10 things you should know before starting a small business
1. Everything will be harder than you think.
If you are employed, it’s a bit hard to realize that some of the things that come natural for your employer are things they got achieved in years. For example, your employer has already a channel to distribute products, previous customers and experience to sell, basically its enough to launch a new product and have some sales on it without big efforts. Not to mention the system that makes everything work starting from contract templates, legal advice, suppliers contracts, after sales support and so on.
2. It will take longer than expected to break even.
Plan for at least a year. You have 2 options here: have enough personal money to survive for a year without a paycheck (but that’s going to affect your morale), or before starting on your own, have at least 1 contract with a big customer that’s going to pay your expenses for a year. Prepare to take longer than the worse plan.
3. Find a niche.
I know in the beginning you will think you could do any product, any service, anywhere. This is not true because your message when finding customers can not be “we can do everything”. If it is, you will compete with everybody in fields you’re not the best. You can’t just go to any potential customers in the market and say we can do whatever they want. Let’s say you want to open a flower shop. You can’t just go out and have flowers, gardening tools, gardening services for every type of customer. A niche might work better for you because building experience, customers and market in a niche needs less effort. Open a flower shop for corporate gifts, if it feels like a good niche, even if you feel you might make some money out of landscaping services. In the beginning focus on what brings you most money and advantages, because the first year is a race.
4. Don’t worry if you can’t do anything the customer wants on your own.
To explain, when you go to a potential customer, some of the requests are outside of our expertise. You could either refuse the business (but that’s a suicidal approach in the first year), work your butt to do something you are not the best, spend a lot of time and resources in the process (and that’s suicidal also) or find a trusted subcontractor to do it, even if you don’t do any profits on that particular section of the deal. Besides gaining the customer, working with subcontractors also gives you the chance to learn from their expertise and know better next time.
5. Don’t invest that much in marketing in the beginning.
I hear what you say, at first it’s very hard to find customers, so how can you leave marketing out? Well, if you are on a niche and provide good service, the main selling channel will be word of the mouth. Invest more into networking and knowing people that can bring you repeated business.
6. Keep your options open.
If everything else fails you should still be able to get a job. It happen to the best of us.
7. Work hard & play hard.
I know from my own experience that you get so many things to do that you fail to celebrate victories. And when this happens you are missing the satisfaction and slowly you are not going to enjoy things anymore.
8. Time management.
One of the most important things entrepreneurs fail at is time management. You can’t see the forest because of the trees. You get a customer and because you need to give your best, you end up spending much more time on it than the money you get. And when the year ends you have happy customers but no profits. That’s going to kill your business.
9. Calculate the cost of the selling effort.
You know, when the prospect of selling something is there, you tend to spend unlimited time just to get that contract. And even if it’s your own time (and “that doesn’t cost anything because it’s just time”) you will end up losing money, because selling effort is never part of the quoted price…
10. Just do it.
The more you think about the hardships you’re going to have, the more you’re getting away from actually doing it. Sometimes is better to jump into the water and see what’s going to happen.