Starting a Business 101…..
People tell you it will be hard. People tell you most fail. People tell you that it will keep you up at night. People tell you starting a business is exciting, thrilling, risky, and absolutely frustrating. Funny thing is………people are right!!! Starting a business is hard. It takes perseverance. It takes grit. It takes consistency to high degree that most don’t understand. Now, before I go off and talk about where I am at now, we must stick to the topic…. “starting a business.” There are a lot more things to think about than one may originally think.
What are you thinking………..starting a business?
There are so many things you will not think about when you first start a business. You have to think what designation you will be: C Corp, S Corp, LLC, Sole Prop….. so many fun titles to choose from!!! I am not going to go into all of them, but my flavor of choice has been S Corporations. And when I add the “s” on Corporation, yes, that means I have multiple companies. That is good and bad from my vantage point.
Are you going to partner with someone? More than one? Who is investing? Who is going to be in charge? What are the expenses going to be? How much time am I going to spend weekly doing this business? Am I doing my own taxes? Who do I file taxes with? Do I have to do it quarterly? Do I need a software program to do my taxes? Do I have an exit strategy if this falls apart? How long am I going to work this to see a profit? Profit doesn’t start instantly? Do I have a business plan? What is a business plan? Why am I doing this again? How is this going to affect my family? Am I crazy? Is this going to help leverage my time or is this company going to own me? Wait, who owns who? Do I have a mentor to help me through this? Do I know how to balance a checkbook? What are write offs? What database system do I use? Do I need a website? A logo? A marketing plan? These things cost money? How am I making money while I start this up? Where is this business going to be located? At my house? Now I need a new printer? I have to use social media? What’s a Facebook Business Page?
These are just the tip of the iceberg……… This gives me nightmares and gets me excited beyond words all at the same time! Personally I am in the process of starting a company, have a couple in their third year, and I have two that I am stepping out of! Live and learn! Let’s just say, I both listened to my own advice and did not at the same time.
Partners in Starting a Business!!!
I believe this is the number one point to be wary of. I have no problem with going into business with anyone, but there needs to be a VERY clear definition of roles that each partner is to play. I have one friend in particular, who had the partner from hell. He almost lost his business, that he had been building for over 3 years because of his partner’s past coming back to haunt them!! Know who you are going into business with and know what you and them are capable of. Decide what your roles are and commit. As you begin the business, meet regularly and refine the roles with an open mind and open communication. Don’t harbor resentment or know it is going to fail!!
I have both succeeded and failed in this category. When you start a business, there is also an emotional piece that we all seem to forget about. Warren Buffett has done the best of hedging out emotions that I have read about it current history, when starting a business. He purchases businesses that are already in play, but don’t you doubt, when he buys one, it is starting a business for him. He has taken most or all emotion out and has done his due diligence to make sure it is a worthy company of his coveted parent company Berkshire Hathaway. All this to say, most of us are not Warren Buffett and will be a tad bit more emotional. Hedging against that emotion is huge!!
My encounter was with two of my best friends. Actually we still own the company, I have just been lazy and have not closed it out yet! We decided we would take the world by storm!! My friend and I have been friends since we were in junior high. We have been friends most our lives and have seen a lot together. He really wanted to start a company with me. We both were married with kids. Life had taken a hold of us and we didn’t have a lot of time to hang out. So, to fix the hanging out part, we decided to start a business!! BAD idea!!!! Don’t just start a company to hang out!!! Starting a business 101 says this is bad from the get go! So, here we are, about a year and a half after and I don’t want to work this company anymore. We had grand aspirations to host thousands of companies, to have a team of web designers, to be helping hundreds, even thousands of people with their web based business needs!!! All great ideas and all good intentions. But, we didn’t have a true plan. And not everyone was in on the plan, nor fully understood the plan! It was doomed for failure as soon as we signed the Corporate docs!! Now, it has put pressure on my friendship, it has led to frustration with one another, we have a lease on a commercial building because of it and there is no good win/win!! So, don’t do what I did!!
