Home: Message List - Please share lessons learned when you first started your business

Re: Please share lessons learned when you first started your business

Adducent — Fri, 30 May 2008 20:42:25 GMT

Here is something that I have learned from 26 years of experience in business. it might help you with planning your first business:

Is the money you can make important? Absolutely!

Is how you make it important? Yes, if making your life more comfortable is also one of your goals!

This would factor in because if you started or bought a business that is capital intensive and/or heavily regulated and competitive you could find out that the business became the worst high-pressure job you ever had.

Any industry or market that is growing fast is probably also a highly competitive one (and may become increasingly so). Unless you have a lot of money behind you it is better to think tactically than strategically about entering such a market.

I tell clients and people that I talk with about starting or buying a business to be methodical in how they approach either one. Don't jump ship, leave your job and pin all your hopes on something (the start-up or business you buy) trusting that all will be well. Sometimes they aren't.

I've been successful in several businesses (from writing, publishing, manufacturing to business services) but have also had flops. That's normal experience for someone who's been an entrepreneur for 26 years. Often you learn more from your failures than you do the successes. Odd but true.

Here's how to learn from those things that don't work out:

Take the elements of the things you have tried in the past that you spent time and money in exploring as business opportunities but that did not work out (and do this also for your current job).
On a sheet of paper draw a line down the middle of it. On the left at the top of the page write "Bad" and on the right top write "Good".
For each thing list out the bad and the good; the bad will constitute the determinants of why it did not work out for you or why it did not make you happy or fill you with any passion. The good are the positive elements that helped offset the bad but did not carry enough weight to make it work for you.
Once you have done that look at what you've written. Take a new sheet of paper and transfer all the good things to that page. This becomes a profile of the things that were positive that you need to look for in a business or opportunity that may ignite your passion.
Now with your "Good" profile in front of you, take the market or industry that interests you, think about how you can utilize those good aspects in a business of your own serving that specific market or industry. Make notes about the different businesses that you can start or buy that have those good aspects to them. Those should be your focus.
Once you've done that calculate what I call your Personal Economic Burden (all your monthly personal expenses that you need to pay to live: mortgage, rent, insurance, food, utilities, car payments, etc.). Total that up and add 20% to it (10% for miscellaneous and at least 10% for savings). Take that total amount multiply by 12 and divide by 365. That is the daily amount your business must generate for you to be "comfortable". We'll call that the "Comfort Number". That's not making you rich but if you achieve it; it will give you a solid foundation to build on so that you can make even more money.
When you have that daily number and with it in mind, review your notes from number 5 above and research to determine if you feel that business can generate what you need to meet your Comfo

Dennis Lowery

Adducent, Inc.

Re: Please share lessons learned when you first started your business

emeraldrose63 — Sun, 18 May 2008 18:35:48 GMT

putting ads on Google was like throwing money in the toilet for me..
Watch out with that.. and Facebook ads too..

Re: Please share lessons learned when you first started your business

babyjoy214 — Fri, 14 Mar 2008 16:42:21 GMT

Hi,

Check this site.. it will help you a lot. it helped me.. It's a blog about "My son, the business teacher".. just found it to be very amusing and informative..not my blog.. you should check it out.. you'll definitely learn a lot.. Goodluck!!

http://younggogetter.com/2008/03/04/my-so
n-the-business-teacher/

Re: Please share lessons learned when you first started your business

MKTG.com.au — Fri, 14 Mar 2008 05:35:04 GMT

I would say the scariness of not having a regular income for a while and also learning to become the best salesperson around.

Re: Please share lessons learned when you first started your business

TommyJoe — Tue, 06 Nov 2007 01:28:37 GMT

Gut Instinct! If it feels RIGHT do it! REMEMBER THEIR IS NO FREE LUNCH ! !

MY Last Offering To You.... If You Have $2.00 To Invest ..Invest $1.00 And Save $1.00......
Watch Out For The+ FALSE POSITIVE..+ This I Think Is A BIG Downfall To Most New Business Owners. They see a small gain and go crazy thinking that they have all this cash WRONG!!!! My Wife & I worked close to 4 years with out drawing a pay check out of the business, just an occasional $300.00 for Groceries to live on. Our Money came from savings that we brought with us to live on from a past life to cary us over for 5- 7 years.
Just look at Oil prices when we bought the business we paid $1.05 per gal. Now we pay $3.00 per gal. Well
we can't increase our rates that much because no one will pay it and yet we need to be competitive . We all hurt and we can not raise our rates because no one will pay it This is what I'm saying invest 1 and save 1 to cary you over the BAD times..... Just when you think all is good + LOOKOUT+ ~ Tommy Joe

Re: Please share lessons learned when you first started your business

Lighthouse24 — Tue, 06 Nov 2007 00:44:36 GMT

Good subject! I'm enjoying everyone's responses.

