You’ve decided to start your own business. Great! Welcome to the club, populated with some of the most interesting and kind people you’ll ever meet.
Here’s what no one else will tell you when you search for advice about “how to start a company” or “how to become an entrepreneur”:
CASHFLOW IS KING. From now on, you will never have enough money to grow as fast as you want to. There will be nail-biting days, every month, where you need to pay for something NOW, and that big check you’re waiting for hasn’t yet arrived.
That’s why, whenever you do get a check, you need to put at least 10 percent of it—and more like 15 or 20 percent, if you are really smart—into a separate account that you don’t touch unless you absolutely have to. It should contain at least two months’ worth of operating capital—enough to keep the lights on—just in case.
Deposit the money the minute you get the check, or you will put it off, and the pad you need will never grow. You may think you can’t get by on the remainder, but you will. By the way, this is the most reliable way to end up with a big fat nest egg in your old age. If you keep putting it in, and don’t take it out, the interest will be reinvested and it will grow all by itself.
If you do get funding, pretend you are broke. If you don’t, you’ll spend it too fast and you will go broke. Ironically, investors are more interested in businesses that aren’t going broke.
It’s not enough to need money or get money. You also have to prove that you are a good steward of that money.
YOU ARE TRULY ON YOUR OWN. Even after you have hired people you love working with, you are still the boss, the person they turn to for the tough decisions (if they are good people, they make the easier decisions themselves). You are now going to be “the buck stops here” person.
Don’t go overboard analyzing; you will never have enough information to make a “perfect” decision. You will only have hints about what might work out. Decide, and see what happens.
In my experience with hundreds of business owners, the ones who put off making a decision are far more detrimental to the business than the ones who make decisions and then go for it. You can always adjust, as you get more information, and make another new and better decision.
This also means that if you have made a bad decision, don’t try to salvage your pride. Just admit that you blew it and make a new decision with the new information.
It’s good if you’re going into business with a strong sense of who you are, and that you like yourself, because being the boss is a lonely job. If you are always looking for approval, you will not be a good leader or decision-maker.
THE BEST WAY TO MAKE GOOD DECISIONS IS TO ASK A LOT OF QUESTIONS. Some people think that good managers and leaders have all the answers. On the contrary, the best managers and leaders are the ones who keep asking until they understand. They are not concerned with looking smart. They want to know.
Always be asking.
TAKE VERY GOOD CARE OF YOUR PEOPLE AND YOUR CUSTOMERS. Your job as the boss is to make it easy and pleasant for people to do their jobs. So you have to match the right person in the right job. Talkers should be interacting all day; introverts should be responsible for jobs where they work on details, on their own.
Find out what they love doing, and try to make their job all about that.
Your other job as a business owner is to love your customers. If you don’t really like the types of people who will buy from you, don’t even think about opening a business. Humans can tell, in seconds, if another human has their best interests at heart, or if they really don’t care.
KEEP LEARNING. Today’s business world is dominated by technology. If you’re not constantly digitizing, streamlining, and taking full advantage of all the applications that can help you do that, you will fall behind. A competitor will offer more to your potential customers, in convenience, product selection, and customer service. Business is more competitive than it has ever been, because a better alternative is only a click away.
KEEP IT SIMPLE. Pricing, in particular, should be stupid easy. If you have to explain it with more than three sentences, you’ll make potential customers wonder what you’re hiding. Keep working on it until you have very simple pricing; and make sure there’s enough profit so you can stay in business.
SPECIALIZE. Trying to be all things to all people doesn’t work. The “big box” stores or service providers have more money and better systems than you do; be honest with yourself about what you can provide, and then work on being the best at that.
Fortunately we are living in an age where customers assume they can get exactly what they want if they just search hard enough. If you have exactly what they want and make it easy for them to find you, understand what you offer, and buy from you, you will win.
TAKE EVERY OPPORTUNITY TO MARKET YOUR BUSINESS. You can’t just build it and expect them to show up. You need to find out all the places where your potential customers hang out, and be there with them. Marketing is now much more interactive, which means that you—or someone you hire to do it for you—need to be interacting with your potential customers. It’s tricky, because at the end of every day, dealing with the internal parts of your business—accounting, setting up systems and processes, hiring, managing, firing, meeting, dealing with internal problems, filling out paperwork for various government agencies, trying to create products and services, setting up pricing and banking and and and and . . . at the end of every day, you will think, “Darn. I didn’t [do that marketing interaction thing] that I intended to do today.”
If you are selling a product, a good rule of thumb is that at least 10 percent of every single day should be spent interacting with customers and potential customers. If you are selling a service, more like 30 percent of every day should be spent interacting with customers and potential customers. Lou Gerstner, who made IBM more customer-focused during his tenure, spent 40 percent of his time with customers. And he was running a company with 300,000 people. I was doing work for IBM before, during, and after his reign and the difference in customer-centricity, at all levels, was stunning. If Lou can do this while running a company with 300,000 people, you can do it too.
IGNORE THE NAYSAYERS, BUT DO LISTEN TO THE TRUTH. There will be people who will tell you it won’t work, that you can’t do it. There will be people who will be afraid for you if you set out on your own.
They are right; bad things can happen. But your persistence is what will make the difference. Entrepreneurs are people who see a need and try to meet it. As you go, you will have to change and strive and get humbled and feel beaten. But you will get up and keep going, because you believe that you really do have a good solution.
At the same time, you need to surround yourself with people who are not afraid to tell the truth when something isn’t working or you could be doing something better. People who are afraid to tell the boss the truth won’t help your business improve.
KEEP IT HONEST. There really is a right and wrong. There really is truth and non-truth. If you deceive in order to benefit, you’re on the wrong side of the line, and it will come back to haunt you.
THE FIRST TWO YEARS WILL BE THE TOUGHEST. A lot of bad things can happen in the first two years. You’ll make some big mistakes; there will be negative financial surprises; you will wonder at times if it’s really worth it to carry on. Do carry on. It will be worth it.
THIS WILL BE THE HARDEST THING YOU’VE EVER DONE, AND THE MOST REWARDING. Anyone who thinks they can “work less” and start a business is sadly mistaken. Your work, especially if you love doing it, will consume you. You will find yourself working harder than you’ve ever worked in your life. No longer are you in another company, part of a larger machine. You are now the creator, protector, maintainer, inspiration, and leader of a completely new entity, one that came out of your head and heart. One that will take all your energy and intelligence. One that will reward you in ways you can’t even imagine at the moment. If nothing else, you will become stronger and yet more humble; you will learn and laugh, and love every working day.
Starting a new business is an adventure that can last your whole life, if you wish. It’s well worth it.