Common Sense Business Principles

A few things I’ve learned in business

 

Starting Up

When starting a business, don't go in under-capitalized. Business does not run on hopes, dreams, or optimism; it runs on money.

Do your research. Who will your customers be? Where are they going to come from? How will they get your product or service? What will make them buy from you and not the place down the street?

You may think at the outset that you are going into business to be your own boss, to have more free time, or to keep your own hours, however the reality of being in your own business is that you will have a complete bastard for a boss and you will work harder than ever did before. You will be your own cheap labor, and you will move your business forward, particularly in the beginning, through self-exploitation.

Be cautious. Try to have a ‘Plan B' and an exit strategy. A large percentage of small businesses fail.

Customer Service

Always be professional and polite. Never get angry.

One of the advantages of having your own business is that you don't have one big boss, you have a lot of little bosses. If one of these little bosses fires you, well, that's not as bad as getting fired by one big boss. But if you notice that all these little bosses are getting together and deciding that you just aren't worth the aggravation, you might consider a change in attitude.

The old saying, ‘if you do not service your customers your competition will' holds true. Always be ready to go the distance for your customer. Often a transaction that seems small and insignificant and maybe even annoying can be your introduction to a new client that ends up doing a lot of business because you helped them out. Every interaction with a customer is a chance to sell yourself to that customer.

Do what you say you are going to do. If you say you're going to call a person back, call them back. If you say you're going to email, email. If you say you are going to sell a product or service for a certain price, try to do so, even if you end up taking a loss. Doing things this way will differentiate you from your competition and cultivate that increasingly rare commodity, customer loyalty.

Bad news travels twice as fast and twice as far as good news. It will take you years to establish a good reputation, but only a few short weeks to destroy it.

Pricing

If you have too much work and are not making enough money, raise your prices.

When you raise your prices, your good customers will say that you deserve it and your customers that won't pay in less than sixty days will say goodbye. For this reason, reasonable price increases can be a win-win option for you.

If you don't charge enough money, your customers will think that your product or service is not good quality. Charge a price that is fair to you first and fair to the customer second.

The Government

Pay your taxes on time, every time, even if it means you eat pasta every single night for dinner and your kids have to wait a month for new shoes. You can't fight city hall. They have their own army and you don't. Also, their interest rates are not at all competitive so you want to make damn sure you NEVER owe them any money past the due date.

Professionals

You need a lawyer. You need an insurance agent. Unless you are in the financial industry, are rich or own a lot of property, you do not necessarily need to have an accountant. This brings us to our next topic.

Keeping the Books

You need to keep immaculate perfect records. You need to do this for self defense in the event of a tax audit, but more importantly you need to do it so that you have control of your business. Without accurate bookkeeping, it is impossible to control your business. Toward that end, investigate bookkeeping software. Quicken, Quickbooks and Peachtree all offer bookkeeping software packages for small business. However, the important thing is that you make sure that all income and expenses are documented religiously without fail, because bad books will kill a business.

The Frog in the Pot

This old metaphor has a frog in a pot of water. Put a fire under the pot, the frog will not notice as the water temp gradually increases, but will stay in there until he's cooked.

Know when to get out. Always be ready to cut your losses and bail out. Keep your emotions out of it. This is the exit strategy I mentioned earlier. It's just another business decision. Review your options and if you find that you have none, exit stage left. Don't get caught in the vortex and go down with the ship.

The Joy of Business

Being in your own business is thrilling and liberating. When times are good, you ride high. Your work goes to no end but your own income (taxes and fees may apply). Just go in with your eyes, ears and mind open and keep them that way and you'll be fine.

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Comments 15 comments

FitnessProDee profile image

FitnessProDee 7 years ago

Thanks for the article. It was just enough to make perfect sense and hold my attention without getting too wordy. Straight and to the point. Love that!