When I started my first company, I'd had P&L responsibility at larger firms, knew a lot about business in general, and had proven expertise in my vocation -- but I didn't know enough about people. Some business owners come by their "people skills" naturally, but I had to develop and consciously practice mine.

Honestly, when I first started out, the actions of customers, potential customers, employees, and suppliers would absolutely bewilder (and frustrate) me at times. I probably said, "What's wrong with these people?" nearly every day for the first few months. So the most important lessons I learned (through books, classes, and experience) were in the area of human motivation and behavior -- truly understanding why people did the things they did, and recognizing what adjustments I could make in the content, medium, and/or style of my communications to get better results for everyone.

Re: Please share lessons learned when you first started your business

NickMiller — Mon, 05 Nov 2007 15:35:20 GMT

It's amazing to see the consistency among the preceding posts. Main lesson -- cash.

Re: Please share lessons learned when you first started your business

NickMiller — Mon, 05 Nov 2007 15:31:49 GMT

Six lessons.... and two bonus points.

1) Focus: Know what you want to do. Who your customers are, what value they want to buy, how they like to buy, and why they should buy from you more than they buy from your competitors. Get as much real data as you can, for example, run your business as a "hobby" for a while to learn the ropes and figure out how the pieces go together. Don't give up your day job first!

2) Sales and Marketing Process. You'll sleep comfortably in direct proportion to the cash flow you have coming in and the predictability and level of potential business in your pipeline. Figure out in advance how you will sell and market and build demand and customers. A lot of people assume "if we have a business, they will come." Wrong, wrong, wrong, most of the time.

3) Do a budget. Know what you can afford and what you can't. Concentrate your resources in places that will produce sales and cash flow fast. Keep things simple.

4) Funding: Have at least six months personal and business expenses in the bank. A year would be better. This will help sustain you through the slow times as you start and help you avoid the temptation to make stupid decisions because you need to eat. Have your "back up" funding sources in place. A couple of extra credit cards is how I did it. But, having a home equity loan or family money or friends who will help you is also a relief.

5) Set up your book keeping. A lot of small business owners use a shoe box as their record keeping method. Buy Quicken or Quickbooks, learn how to use it, set up real files, and start your record keeping etc. the right way from the beginning.

6) Find a mentor, someone you can go to with your questions and who has the type of experience you need to answer your questions. Probably not your attorney or CPA. Probably someone in a similar business.

Bonus points: Be prepared psychologically and financially to go "belly up" at least once in the first three years. I tried that three times in the first seven years, it scared the h*** out of me, and I'm really careful now about managing the business. Finally, read "The E-Myth, Revisited."

Hope that helps!

Re: Please share lessons learned when you first started your business

Qualified — Mon, 05 Nov 2007 15:06:11 GMT

Starting a Business is very exciting, scary and rewarding. One of the best ways to lower your financial risk is to continue working while you build the company. Then go find a customer who will buy your product or service. Once you find the customer quickly incorporate your business (around $500 if you use an online service http://www.mycompany.com). They will pull all the legal documents together for you and have a host of services you can subscribe to. I also offer a start up package (website and office materials like business cards, stationary, etc details are listed on my website http://www.qualifiedconsultantsllc.com). To give your customers a live person to speak with while you are working, subscribe to a professional and affordable 24x7 phone answering service provider (for more information about a local St. Louis vendor offering this type of service email mailto:info@answering.com and they will send you an email after each call so you stay in touch with your customer.

If you find the customer first you generate revenue (make sure you agree to payment terms). The good news is that by working you still make money to support your household and you can put all the money received from sales back into the business or pay for business tools, equipment, licenses etc. Next, you will want to go to 2 seperate banks to make inquiry into see if you qualify for a line of credit (you'll need to use your home, 401k etc. for collateral). Get the loan but, don't use it. Even if you don't use it may cost you closing costs etc that you can write off at the end of the year. Using this approach, my first 6 months in business we generated over $240k in billings. By the second 6 months of the year we had generated over $390k in gross revenues. The difficulty is that you have to say or pray everyday that you receive the courage, strength and gain the wisdom to keep the business growing while you remain working. Use the net income to pay off any bills at home before quiting your day job. When your business generates a level of income you need/want you can then work within your business full time.

Wishing you continued success mailto:dee@qualifiedconsultantsllc.com.

Re: Please share lessons learned when you first started your business

LT Lawn Care — Mon, 05 Nov 2007 13:44:23 GMT

If you are married or in a relationship having the support of your significant other is so important. Starting my business caused me to go through a divorce as my ex-wife didn't share my dream. She saw me quitting what she viewed as a good job to do what she amounted to cutting grass. She couldn't understand that the "job" I had was chocking the life out of me.

Well today thank goodness, my cutting grass hobby has turned into a business that has allowed me to be a lot more prosperous than I ever would have been working that "job".

The trouble in my marriage caused a lot of problems for me and my business early on, but I had a dream and saw it through.