Small Business: Top Five Tips to Avoid Costly Risks
First and foremost I want to emphasize how important it is to BE HAPPY and enthusiastic with your work!
If you are not happy and truly enjoying your work, what you are working toward and the entire process, something is wrong. It won't all be fun, but in general, the moment you find yourself in a negative mind-set and something is just 'off', take a moment or day to re-examine your overall goal and just why is this your dream.
Learn from my mistakes. I can't say I wasn't warned. What I am about to post happened very recently. My hope is that this short post will serve as a reminder to take timely action on some very basic, simple steps in the beginning to avoid major mistakes and headaches later on. I certainly do not want to burst any bubbles of your enthusiasm, but in reality, it is not all gum drops and lollipops. Even living your dream is not going to be fun 100% of the time. But even in those moments of must-do's for the business, you should still be jazzed enough to enjoy the process.
Keep the enthusiasm going, but be smart about it. Launching a business solely on your own is do-able, but most of us need to rely on someone or a few other hands from time to time to bring our dream to fruition. This post is about a recent business venture/partnership gone south, so some of this may not apply to your sole proprietorship.
1. Get it in Writing
Trust no one. That's not to say walk around being paranoid and cynical all the time, just to be wise and keep your eyes open. My first mistake was not getting this latest venture in writing! I don't care who it is. Whether they are family, close friend, 'trusted' colleague or referral, get it in writing. Discuss some terms that can be mutually agreed upon and draft a contract ASAP. You can find a simple contract here, and re-write it to customize it to meet the needs. If one of the parties feels it is still not quite to mutually agreeable terms, simple, don't sign and take it back to the drawing board. If the contract is to your liking and you are no longer wiling to bend either direction, then it is necessary to NOT do business with that person.
Recently, about two months ago, a man approached me about a potential business venture and he was looking for some people to go in on this with him. He mentioned he had me in mind for a while and what skills he has observed that I bring to the table. The FIRST thing I mentioned back to him was, "Not for free, right?" He replied in agreement, but his proposal was that he, "has had several successful business start-ups and that he is offering a percentage of the business after the money starts rolling in." I believed him. Mistake.
Wolf in Sheep's Clothing. This person portrays himself within the community as a leader and mentor. Has the audacity to call himself a Business Consultant, yet wasted no time taking advantage of, not just me, but others as well. I believe he saw a weakness in me, a desire for finding the right opportunity and reeled me in. The other person that was burned, we have compared notes. I want so badly to have this behind me and some great success on my horizon soon, but all in due time.
Red Flags. After about a month and a half of my clerical assistance, working from home, drafting documents, attending weekly meetings, taking notes, making phone calls, running erands and even putting in volunteer time for his weekly Meetup.com group that he uses to try and drum up business, I finally approached him about working for an hourly rate, no longer for free or promises and cutting out the percentage partnership all together. There were enough red flags that I decided I did not even want my name attached to his business as a partner, I prefer to work solely as an Independent Contractor, providing a service at an hourly rate. He agreed to be open to signing a contract and I was relieved that there could still be potential. In the back of my mind I had a feeling that was just lip-service.
Sure enough, as soon as I presented the contract to him as an email attachment with email verbiage as, 'open for further negotiation until we find mutually agreeable terms' his email reply was to 'terminate the business relationship', no discussion. It was both a relief that it was over because I do not want to be involved with anyone like that but also very upsetting because it was such a slap in the face.
2. Financials in Order
Easier said than done, but it is imperative to have financials in order on all sides, from all fronts. There really is no way to examine the books of others in the business if you are working independently or without anything in writing, but here is another gem of a red flag that the charlatan had the nerve to readily divulge. I wonder how this would be received during a lunch conversation with an IRS agent.
During one of the meetings when I mentioned that since Jan 1, 2012, I had been saving every single receipt and keeping monthly expense reports in preparation for next tax season . . he jumped in to relay to me another of his crusty old life-lessons on how to handle small home-business. He actually said he saves NO RECEIPTS, that he uses only one bank account and that he literally claims everything as a business write-off because of the one bank account. He went on to explain, "No need for receipts when literally every transaction is business. You are wasting your own time and effort saving and tracking receipts." I just replied, well, for one I should not have brought it up because it is my business how I run my home office and second, "I'd rather be safe than sorry." He just scoffed at that and we moved on to the next agenda item.
Bottom line, it truly IS better to be safe than sorry. Here is a great article from IRS.gov full of helpful links to help keep you on the safe and sound track for your small business.
3. Business Plan
Common Sense, especially from a 'Business Consultant' claiming to have great success starting several businesses. My brother summed it up best when he asked, "So, just what happened to his other businesses? Where are they now? Is it really more than one or is it just a previous failure or string of failures? If he is so successful, why is he not willing to honestly pay for legitimate help? My brother is a very successful Entrepreneur, so he helped me with some very keen observation and specific questions I should consider."
From legalzoom.com, here are some business plan basics: http://www.legalzoom.com/business-management/starting-your-business/7-giant-steps-business-plan.
4. Priority Management
It is fundamentally more productive to focus on priority management than to simply think of it as time management. When you successfully prioritize your tasks, you master the art of efficiency.
A very visual tool to aid in quickly identifying and prioritizing your list of tasks is a quadrant developed by Stephen Covey. I posted a pic sample quads from the website.
I don't always use the block form, rather, most of the time I simply write a Q1 or Q2, etc on my to-do list.
5. Attitude vs Laziness
Why is this section of attitude not related to enthusiasm? Because I believe enthusiasm is the joy of the process and attitude is a reflection of work-ethic. This, to me, is one of the top five because it relates to both parties. You should pay careful observance of the attitude of whom you are working with because that speaks volumes to the type of character you are dealing with. Also, pay careful attention to your own attitude and give yourself an adjustment from time to time.
One of the red-flags that kept being raised over and over causing me to question again whether I wanted to do business with this particular person was his constant hands-off approach to 'his' new business venture. I can appreciate delegating tasks to free up your valuable time to better focus your talents in your areas where you are strongest. But I start to lose respect for someone that makes little to no effort to really dig in to the necessary details of their own business. The wolf mentioned above, often used the phrase, 'don't want to be bothered with the minutia.' That screams either incompetence, which is okay to admit when you simply do not know how to do something, or downright laziness. He has developed quite a reputation for even strong-arming other volunteers for his meetup group.
One recent email he copied me on, stating how hectic things get at the check-in table when people don't show on time (volunteer) left me scratching my head because why did he even bother to copy me on the email anyway only to rip me in a paragraph too, 'and Karen didn't even show up at all.' I had to remind him that I had text him about an hour before the event that I could not make it that night. I just didn't bother to text all the details that another PIPE BURST in my place and I was dealing with a flood. So, I let him know in reply to his lame email. Gimme a break, handle your own check-in table. He is so crass, he even had the nerve to say that the front must be a woman only!
Onward and Upward
Looking back on this adventure of a venture, as negative as it all was, this was a huge learning lesson for me. A harsh reminder to very carefully consider working with others.
I am so relieved it ended the way it did, best thing really. I can't imagine worse headaches I avoided by NOT having something in writing with this character. The phrase, 'dodged a bullet' comes to mind. Only a few days after the fall-out, I have lined up more Virtual Assistant work from home. So, I can still play the 'my own boss' role as an Independent Contractor. All's well that ends well.
Enjoy the below video for a little levity from this heavy subject :-)