I wish I knew them when I started;
Lesson 1. Sole Proprietorship is not ‘Business’ – Its only a glorified way of fooling yourself into thinking you are now in business.
Action – Get yourself a ‘Business’ mindset. Think yourself Microsoft, P&G or Toyota and then scale it down. Think of everything a large conglomerate would need and see where you are on all of them. You will not need most of it but the very thought will prepare you and will help you outgrow your freelancer/small businessman mentality.
Lesson 2. Pricing – Pricing your Product or Service right will make or break your business. If your justification for under-pricing is to build a sizable portfolio, then place it clearly under the head ‘marketing expenses’.
Action – Pricing involves breaking down each element of your business into the most granular level and giving it a value. Some of us can handle this but most of us may need professional help.
Lesson 3. Processes – If your business objective is to make money. Then you have to setup a model that can consistently bring in certain predictable returns. This predictability can only be brought in if you were to follow a set of processes that can consistently produce these results.
Action – Open a spreadsheet and start writing down step by step your Lead to Cash Process. Detail it as much as possible and against each step see if you can delegate, automate or get rid.
Lesson 4. Systems: You have to have basic automation systems in place. Invoicing, Lead, Proposal, Project Management systems will get you organized and will build efficiency that you cannot get from using a spreadsheet. Its all the more challenging when you decide to do it 6 months into your business when you already have a bunch of stuff on word, excel, pdf etc.
Action – Please invest in some low cost web based tools a few that I use are Hiveage, NiftyQuoter, PipeDrive etc. I am yet to find a good Lead to Cash end to end tool that’s reasonably priced, simple to use and easy to setup. I therefore had to set up my own systems. Check out www.e2epm.com
Lesson 5. Numbers – You got to know your numbers. I cant tell you how important this is. You have to be on top of your Sales, operations, marketing, finance, collections and other such Statistics on a daily basis. These numbers will eventually drive you to success. If you don’t know your numbers, you will continue to remain in a state of illusion always thinking that things are under control.
Action – Get to a situation where you can set aside a size-able chunk of your time to simply focus on your business statistics. Set up processes that can get you access to this information automatically. I get daily reports by email on all of my key statistics. Click Here to see some of the reports.
Lesson 6. Recurring Income – Projects that bring in a one time return are definitely not worth pursuing unless the margins you are making are rather substantial.
Action – Always build a pricing component into your business that will give you recurring returns from the client you have acquired. In the case of a Web design business, it could be a monthly maintenance fee. Customers will not mind paying you on an ongoing basis as most of them would go on to build it into their budgets.
Lesson 7. Cash – While the numbers will give you a forecast and your strategy will help you stay disciplined. Its a foregone conclusion that you will overstep at times. If you find yourself in a position where you do not have sufficient cash for Operational expenses, your motivation levels will soon begin to drop.
Action – Always keep sufficient cash in reserve. Build this reserve at the very onset of starting the business and have flags in place when you hit certain thresholds. Do not dip into your personal savings when you run out of business cash reserves, this is where it will start to hurt as an Entrepreneur.
Lesson 8. Experienced Team Vs New Joiners – This is a tough one. The experienced ones don’t stay for long and sometimes you don’t want the new joiners to stick around for long either. However, my learning has been that if you have budgeted for experienced folk then go on and get the best you can within that budget. These guys will not only deliver, but their work will go on inspire you.
Action – You will only begin to enjoy business when you see that the sale you brought in has been successfully delivered. To make this possible, you have to have people with you who are sufficiently skilled and dependable.
Lesson 9. Do not let the focus on Quality slip – When you are in it by yourself trying to keep the juggernaut going, you are always overwhelmed by mundane operational stuff that occupies most of your day and before you know it, clumsiness creeps in.
Lesson 10. Salaried Job Vs CEO of your own Business – If you are 35 and you have a job that allows you to own and run a project or an account, this is akin to having your own business. The stories doing the rounds about your multiple options as a businessman are over rated.
Lesson 11. Partners – You definitely need all the help you can get. You rather get it from someone who has a stake in the venture. Everybody else, including your family, friends colleagues can only at best critique you and sympathize . The quality of your partnership is another topic in itself.
Lesson 12. Pay yourself a salary – This topic is referred to under Numbers, Cash etc, but given its importance, I have this as a topic in itself. When one decides to embark on the entrepreneurial journey you sometimes decide to absorb or conveniently downplay the importance of paying yourself a salary. This is perhaps the easiest way to disillusion yourself into thinking that the business is working and making money.
Action – You may not want to pay yourself as were drawing from your last job. But please put something reasonable as a salary and remember to factor this in your pricing.
Lesson 13. Rethink your Portfolio of Services/Products – When you are a newbie entrepreneur, every day brings with it exciting new opportunities and before you know it you are either offering everything or diversifying.
Action – There is no harm in exploring new opportunities, but after about 6 months, you have to look at whats working for you and whats not. If you are unable to let go, at least pause it and divert your energies to the ones that work.
Lesson 14. Branding – Logo, Company Website, Business Cards, Company Brochures, Portfolio, Invoices, Proposal documents – All of these add to your credibility in some little way. Try not to cut corners.