy to start to stretch yourself thin. This is especially true if you run a company that specializes in providing new and innovative products and services to your customers. If you are developing a new product or service continue to do so until it is fully developed. Even if you have a good idea for something new, write it down and revisit it when you are finished with your current project. If you have too many new things being developed or going on at once then the quality of all of these projects will suffer. Not only will the quality of your new products or services suffer, but you will develop a tremendous amount of anxiety about needing to get a tremendous amount of work done. As we have discussed, running a business requires a tremendous amount of work. As a business owner, you are going to put a lot of pressure on yourself to succeed. When you continually pile more and more things for you to do grown your business you are going to start to feel that you aren’t successful since you have so much unfinished work that needs to be done.
45. Dealing with the Failure of a Product or Service
Beyond a business failing all together, nothing is more difficult than handling a failed launch of something that you thought would be successful but ultimately wasn’t. A few years ago, I launched a specialized website geared towards financial products. After months of research, planning, and development I uploaded the website and began marketing it to the public. I spent thousands of dollars on marketing. Although almost 30,000 people came to the website – I only made 9 sales. This was a tremendous disappointment for me. Although I was still running a profitable business, I felt as if the entire thing had gone bust. I thought about the failure day and night. It made me restless thinking about where I had gone wrong or why people were interested in a service that I thought was outstanding. The truth of the matter is that to this day – I still do not know why it failed. I had used a similar formula for businesses in the past, and I couldn’t figure out why it did not work out. My lesson from this matter was that sometimes – no matter how good of an idea you have and no matter how hard you worked on it – it just isn’t going to work out. During these times, it’s good to reflect – but not obsess – about what went wrong. For me, I now keep a journal for when things do not go as planned and for when things went as planned. To date, I have started eight businesses. Three have done very well, three have done okay, and two have failed miserably. It’s important to remember that you can always start a new business with a new idea. The true key to being a good entrepreneur is to know that you are going to succeed 70% of the time. If you can remember that then you’re golden.
46. Running More Than One Business At Once
For experienced entrepreneurs, running more than one business at once is not a problem. However, when you have one successful business venture and then decide to open a second one (or buy another one) – you are going to feel immediately overwhelmed and stretched very thin. This is especially true if these business are in different industries. You will be dealing with a different set of customers, and each different type of business has its own unique set of problems. It is recommended that you should be in business for at least five years with an existing profitable business before you try to start a second one. Commonly, for people that have developed a profitable company they think that they can make any business profitable. Their ego starts to get the best of them and just because they have had one success – this doesn’t mean that everything they are going to do is going to become successful. As such, before deciding to develop or buy a second business – you should put a tremendous amount of thought into what you are doing. More often than not when I counsel people on this matter they ultimately decide to try to make their existing enterprise bigger rather than doing something completely different with a second company.
47. Franchises Are a Great Idea
If you are worried about starting your own business from scratch then franchising may be for you. Some business consultants do not like the idea of franchising due to the constraints of what you can or cannot do as a business owner – I love the idea of franchising. When you buy into a franchise you are getting a well known brand name, a protected territory, and marketing support. Although it is expensive due to upfront start up costs, initial franchise license fees, and ongoing royalty payments – the benefits can be tremendous in that much of the risk with starting a new business venture is immediately removed. If you are thinking about buying into a franchise system then you should be aware that you a certain extent you may feel like you are a business manager than a business owner. In some respects, this is true. Generally, you cannot dictate your own marketing campaigns and you are required to adhere to extensive contractual agreements about how the business is run. However, most franchising businesses give you tremendous opportunities to expand via the ownership of more locations. In fact, most franchisors prefer that existing franchisees develop new locations rather than having to train new franchise owners. As such, if you are wary about starting a new business then you may want to see if franchising it right for you.
48. If You Buy a Franchise, Also Hire a Lawyer
Although we mentioned retaining an attorney earlier, this is doubly true if you are buying into a franchise. This is because there is a document known as the FDD (Franchise Disclosure Document) that is hundreds of pages long and contains every detail of how you have to run your business (sometimes its called a Uniform Franchise Offering Circular). There is very little wiggle room for you to put your own spin on how your franchise is run on a day to day basis.
