Most people start a business because they have a skill. They’re good programmers or writers. Maybe they can design or wire a house.
The point is, they have a skill that they decide to leverage into a business only to meet a hard truth. The skill cultivated is only 10% of having a successful business.
Showing up and executing your skill while collecting a paycheck from your employer is worlds away from being able to handle bookkeeping, marketing, and managing projects.
Let’s look at how to do the other 90% of running a business well.
1. Marketing and Sales
If you’re not telling people about yourself and your work, then no one is. If you’re not asking for a sale, then no one is. It’s not a bad thing to tell people about what you do.
If you had the cure for cancer, would you keep it to yourself because you were afraid of being too ‘salesy’?
You started your work because you provided value to customers. If you design sites that increase conversions for clients that means extra sales. Those sales might be the difference between a thriving business and a dead one.
One of the biggest dangers, when you market your business, is to resort to massive action. You talk to 100 people making an inch of progress in 100 directions. You show up to 10 networking events, but none of them were picked because they’d have an ideal client attending. Worse, you stood in the corner the whole time talking to no one and then called networking a terrible waste of time.
When I started, I substituted massive action for smart marketing. I’d send ten contacts a day to potential customers. I’d search Craigslist, my local chamber of commerce, and randomly surf the web for bad sites that needed work. Yes, I got clients, but few of them were great, and few of them had the budgets I wanted.
When you start diving into your marketing, take a few weeks first and identify your ideal client. Figure out which forums, groups, blogs, and networking events they frequent. Then focus on only those areas ignoring the rest.
2. Budgeting and Bookkeeping
My friend is an accountant working for himself, and even he admits that the budgeting and bookkeeping for his own business is one of his least favourite tasks. He knows all the Generally Accepted Accounting Principles (GAAP) and admits that for his business, he follows few of them.
To have a successful business that lasts for more than a few years, you need to do better than that. One of the most transformational books for my business finances was [Profit First]( Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine). To follow that process open up your 5 Foundational Accounts as follows:
- Income (where all money starts)
- Expenses (for your expenses)
- Owner’s Pay (pay yourself from here)
- Taxes (this is not your money it’s the governments)
- Profit (your reward for taking the risk to run a business)
All your money starts in the Income account. Then based on percentages, you divide it up on the 10th and 25th of the month. Your goal percentages for a business doing $250k a year in revenue should be something like.
– Expenses (30%)
– Owner’s Pay (50%)
– Taxes (15%)
– Profit (5%)
If you don’t have enough money in your expense account to cover something, then you can’t afford the expense. Cut it or something else so you can afford it. If you can’t pay yourself what you want to, that’s your business screaming at you to increase revenue.
Along with budgeting, you need to set aside time to do admin work. For many solo entrepreneurs, 5 hours a week will easily keep them caught up on entering their receipts. Once I got organized with my receipts, I got my time down to 1 hour every two weeks.
Schedule this time on your calendar every week and don’t let it get taken over by other stuff. Neglecting a little time every week only means you’ll need to spend hundreds of hours in tax season. All that extra work only makes tax season worse.
If you’ve kept up on your bookkeeping and saved for taxes as you should, tax season is just another thing on your calendar. You’ve already prepared for it; it’s a blip on the radar of your business.
3. Working ‘on’ the business
It’s easy to fall into the trap of doing work for clients all the time. It brings in money to pay the bills. The purpose of your business is to provide services/products to others.
But it’s a fatal trap.
The problem with always focusing on doing the work is that you and your business won’t grow. If you start out as a great programmer, you’ll stagnate as you stop learning new programming languages.
Worse than getting behind in your field is that you’ll have to learn how to be a great business person through trial and error. Hopefully, your business can survive your mistakes, but many don’t.
To work on your business, set aside one three hour block a week to plan the future of your business. Use the time to read books on sales or marketing or time management. Then put a plan into action to do something with what you’ve learned.
By putting the time into becoming a better business owner, you’re going to serve your clients more effectively. You’ll have a deeper wealth of knowledge to use when advising them in the success of their business. At the same time, your business will become more profitable as you increase your understanding of what makes a successful business.
As you get out there and do your work remember, just doing work for clients is not going to yield the most successful business. To maximize your chances of success, you need to focus on other things as well. You need to have a solid marketing plan. You need to budget. Finally, you need to set aside time to work on your business.
If you can do these three things, you’re going to be in a much better position to build the business you dreamed.