Running and owning a business is an adventure. No matter how skilled you are at jumping over obstacles and avoiding the hazards along the path, there simply isn’t a shortcut to get ting everything right. I would know – I’ve learned more than my fair share of lessons along the way as a business owner and a financial advisor.
If you’re starting out with your first business or considering jumping in, here are 10 common missteps and helpful tips to consider:
Be creative when it comes to financing. Today there are far more ways to fund and finance your business than sitting sweaty palmed in a banker’s office. Consider grants, loans, credit cards, friends and family investors, and even bartering to get what you need for that ground-level financing.
Establish business credit early. Your goal should be to build business credit – not personal credit-because it’s your business that will get you approved for future funding. Skip the personal award points, no matter the allure, arid pursue business accounts at stores and buy direct as opposed to buying through a credit card.
Be open-minded about who you hire. The success of your business relies on your people. Some industries are more concerned about hiring someone with the right degree from a prestigious university, but anyone can look awesome on paper. Keep in mind that you’re hiring the person’s skills, experience, and character, not their credentials.
Understand the rules of working with friends and family. Your closest circle of friends and family can be your best allies. Just be sure to start off with clear ground rules, expectations and contracts as you would with any partner or employee. A good rule of thumb is to treat your friends and family like employees, and your employees like friends and family.
Don’t be afraid to negotiate. Many new business owners go through a period of desperation for business, and that will often work against them. Remind yourself that costs and lead-time can often be changed with some conversation – and that applies to both buying and selling. Know your limits, be ok with saying no, or yes – but be clear that it may take longer to deliver than anticipated.
Don’t give stuff away. People assign value on an item or service based on what they paid for it. When you give it away, it’s worth nothing to other people. This was a hard personal lesson to learn!
Tell the truth with your vendors. People respect honesty rather than going along with something because you’re the client and they’re the vendor. Don’t be afraid to tell the truth. When you’re a new business owner, you’ll find yourself in compromising situations where you’ll be tempted to say and do things you know you shouldn’t. Resist that urge!
Recognize when you’ve outgrown clients. As you grow and things change you may need different types of clients to reach the next level of success. Legacy business is reliable but tends to become baggage because you’re not the same business when you started the relationship. Don’t carry losing money on the books because of loyalty – you’re not best serving yourself or your client.
Accept when you need to fire clients. Not all people are meant to work together. You’ll find yourself with clients that you can’t connect with, or who never seem satisfied. Don’t be afraid to do what you know is the right thing to do. You’ll be ok, and so will they.
Know when to step up to visionary mode. There’s a great book by Santa Rosa author, Michael Gerber, called The E Myth, that defines three levels of business owners:
The Technician who does the work
The Manager who oversees the technicians
The Visionary focused on the direction of the business
So many businesses fail because as owners, we struggle to get out of technician mode. It takes letting go of control to be come a leader – a visionary – who is more focused on building the business than on executing the business.
There are lots of lessons to be learned in any business ownership, and no two paths or experiences are ever the same. As I now focus on helping business owners structure their finances and plan for the future, I believe in sharing advice that is beneficial for owners during every stage of their company’s growth.
Thanks for reading!