Starting a business the right way!!
Take it slow…… there should be no rush. If there is a rush, it’s because you have been working on the idea for so long and actually making money at it, that you have to form a company so Uncle Sam doesn’t come looking for you demanding a lot with some fines attached! Going through every conceivable scenario and then really having an exit strategy. Again, this is more tailored for a partnership conversation, because if you are a sole prop, you can shut it down anytime. If you have employees, no matter what it is going to be difficult, but you are not having to ask anyone’s opinion.
One of the best ways to start a business right is by having a good attorney. Mine, I’m biased, is awesome! Charlie Dent is one of the best attorneys I know and has given me a lot of invaluable advice. He has seen me win and seen me loose. He is there to give me advice when needed and always makes sure whatever the venture, it is set up right…..in the paperwork and corporate docs!! “Rich Dad Poor Dad” by Robert Kiyosaki, is a great book to read before you jump in. I read it when I was 20, the year it was published and found a lot of truth and real applicable advice throughout the book.
Find a mentor. Not just anyone. Someone that has started their own business and has had success. And not just for a short time but over multiple years!! I would actually say my Dad, Ken Rody, is my most valued adviser and mentor. He has owned and operated his own companies from before I was born! He has definitely had ups and downs but really has taken a steady approach and been successful throughout his lifetime. It doesn’t mean he won’t let me fail, but most the time I fail is because I never went to him for advice on that particular situation. Having a person in your life like this in invaluable in saving a lot of headache, heartache and money ache!!! Let’s jump into the money!
Starting a business isn’t Free!!!
One thing my Dad taught me above all else, in business, is to save money. Don’t go buy a bunch of stuff, save, save, save. I learned to balance a checkbook at a young age and I was given a savings account with a very small balance, that my parents urged me to put money into anytime I earned something. It was invaluable, because at a young age I began to save and understand the power of having cash.
I know many people do not have this opportunity and that is unfortunate, but you are hearing it now…..so listen up!!! You need to save your money before starting a business! You are going to be stressed about a lot of different things, it is inevitable, but if you have some money in the bank, it brings a peace of mind. I was stressed when we started Washington Home Team in 2011 and then our marketing company later on that year. Having saved from the time I was 20 years old, really alleviated some of that stress. Was and am I still conscientious about money all the time? Of course, I would totally be failing if I was not, but I don’t have to worry. So, save all those dollars….by skipping eating out, watching a movie at home instead of at the theater, making coffee at home instead of at Starbucks!! It all matters when you save over time.
The other part of saving is that you are ready to jump on an idea when the time is right. If you have no money, many times that time never arrives. Unless you, your mind and ability are the only driving force, it is going to take some funds! So keep on thinking about saving NOW!! Don’t wait, find a way. If you have that entrepreneurial spirit, make sure you can afford to take advantage of it!
Starting a business is all about Risk versus Reward
As we finish this up, let’s go over one last thought. Is the risk worth the reward? Only you can be the one that knows this. If you have passion, inspiration and just really love what you are going to do…..then do it!! I know numerous businesses that barely make it, not being in a very lucrative environment, but love what they do and they don’t have to answer to a boss! If this is you, then that is fantastic! You’ve weighed the risk, knew what it would take and are doing it with all the passion in the world.
For others, if you have a glimmer of, “Do I really want to do this………?”, in the back of your head, really take a hard look at it and think twice. It is just not worth all the work and I mean hard work that it will take to make starting a business worth it. Most businesses fail within the first two years and there is a reason why! It’s hard! So really take the time and consideration to really plan out and soul search, to make sure you have what it takes to plow through until your business performs the way you want.
My goal for sharing this, is to inspire you to start a business!! You may question the way I have gone about it, but I really want everyone to succeed! This is a basic recipe to not get into something that you won’t want to do. This will make you think before jumping into a opportunity that may not really be a passion. So really sit down and contemplate your choices when thinking about starting a business.