Common Sense Business Principles
A few things I’ve learned in business
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.
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.
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.
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.
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.