These details are often written in highly complex legal language. Even seemingly simple things like how you decorate your location may be dictated in this contract. As such, your attorney should put every detail of this agreement into simple every day language for you so that you know exactly what you are getting yourself into. Additionally, you are going to need to train your employees very well on all operating facets of how customer service is handled. Often, franchising companies will hire mystery shoppers to go into locations to use services or buy products. These shoppers then report back to the franchisor, and if their are issues you could risk losing your franchise license. This is something that you should consider heavily.
49. Buying a Business Can Be a Great Way To Reduce Risk
As an alternative to starting a business from scratch, you can buy a business that is already up and running. This is a great way to reduce the risks associated with starting a new business as you are buying an already profitable venture. However, you will be paying a premium for this business. For instance, if you want to buy a local plumbing contracting business that is making $75,000 a year in profits then you can expect to pay $200,000 for it. This is because you are paying the person who is selling your business for the risk they took in starting this profitable venture. It may have only cost them $50,000 to start the business but they were the person that did the marketing, got customers, and built a brand name for the business. As such, when you are buying a business – the premium you are paying for is someone else’s hard work. However, if you are well capitalized and want to start making a profit right away then buying a business may be a better solution for you. One of the best parts about buying a business is that you can immediately start to grow the company once the ownership transitions to you (which is usually a six month process).
Additionally, banks love to loan money to people that are buying businesses. This is because they are a proven money making business and the risk of business default (depending on how long the business has been in operation) is substantially lower than that of a new company.
50. If You Are Going to Buy A Business – You Are Going to Need to Do Your Homework
First, you are going to need to find the business that want to purchase. Much like with real estate, there are a number of websites available that lists businesses for sale. Popular sites include BizBuySell.com and BusinessesForSale.com. These sites have thousands of businesses that are available to be purchased and basic information about the business. However, you are going to need to do a tremendous amount of your own homework as it relates to a potential candidate for a business purchase. The process will take you just as long as if you were raising capital to start a new business on your own.
You are going to need to review all of the tax returns and financial documentation that the owner gives to you. Generally, you will be required to sign a non-disclosure agreement as to any information that you receive. Additionally, you are going to want to talk to employees, customers, and other people familiar with the company. You should also do checks on the company’s rating with the Better Business Bureau, and you are going to want to make sure that all online reviews are accurate. Although it is often overlooked, you should ask the seller to provide you with a third party independent valuation of the business before you make any offer.
As with any large transaction, you are going to need a CPA and an attorney to assist you. Your CPA will make sure that all information provided by the owner is correct while the attorney will produce all of the necessary legal documents to carry out the sale. You should make sure that the transaction is insured with Errors and Omissions Insurance (this kicks in if the owner lied to you about something).
Finally, the owner of the business should be willing to stay on as an employee or consultant for a few months while you transition the business to your ownership. Be wary of business owners that want to jump ship quickly.
51. Starting Your Business Slowly
Not every type of business requires that you immediately quit your job and dedicate yourself fully to starting a new business venture. Some businesses, like online e-commerce websites, can be started from home at very little cost. There are a myriad of ways to make money online or by starting a business very locally. For instance, we recently had a client that wanted to open up her own dog sitting and dog care business. Rather than quit her full time job (which paid a decent salary and benefits), she decided to make it into a weekend business. People that wanted to get away for the weekend dropped their dogs off at her house for two days at most. People that wanted to take day trips dropped them off for the afternoon. She did an outstanding job, and word spread around about how reliable she was as it related to dog care. After she built up a roster of about 100 customers she decided to take the plunge and rent out space where she could run the business seven days a week. This business is now the highest rated dog care center in my area.
As such, if it is possible – see if you can “toe in” to starting your own company before launching the whole thing at once.
52. Once You Hit Profitability – Consider Yourself a Success Story
The moment you hit profitability gather up your friends and family to celebrate. You’ve done it! You have put the work in, you took a major risk, and you have now created a profitable business. Many businesses fail and never get to profitability. It is important that once you hit this point – consider yourself extremely successful. Even though you are going to want to continue to grow your revenues and profits, you now have a profitable business venture that you can grow even bigger by reinvesting profits, attracting investors, or by acquiring a business loan or line of credit. Never think that you are not a successful business owner because you aren’t running a business that is going to go public or be sold for tens of millions of dollars. While those stories are the ones most likely to grace the covers of business magazines, the vast majority of profitable businesses are barely featured in a local news article.