Dating all the way back to high school, I have been running a website design or graphic design business of some kind or another. I started off as a sole proprietor. I later registered as a corporation, and eventually merged that corporation into what is now nine10 Incorporated. During this long and winding road, I learned many lessons about business. Some of them took me a long time to learn, some I learned quickly, but most were taught at the school of hard knocks. Had there been someone to share insight with me, things might have been easier, right from the start.
Now, understanding both the struggles in starting a business and now being on the successful end, I have a desire to share what I learned along the way with those that are just starting out. My hope is, that by sharing what I have learned, I can minimize and reduce the business struggles that so often accompany new business startups. The following is a small collection of key insights I wish I had known from day one.
1. Know the difference between a job and a business
I got into business in the simplest way possible: I like designing graphics and people paid me to do it. The simplicity of this is beautiful, isn’t it? I do something I love, and somebody hands me a cheque. If this is you right now, then here is my advice: You don’t have a business yet. You have a job. And, if you’re good at what you do and people start hearing about it, it will quickly turn into a job with the longest hours, lowest pay and highest stress levels you have ever had.
2. Doing what you love and making a business doing what you love are not the same thing
I’m pretty sure I started out the way most small businesses are started: A person has a skill or passion and they decide to start making money (or a living) from it. The problem with this approach is that doing the thing you love to do, and running a business doing the thing you love to do, are completely different things. The “business” part has (nearly) nothing to do with doing what you love. It is a completely different game altogether, requiring a completely new set of skills and traits. You may be great at your craft, but can you read a contract? Balance your books? Process payroll? Many people who start a business out of love for a craft don’t know how to do these things. What’s worse is when they struggle to learn them, fumbling their way through it. Suddenly, doing what they love to do doesn’t seem so fun anymore.
3. Have a plan
My first real gig came when I graduated from college. That same college hired me to plan and redevelop its entire website. My company became official on that day in a very literal sense—I needed to form a company to get paid by the client because their policies did not allow vendors to be paid as individuals. After a trip to the bank and the business registry, Podsada Consulting Services was formed, and I was the owner of a new business. I went straight to working my ass off to do the best job I could for my first client. And that’s how my business was born. Without a single thought or plan as to where it was going, how it would grow, or what it would do. This worked fine until my business was inevitably forced to grow—at which point I hit a wall because I had nowhere to grow without a plan. That is when I realized how important it was to have a plan from day one.
4. Build your business plan from the outside in
One of the biggest mistakes we made at nine10 when starting out was that we built our business from the inside-out. We looked at what we could do, what we wanted to do, and what we liked to do. We molded our product and service lines around this. We approached everything from the standpoint of “here is the company we want to build.” I don’t know if it was beginner’s luck or the market boom, but we did fairly well, all things considered. Once the economic slowdown hit, however, we noticed things were dropping off. People weren’t responding as well to our old methods and ideas. The more we tried to force our wishes upon the company, the less it responded. We came to a point where we realized that if things didn’t change, we would end up being in big trouble. It was the “Ah ha!” moment that things finally changed for nine10. That was the moment that we realized that we should be building the company our customers wanted us to build. Once we made that realization, almost everything about our company changed.
5. Get a bookkeeper
Until nine10 Incorporated, I have never had the support of a bookkeeper. Like many business owners, I got myself a copy of QuickBooks and tracked everything myself. I did all of my invoicing, wrote all of my cheques, reconciled my bank statements, and kept all of my files. When tax season came, I procrastinated right till April 30th because I absolutely hated digging up and totaling all of those receipts, writing off all of my expenses, getting it all right, and still trying to finish the 3 projects I had on my plate. It was a feeling of dread that I never want to experience again.
It wasn’t until years later that I learned how much of a waste of time it was for me to do be doing that year after year, after I had learned it. I want to emphasize “after I had learned it” because I don’t think it was a waste of time for me to learn how the money in a business works—how work becomes invoices, invoices become collections, collections become deposits, deposits become vendor payments, and so forth. Understanding how your business works is very important for success, but once you understand something, if that isn’t your core competence, get somebody more skilled to do it for you and move on.
6. Think systems from day one
I am a huge believer in systems—but I wasn’t always that way. In fact, for many years I was completely oblivious to the fact that there was a better way to run a business. It all changed one day when a friend, Dan Martell, sent me a copy of E-Myth Revisited by Michael Gerber:
That book rocked my world. Everything I had come to accept as to how you run a business was just pulled out from under my feet… talk about one of the biggest “Ah-ha!” moments in my life. But I wasn’t scared—I was ecstatic! I couldn’t believe how much the concept made sense. Since that moment, I have been learning about systems; implementing them in everything I do. I can’t help but think sometimes, if I had that knowledge from day one, how much further ahead would I be? So if you don’t have a generous friend like Dan (thank you again) to send you a copy, please, do yourself a favour, go to a bookstore and pick up a copy of E-Myth and read it.
7. Know that the only systems that work are systems that are tested
Systems have one downfall: it’s very easy to invent something too complicated and too impractical to be useful in real situations. In fact, it can lead to a form of procrastination known as “analysis paralysis.” This can be deadly to your budding business. Remember this: The only systems that work are systems that are tested. Start by building something simple that solves the core issue with the least amount of steps and effort as possible. Don’t over-complicate things; if paper will work for now, try it out that way. Don’t spend three weeks writing custom software to run your system when you have no idea if the system works yet.
8. Make sure it’s what you love to do
Money may get you through the ups, but passion gets you through the downs. Life is really, really good when things are profitable. When you’re not making money, though, it’s almost a cliché—you’re losing sleep, your health suffers, you’re putting in more hours and you start to wonder where it all went wrong. Think back to the worst job you’ve ever done. Trust me on this one, if you’re doing something you love to do, the absolute worst day at that business is still better than the best day you ever had on that job you hated. If you have a passion for what you’re doing, you’re able to look back and think, “Hey, things are tough now, but at least I’m not getting screwed out of my vacation time or bonuses anymore.” (Or whatever your worst situation was.)
9. Find your strengths… hire your weaknesses
You can’t do it all. Identify what you’re good at and figure out how you can focus on that. Outsource everything else that you can, or hire someone else to do it. Incorporate your outsourcing ideas into your business plan (or add them to it once you know them). After I learned the bookkeeping process, for example, there was no reason for me to keep doing it, so now we hire the talented people at CEBS to help us with all aspects of our administration.
You have to be really honest with yourself to make this work. Maybe you like doing the books for your business, for example, because you like having that sense of control, knowing where every cent goes. But let’s face it, there are people who are going to be better at it than you, and doing the books doesn’t make you any money. So don’t waste your time—give these tasks over to someone who’s stronger at it than you. Once you do, you can start spending more of your time doing what you enjoy and what makes you money. And then you’ll really be cruising.
Those are just a few of the things I wish that someone had sat me down and told me when I was first starting out in business. Hopefully this info will help you too. The biggest things I would tell someone starting out would be to do as much planning and learning ahead of time as you can. Listen to someone who’s been there before you, and admit to yourself that you don’t know it all. Oh, and get a copy of Michael Gerber’s book!