The purpose of this article is to discuss my experiences and lessons learned on how I started and operated my two businesses. This is going to be a work-in-progress and keep organically growing as I have time to write. Lots of lessons learned, lots of pain and money made and lost. And at the end of the day, what really matters.
This will be my notes from the two business I started and the lessons I learned.
I. IDEA PHASE
These are the following things you need to address "First" when thinking of starting a new business:
Ask yourself why you want to start a business.
Will the business be profitable?
If you have a full-time job, start your business idea as a side hustle to see if it gets traction. The bad thing about this is that it will take your free time and may cause stress if you are married and have kids. Most Entrepreneurs are in their business 100% and often the girlfriend will ask you to choose between them and the business.
PRO TIP: choose the business. Women are easily replaced. Your business creation is not.
Start organizing your documents. Setup a neat folder structure for your legal, tax, CPA, customer, clients, professional services contacts. You will need to refer to your FEIN tax number alot in the beginning, so have that handy. Name a file your FEIN number.
What is your time worth? Sometimes the juice is Not worth the squeeze. If you Do not think you will ever make a profit, Then your business is a Hobby Business.
With your business, find your niche. Do not try to be all things to all people. Pick one thing and focus on that. If you are selling cookies, just make your best chocolate chip cooky. Do not try to go beyond that and do catering or make 1000 different cookies. Find the item or service that will make you money.
Do you want to create a product or be a service? One creates and sells the product, the other is provide a daily service where you get paid to complete a task for the client. For example, A Software Engineer can make a product that a client can buy outright and install and use. A Software Engineer may also hire out their services and work for a client and bill them hourly on a contract basis. This latter can be very lucrative. But you are being paid for your time versus for a product. So, how much is your time worth?
Trust Your Gut. If something Does Not feel right. Do Not do it. Walk away. Your gut is 100% correct.
Visualize in your mind what you want your business to be. Yes, meditate on this for a few minutes when all is quiet and calm.
II. DO YOUR DUE DILIGENCE ON YOUR BUSINESS IDEA
Explore if your business idea will make you profit. Without profit, your business is simply a Hobby business.
For a technical software business, investigate the demand for your idea and the need for your services.
Be polite when dealing with people. Yes even the local civil employees whom you need to sign off on any legal permits. The Government, both local and federal, are the biggest mob in the world. They want their cut for doing absolutely nothing.
Is your business model scalable? If not, do not do it. Why? We opened a Pinot's Palette franchise, the concept was sound, however the logistics and scalability were very limited. We had a high lease payment and had only limited seating and events for which to make money. It quickly became apparent we made a huge mistake. The franchisor will not tell you this, they again, want your money. Just like everyone else.
PRO TIP: No-one cares more about your money than do you.
Ask people in your network what they think of your business idea. Feedback can suck, but owning a business sucks.
Know your limitations. If you are not good at dealing with the customers or clients, you need to figure it out and get good or hire someone to do that job for you. Pissing off customer/clients is a sure way to fail.
PRO TIP: Always question someones motive as to why they are contacting you or wanting to work with you. Be cautious. People smell blood in the water when a new business appears.
Create a simple business plan or roadmap on a piece of paper. This helps you to visualize what it is you want to create.
III. GET OFF YOUR ASS AND GET STARTED
Setup your business entity. The hardest part is creating your business name. Keep it simple. Remember you can brand anything. But keep the wordiness down. One word or your name is best.
I setup LLCs and did this online. Do Not pay a lawyer to do what you can do online. A lawyer in Maryland wanted to charge me $1000 to setup my LLC. I went online and set it up for $149 and got my Federal EIN tax number. Reminder, everyone wants your money. Protect it.
PRO TIP: Create an LLC, you can easily change your business structure later. Consult your CPA for advice. But an LLC is best.
Setup a business account with a local bank. You will use them mainly for free notary services.
Apply for Business credit cards. Mainly to get the cash bonus. But also to keep business transactions separate from your personal transactions.
PRO TIP: Do not charge your personal items on your business cards. Keep them separate.
Find a CPA. Ask other business owners whom they use and get their fees. References for me sometimes workout. They always did for CPAs. For business advisors, the referrals were horrible. I was referred to a Keller Williams business consultant in Howard County, MD and this guy almost destroyed our relationship with our business landlord. He was horrible and acted like his shit did not smell. What a mistake. Do not use Keller Williams. Even for real estate.
PRO TIP: Do not hire advisors or consultants. Learn to do it yourself.
For my E-Commerce business, I foolishly hired a consultant to help me improve my website. I over paid the guy and my sales decreased after the site was updated.
PRO TIP: Do Not try to fix what is not broken.
Join business groups. But choose wisely. Try to hit up all of the local business groups. But as you do, try not to pay them membership fees or give away freebies. These groups are typically worse than the local government officials. You will wee out the losers over time and stick with the like-minded winners. Examples: The Howard County, MD Chamber of Commerce and Young Professionals groups were simply awful. They wanted a membership fee and wanted to charge us for our Grand Opening Ceremony. We opted out. They do not have your best interest in mind and simply want your money and to feel important. The local Howard County government, just wants your money.
PRO TIP: Remember, the people that Cant, work in the government and have lower IQs. So you are dealing with that.
Guard your money, do not just throw your capital at marketing and advertising hoping it will work out. What does not work? Print media. Local Newspapers, flyers, etc. These are a huge waste of money. Do not do it. The BEST advertising is social media. When using social media like Facebook, keep is professional. Do not get into the vitriol and hate that dominates social media these days. Remember social media is a true reflection of human nature. Humans are naturally hateful ugly people. But they are also easily influenced. Use this to your advantage to get their money and grow your business. Repeat Do Not do Print advertising on any level. We took out an expensive ad for our Pinot's Palette franchise business in a local Howard County Woman's magazine, "Her Mind." Biggest waste of money. I should have just gambled or flushed the money. No ROI on the investment. When asking customers how they heard of us, it was 99% through social media and/or friend. Organic advertising and word-of-mouth are your friends. This is mainly for Brick and Mortar shops. But works well with technical or other service businesses.
One of the biggest rip offs and useless services, is the Better Business Bureau (BBB) this outfit is impotent and is a dinosaur in todays digital age. They charge a hefty yearly fee just to allow you to say you are a BBB accredited business. Of which, this only means that your were foolish enough to pay their membership fee. What a joke. They add zero value to my business and my life.
PRO TIP: DO Not use the BBB. Ask yourself, will this help me grow my business. Short answer: No.
Build relationships with vendors. Call them and ask to become one of their distributors for products related to your business. Affiliate business do well and help both parties. For retail business, you may even be able to setup a drop shipping relationship where you are just taking orders and the vendor is doing the actual shipping.
Build your online network. Join LinkedIn
IV. BE CONSITENT
After setting up the business structure and getting all the support items in place and deciding it is you want to do. Start moving. Ask other business owners questions.
Start acquiring customer.
Find needs for your business and services.