This post is sponsored by QuickBooks. All opinions are my own.
1. There are No Prizes for Taking on a Hard Business
In normal life, challenging yourself to do harder things pays off.
Lift heavier weights, get bigger muscles. Take harder courses in college, learn more.
But in business, taking on a harder industry or product group doesn’t give any real advantage. It just makes it easier to fail.
The goal of any business is to make money. There are no prizes for uniqueness or hardest business to make profitable.
2. Think about the Type of Life You Want Before Starting a Business
Until you’ve had a difficult business, it’s hard to appreciate the massive differences in lifestyle that two different business owners can have. Let’s take two successful business owners. John owns a restaurant, and Sarah owns a software company that creates a popular WordPress plugin (pieces of code that people buy to add new functionality to their website).
These two business owners day to day lives are drastically different.
John has to make sure his 10-20 cooks and servers show up every day, ensure his customers had a great experience, make sure enough ingredients have been ordered, and most importantly be in his restaurant to make sure everything is running smoothly. If John decides he wants to take a week off from work, there are a multitude of things that can go wrong. In businesses where there are a lot of lower paid employees, the chance of someone not showing up for work or quitting with little to no notice is higher, which make it more likely John has to deal with it on a regular basis. John also has a large rent payment and employee payroll to deal with, so he took on an investor to get the restaurant started, so he has to manage that relationship and ensure the restaurant performs well to keep them happy.
Now let’s look at Sarah. On a daily basis she makes planned updates to her plugin that have been requested by her customers. She works from home and has a couple software developers she contracts with to help her code. She spends some time looking at add-ons she can create for her plugin to bring in some more money. She reads up on the new changes coming in the next version of WordPress, and updates the plugin as necessary.
Her business is significantly easier from a lifestyle point of view. She works from where she wants, she works when she wants, she can take a week off without any repercussions, and she deals with contractors who are being paid well enough to really care about their job.
The only time she runs into an emergency is if there was some error overlooked in a new update for her plugin. She still works hard on her business, but in her business she’s able to decide when and where she works and doens’t have to manage as many people – which is where a lot of the headaches come from.
I’ve of course simplified both of these businesses, but the point is that you should really think through what your day-to-day life will look like before starting a company.
3. You Should Enjoy Your Work
I was watching a show last night with my wife and a guy was talking to his dad about his job. The son say’s that he hates his job and the dad responds by telling him that “You’re not supposed to enjoy work, that’s why they call it that.”
I hate hearing people tell others that they’re not supposed to enjoy their job.
It’s ok to have a job that you don’t fully enjoy, as long as it’s a stepping stone to one that you will. It’s a completely different thing to believe that you’re not supposed to enjoy your job and not be working towards having one you will.
If you want to be truly successful, you should enjoy what you’re doing.
People who enjoy their work naturally spend more time on it, which leads to more success.
They say “Do what you love and the money will follow.” I can’t say it’s completely true because it’s usually quoted by someone who did what they loved and became successful. There are plenty of people trying to do what they love and never make it.
My point is that it’s worth the risk. Your job takes up the majority of your life, so why surrender most of your life to something you don’t enjoy?
4. Discuss Your Problems with Other Successful Business People
There have been countless times I’ve come out of coffee meetings with other successful business owners and changed a major part of my business for the better.
So much of business is the same. There are so many similar challenges in completely different types of businesses. It doesn’t take much work to find someone with the same problem you’re dealing with in a different industry.
Most owners love new business challenges, and like to help others to success. You’ll be surprised by how many respond to a simple request for advice on your business.
Some owners are incredibly busy, so don’t be let down if the first one you ask declines. Reach out to 8 and you’ll probably get a few who are open to meet with you.
5. Don’t Take on a Business Partner Lightly
When first starting a new business there are usually gaps in knowledge that will be necessary to make a business successful. It can be very tempting to fill those gaps with business partners, especially when the business is new or you don’t have the funds to hire outside help.
If you find yourself in this position, don’t make any quick decisions.
Bringing on the wrong business partner can destroy a business.
I could write an entire series of blog posts about finding the right business partner.
Taking on a business partner is very similar to getting married. If they end up with a chunk of your business ownership, you’re going to be with the business forever, and if you want to separate from them, they’re going to take a good chunk of your assets.
The problem is many people jump into bed with business partners as if they’re dating, and only realize they exaggerated their abilities, and aren’t someone they want to work with day to day after they’re stuck with them.
There are ways to mitigate this with vesting schedules, but it’s much better to just take your time to ensure they are an AMAZING fit.
6. Cash is King
Cash is the lifeblood of any business, so you need to ensure there is enough to keep everything pumping. For businesses with a lot of expenses like employees, rents or contractors, it can become a bit of a balancing act. Growing businesses need money to do so, and toeing the line of reinvesting in the business while also keeping enough in the business to handle any downturn in revenue can be difficult.
Whether you’re doing your own bookkeeping or having someone else do so, it’s important that’s it’s getting done.
I’ve found that Quickbooks Online is one of the easiest ways to keep clean records of real-time expenses and revenues, because it pulls all the transactions from your bank accounts and makes it easy to sort into the right accounts. They also have great reports so you can check the health of your business whenever you want.
It’s hard not to take all of the tools we have now for granted. I used to watch may dad pouring over massive stacks of paper checking on sales every week, and I can only imagine how much time he could have saved if he had the same tools back then.
There are are areas of every business to cut corners, but keeping track of your business’ finances is not one of them.
7. Get Advice From Accountants
Some people only visit an accountant when it’s time to get their taxes done, and if that’s the case, they’re losing out on one of their biggest benefits – finding ways to make more money by paying less tax.
First off, all accountants are not the same. I’ve had fantastic ones and AWFUL ones. Don’t just assume because they’re filing your taxes that they are trying to get you the lowest tax bill possible.
I had one even tell me his job “isn’t to try to minimize the taxes I paid.” His job was “to make sure I paid them correctly!” It goes without saying that he didn’t get my business all the deductions he should have.
Once you’ve found the right accountant, it’s your job to talk to them about minimizing your taxes. You may be surprised how much you can save by changing small things about your business or it’s structure.
8. Find the 20%
If you haven’t heard about the 80 / 20 rule it states that 80% of the results come from the 20% of something. This could be 20% of your customers providing 80% of the revenue, 20% of your employees causing 80% of the problems, 80% of your time only produces 20% of your profit, etc.
It’s important to find the 80 / 20 in any business and use it to your advantage.
I like to create custom reports in QuickBooks Online to gauge all my revenue sources against their expenses to see which are providing the most profit for the least time spent. Once you figure out what you’re ideal customer looks like, it’s much easier to drop those that aren’t producing and replace them with much more profitable ones.
Hopefully these lessons prove useful to other business owners or those on their way to starting their first company. Being self-employed is one of the most liberating things I’ve ever experienced. You’ll never know how great it can be until you have it, so take your first step today!