Teresa McGurk profile image

Teresa McGurk 7 years ago from The Other Bangor

THis is great advice and perfect timing: I'm trying to open a Writing Center for local kids and, while it will be a not-for-profit organization, we will need to pay the rent and the light, of course. And I'm a teacher, not a business woman (although I'm learning some of the tricks of the trade). I know not to open our doors until I have a sound business plan and substantial grant monies in place. It's all taking a lot more time than I would have thought possible or necessary (applying for charitable status is an immense undertaking). So I'm book marking this hub, and will be returning to it, as your advice works for everyone. thanks!


Tom Rubenoff profile image

Tom Rubenoff 7 years ago from United States Author

Thanks, FitnessPro! That's tech writing for you.

That sounds great, Teresa! And it sounds like you are way ahead of about 90% of the people who think they want to have their own biz. I wish you the best of luck. If successful, you will be making a living and doing good in the world. Very little is betta than that in this life.


SiddSingh profile image

SiddSingh 7 years ago

Hi Tom,

Great tips in an interesting manner, especially the one about government!

Also, great analogy with the boiling frog. People stick with sinking businesses till it is too late. Guess this has to do with an absence of plan B.

I enjoyed reading this hub!


Tom Rubenoff profile image

Tom Rubenoff 7 years ago from United States Author

Thank you, SiddSingh. I hope it saves some people some trouble.


cindyvine profile image

cindyvine 7 years ago from Kyiv, Ukraine

Great advice there, Thomas!


Tom Rubenoff profile image

Tom Rubenoff 7 years ago from United States Author

Thank you Cindy. I'll bet there are a lot of people thinking about opening a biz right now.


Frieda Babbley profile image

Frieda Babbley 7 years ago from Saint Louis, MO

Great info Tom. Thanks. Well presented. And yes, you're right, getting out is business decision, not an emotional one. No matter how much we care for our little business we have to use our gut and business sense when making decisions, and on when to get out of it. A hard thing to do!


artfuldodger profile image

artfuldodger 7 years ago from Earth

Wonderful advice. You forgot one thing. Snazzy logo. Never underestimate the power of a snazzy logo.


G-Ma Johnson profile image

G-Ma Johnson 7 years ago from NW in the land of the Free

Man...do I wish you were around when I had my small Stained Glass business...I made so many mistakes I could write a book...Hey that's an Idea dahh see how dumb I am...I did see how hard my parents worked though cause they had their own....very successful business...maybe that's why it didn't work for me...Nicely done hub sweetie...G-Ma :O) Hugs


Tom Rubenoff profile image

Tom Rubenoff 7 years ago from United States Author

Yes, Ms. Babbley, the business gets to be like a member of the family. But if it gotta go, it gotta go.

Absolutely, Dodger! Nice add to this hub.

I learned more from my mistakes than my successes, G-Ma. You should go ahead and write that book - or at least a hub or two!


Ashley Joy profile image

Ashley Joy 7 years ago

Where were you when I started my first business? It was began with some start up capital which all went into buying equipment. Then we still had other tools and stuff leased on top of that. There was no money and it was a financial mess. Somehow we kept it together for 4 years until a larger company wanted to buy us out to get rid of the competition. We glady accepted and took the lessons learned on to other ventures. But if we had only known then what we know now things would have been a lot different.


Tom Rubenoff profile image

Tom Rubenoff 7 years ago from United States Author

There are a couple of organizations that help small business start-ups. One is the U.S. Small Business Administration (SBA) and another is the SBDCC, Small Businesss Development Center. Retired businessmen at these organizations help startups avoid mistakes.


timothy82rodrigu profile image

timothy82rodrigu 6 years ago

Tom,

Came across this page for a search of "business principles" and decided to use it as a reference for a Hub I was building on logo design (including a small point about business principles).

Thanks for sharing your experience.


Dennis AuBuchon profile image

Dennis AuBuchon 5 years ago

Tom,

Great advice

The information in this hub is right on target and one which we all need to remember whether it is our business or our jobs. We must take care to take care of customers for without them neither a personal business or a business for which we work will succeed. Customers need to always come first. If you treat customers well they will not only return but they will tell their friends. This is the way all businesses grow. Word of mouth is a powerful advertiser.

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