I’ve been doing a lot of thinking about my eight-year trajectory as a business owner. There’s so much I didn’t know before I took the leap to run my own show – and I’m still learning. Whether you’re currently a business owner or you’re considering striking it out on your own, there’s always a lesson. Here are a few things that I wish I would have known before starting a business.
The freedom to ‘be your own boss’ and ‘set your own hours’ are relative. When I was starting my business, I recall my boss at the time said, “You realize you will now have 10 bosses, right?” I didn’t think of it that way because it was still MY business. I could always fire a bad ‘boss’ right? Sure, but, the bigger lesson is mistakenly thinking that owning a business meant being in charge. That’s only partially true. While I’m the leader of my team, I still work for/with the customers. I need to be available when it fits their schedule, not necessarily my own.
You must understand the expectations of the industry and the customer. Social media never sleeps. Some of my customers reside across the nation and across the globe. When our customers’ customers interact on social media, especially when they send private messages or give poor reviews, it’s important that we respond in a timely manner.
Owning an online business allows me to work from anywhere, but that doesn’t mean I am available anytime. I’ve had to establish and re-establish expectations to properly serve our clients without feeling chained to my laptop.
Accounting and legal cannot be overlooked. When I started out, I tracked my income and expenses in Excel. This method of ‘accounting’ is not efficient for analyzing profit margin, over time. Since 2012, I’ve used an online accounting system called FreshBooks. It’s been a huge time-saver. Also, do not underestimate the power of a good accountant who can help understand tax implications. A bookkeeping system will keep you organized, but an accountant will guide you on vital tax information for your business.
Equally important is legal help. From incorporation to the pickles one can encounter in the business world, a solid and affordable business lawyer can be your biggest ally. I’ve had a series of legal issues, over the years, because I didn’t know what I didn’t know. Fortunately, my lawyer was there to help me through it. In some instances, she may have even saved my business.
A true understanding of what it means to scale. I once thought that more clients and more revenue meant more profit. That’s a huge misconception. More revenue often means more operating costs – time, people, resources (a.k.a. expenses) as well as more taxes. According to the book, Scaling Up, there are four critical elements for growth: people, strategy, execution, and cash. I made grave mistakes with people, alone. The worst was thinking that I could do everything myself. That’s just silly. You can’t strong-arm business growth. It’s simply not sustainable.
Success is not a straight line. When I celebrated my first year in business, a client congratulated me. He then said, “The next ten years will be the most difficult.” He wasn’t kidding. I survived my first year and with mild success. What awaited me, since then, was another story. I falsely assumed that each year would get better – more profit and more people. Some years were just plain hard. So were some months and many days, too. Running a business is a journey. It’s not always a straight line… the goal is overall progress.
I asked other business owners to tell me what they wish they had known before they started a business. Here were their responses.
Customers will not always pay their bills. After the initial no-charge meeting, the quote, the services provided, the gratitude expressed from the client, then no payment! Rather, I receive excuses.
I’m waiting for a client to pay me.
It’s tight right now.
I need more time.
The worst excuse is no excuse. I don’t receive a response at all. On larger projects, I now ask for a deposit, but chasing people for money already earned is very frustrating. I would tell anyone starting a business to ensure they have financial resources, in reserve, for times when they experience delayed payments. Treat it as the insurance policy to maintain a healthy cashflow.
I wish I had known that my industry was 24/7. Literally 24/7. I’m not sure I would have started my business, if I knew. Social media does not stop because it's a holiday or because I am sick. It doesn’t stop if I want a night off or because I need sleep! Even with alerts and notifications, I never know what kind of issues might arise during a time when I am not connected.
After launching my business (which I started as a sole proprietor and later changed to an LLC), I hadn’t realized the importance of keeping a close eye on my quarterly financials to ensure my quarterly estimated tax payments were in line with my tax obligations. One year, I had a huge unwelcome surprise at tax filing time—while nearly everyone I knew was basking in the glow of their tax refunds, I found myself writing a lofty check to the IRS! I had unintentionally underpaid taxes throughout the year, not grasping that my taxable income was significantly higher than the year before due to better-than-projected revenue. Fortunately, I didn’t need to pay a penalty on top of the tax owed because I had remitted more dollars quarterly than in the prior year, but still, it was a shock. Since then, I run comparison profit and loss reports monthly and quarterly to keep tabs on where I stand.
Owner’s anxiety is a unique feeling that cannot be understated as you launch a business. However, managed well, it also can lead to great ideas and early success. The trick, however, is to accept that it may never go away. Get used to working through it.
Wearing multiple hats is not easy. It is rewarding when you win and frustrating when you lose. Either way, the opportunity is always with you.
I wish someone would have told me not to get discouraged and to be patient. In the beginning, I networked with other entrepreneurs. While I enjoyed meeting others who were also starting businesses, I often became discouraged by the fact that I wasn’t getting a lot of new accounts or the owners were not ready to pursue email marketing. In time, I found another great avenue (offering training classes) that exposed me to business owners who were ready for my expertise with their email marketing strategy. I learned that every event I attended and every person I met was a “seed planted” that will grow. Many of those connections have turned into a business relationship, even ten years later.
One thing that I didn't realize is how difficult it is to market myself and my business as the owner. One of the primary reasons that my business has been successful is because I've done a great job of marketing myself, over the years. I feel like I'm now forced to ignore all the reasons that got me here. On the flipside, all the work that I do now is my own, so I can point to successes for my clients because of my own hard work and expertise. This wasn't something I could do when I was working for a marketing agency.
One final note… No one can do this alone! The best thing you can do as an entrepreneur is surround yourself with people who can help you succeed. This could be other entrepreneurs or business owners, mentors, and coaches or consultants.
Business owners: what have your learned that you wish you knew before running your own show?