Starting a new small business is often the most difficult thing most people will do in their lifetime. Short of a major tragedy in your life, nothing else will cause you the pain and suffering of creating a new business from scratch. While a handful are successful, the majority of new businesses fail; some dying out like embers in the fireplace while others burn up in an inferno, consuming many other important things (in their life) in the process. Hopefully, these six tips can help limit the possibility of your business going up in an inglorious firestorm.
Mistake #1: Poor initial investment
We all like to save money, but there’s a time and place for being frugal. Don’t make your initial business decisions based solely on the cheapest price. When I started out in business, we (initially) went with the cheapest home inspection software we could find. After slowly creeping up in cost as we bought better software to replace cheap and ineffective versions, we eventually arrived at a quality product that would effectively serve our needs. Unfortunately, we spent three times as much money as we would’ve if we had just bought a quality program to begin with (and wasted a lot of valuable time in the process.)
Lessons aren’t cheap, and neither is quality. Do your research and invest wisely. Yes, quality may be expensive, but learning lessons the hard way can cost even more.
Mistake #2: Undervaluing your product
I see it all the time: new business owners come into a market and think that the only reason they aren’t getting business is their pricing. They’re quick to slash their fees, rapidly becoming the “low cost leader” in their market. The unfortunate reality is that it takes time to build business relationships. Yes, you can get business by being the “cheapest game in town,” but to survive with a low profit margin takes tremendous volume. And doing a large number of jobs for clients that care about nothing but how cheap you are is a recipe for disaster. Your product is an incredibly valuable resource for your clients; price it accordingly.
Mistake #3: Waiting for the perfect roll-out
Yes, being the best you can be is extremely important in business; you want to provide the best possible product for your client. However, the only way you can learn what makes the best product is through feedback. Feedback comes from experience, and experience comes from making mistakes. Waiting to start your business until you have the perfect product, until your website looks spectacular, until you’ve got the most professional vehicle, business card or brochure does nothing but postpone the inevitable: doing your job, discovering where it is you’re lacking, making mistakes and fixing them.
You’ll never have the perfect product, so just start doing it. You’ll figure it out, but you need feedback in order to do so. Now, I’m not saying you shouldn’t strive to produce the best product or present the most professional image, but you’ve got to start somewhere. The clock is ticking on your new business. It’s time to stop sweating the details and start building that informational database on your process. Figure out what you’re doing wrong and make it better. Just do it while you’re working.
Mistake #4: Having technology phobia
Unless you were fortunate enough to be born with a silver I-phone in your mouth, technology can be intimidating. Especially for older business owners who still know what “clapping the erasers” means. But you can’t avoid it; technology is here to stay. You can long for the return of carbon-less forms all you want, they’re not coming back. You must embrace tech; you need to take the plunge. You certainly don’t have to become a programmer, knowing the difference between CSS, HTML and SQL, but you do need to know how to print and email a PDF. You must be able to send a text and operate (at least one) social media account.
It’s just like I tell the students in my home inspection school, you need to play to your audience. If all your clients are on Facebook, Instagram, SnapChat or whatever the newest platform is, you’ve got to have a working knowledge of those platforms. You don’t have to become the next Mark Zuckerberg, but you certainly need to know how to “like” a client’s post about your business. Do the research, spend some time (and money) investing in your business by learning something new. Who knows, you might even enjoy it.
Mistake #5: Skimping on the legal
We all enjoy saving money, but not consulting the proper experts when starting your business is “penny wise and pound foolish.” Talk to a CPA for help setting up your company’s bookkeeping and accounting structure. Consult with a qualified, local attorney to format your paperwork and contract language. Be certain that you know the federal, state, and local laws that apply to your business, and follow them to the letter. Saving a few hundred dollars while setting up your business can cost you thousands (or more) later, when those inevitable problems occur. Spend a little now, save a lot later.
Mistake #6: Undervaluing marketing
Unless you let people know you’re out there, you’ll be left out there alone. And alone is a bad place to be in a new business. The old adage “you must spend money to make money” still holds true. Now, I’m not saying that you need to break the bank with your marketing, but you’ve got to do something. If you enjoy learning new things, invest in yourself, take a class to learn some social media skills and put the internet to work for you. If your skills would be better utilized in another part of the business, then pay someone else to do it for you.
Get creative; do something different; just do something. Google is an amazing resource; use it to your benefit. Check online to see what’s working for other businesses and emulate their programs. There are no new ideas, just tweaked ones we borrow from other businesses. Find out what works, change it up, and make it your own.
Starting a new business is hard. Don’t make it even harder by failing to give yourself a chance. Yes, it’s difficult, and yes, you still may fail no matter how great your efforts. Some things are just out of our control. Just don’t let the source of your failure be something you could’ve controlled.
Good luck, and please let me know how you’re doing.
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Thanks, Joe
