Lots of books and articles have been written about business, some by those who have never started one themselves, but merely picked up where others have left off. So I thought I would offer my wisdom into the mix and give a bit of detail on my most important lessons so far.
In fact up to 90% of your first year is likely to be shown to be plain wrong. Horrible thought, but why is this? If this is your first business it usually means you have worked for someone else and, similar to young people hankering after a home like mum and dads, you think you can run things better than the firm you used to work for. You might have heard yourself saying such things as: “those old fools are out of touch”; “I can do it better and cheaper”; and, “I will take all my clients with me”. The tough truth is that it took years for your old firm to build their business, they have a reputation already in place, more cash available and if they are smart they won’t be the cheapest because they don’t want to be in that market place as it’s not profitable. They have the scale to market themselves well beyond what you can afford and because they are secure not all of your clients will want to move from a good service with an established brand and company to a shiny, new, undercapitalised venture; they also have skilled staff to help them.
In fact you have to be particularly good at your job for your clients to want to move. You might also not want to deal with your lower fee clients because while you cut your prices to beat your old firm they might become unprofitable in the first place. You might also be wrong because of your reasons for starting a business in the first place. Since everything we do is emotional, starting a business is no exception. I’ll put money on the fact that most who start a company do so from dissatisfaction with their current job or employer and therefore do some research and have some initial money to get started, but don’t have enough of either to be secure at the start. I know of several business owners who had a very good standard of living and tried to continue that at the same time as having started a business; good luck with that.
One of the painful lessons is you need much more initial capital than you think. This is because you don’t realise it will be so difficult at the beginning and so you start without enough money or a solid plan.
The reason for this is that emotionally you are committed, and not much will sway you against your new venture. Thank goodness for naivety though! If you knew how wrong you were we wouldn’t have such a thriving small business sector in the first place. So lesson number one is prepare to be very wrong, and don’t blame others for this fact. Own it, and learn from it; as fast as possible!
Lesson two coming up soon.