Surviving (& Thriving) in Your First Year of Business - 5 lessons from the school of hard knocks
The below lessons are not the result of quantitative analysis of 1200 small businesses across five continents (although those articles do exist and we encourage you to read them). This is our story – backed up by no more than our own scrapes, bruises and high-fives, having just survived our first year in business. Whoop whoop!
My business partner and I had about forty years between us (yes that does make us feel old) in the business of organisational culture, before we took the step of becoming business owners ourselves in this field. But even though we had plenty of expertise in our chosen field, business ownership in itself is a whole other exciting, scary thing.
We did a heap of stuff right, we absolutely got stuff wrong, and the journey was about as massive a learning curve as we’ve ever encountered. But boy, what a ride!! So if you’re thinking of giving up that regular salary and taking the plunge into business ownership, good luck my friend. I hope our experiences can be of some value to you.
First up, realism.
Unless you are one of a very rare and exotic breed, you won’t make your first million in your first year. Probably not your second either. Chances are, when you give up that good salary you’re on, you may take a drop for a while – maybe even quite a while. Expect it and plan for it, because it’s normal. The trick here is to keep your eye on the end game and make sure you’re trending in the right direction. Don’t beat yourself up/panic/freak out if it doesn’t happen straight away. OK, I know this is easy to say and hard to do – because I’ve been there and indulged in all three. So perhaps this is better advice – when you start beating yourself up/panicking/freaking out, take a deep breath and remind yourself of the end game. Yes you have a ways to go, but I bet you’re a damn sight closer now than you were just a few months ago!
Plan, plan and then plan some more.
OK, this is an area I’m happy to say we got right, and it paid dividends. When you first start out in business, never is there a better time to get crystal clear about what it is you want from this business, and how you plan to get there. I’m not talking short or even medium term here. I’m talking the big questions – what is the end game? Why go into business at all? What do you want this business to achieve for the world and for you in 5, 10, 20 years’ time? Do you have an exit strategy? Once you’ve worked your way through the big stuff, bring it back to an annual plan that will ensure you get where you are ultimately planning to go. Combine that with a financial budget, and you’ll be streets ahead of most start-ups.
We found our future planning impacted heavily on our decision making about almost everything else. In the first year you’ll be setting up a lot of infrastructure for your business moving forward. If you can do this with a view to your future needs, you’ll make better decisions in the short term. At least that was certainly our experience.
Surround yourself with good people.
One of the most confronting things we found about owning our own business, is that there’s no IT team to call on when your laptop packs a sad. There’s no finance team to help you with your money stuff, there’s no marketing guru at the end of the phone. Suddenly you have to build a reasonable understanding of well – everything. This is fascinating and daunting all at the same time. Our advice – find a good IT guy (or gal), get yourself an accountant who gets your business and can grow with you, same with a lawyer. Approach people you know who may be willing to offer some gratis help or advice. Get a mentor, particularly one who can mentor you in areas where you’re not strong. We linked into Business Mentors New Zealand http://www.businessmentors.org.nz/ which are a not-for-profit who match mentors with businesses. The mentor we’re now paired with has already added value to our business through his sage advice and insightful questioning.
OK, it sounds pretty obvious right? And it is, but it was a biggie for us so I’m including it anyway. In your first year of business you may not have much coming in, but everyone seems to have their hand out. There are a million places you could or should spend money. Our advice would be, think really carefully about what will take your business forward. For example, we were lucky to set ourselves up in a wee office attached to a warehouse that we get to have for free in exchange for some of our services. It’s not flash, we can’t display our branding outside and it’s not in the ‘premium business area’. However, in our line of work, clients don’t come to the office, we go to them. Therefore, committing to a regular rent check when we didn’t have to just didn’t make good business sense. Instead, we spent a big chunk of money on branding and marketing – so we do put a professional image forward to the market.
Also, find out what you can get for free because you may be surprised. For example, we use Hubspot as our CRM to manage all our client data. Their free version is perfect for us, and as we grow we may upgrade to a paid version, when we need it. There’s also a variety of free advisory services available for small businesses – take the time to explore your free options. Every saved cent helps!
Anxiety is OK.
I was at a conference a few years back, and an entrepreneur made the point that many people don’t take the plunge into business ownership because they perceive that owning your own business is riskier than having a regular job. She then made the very pertinent point that when you work for someone else, they have all the control about the future of that business, and hence your job security. When you’re the boss, you hold that control and you make those decisions for yourself. So which is truly riskier?
I have had a regular paycheck from the moment I left University in my early 20’s. Walking away from that was freeing and exhilarating and liberating. But despite my agreement with the entrepreneur, it was still damned scary. My business partner has a naturally crazy-high level of optimism and future focus, so did not seem bothered by the same anxieties I was experiencing. What I found incredibly comforting was talking to others who had been where I was and could relay their own experiences of anxieties in the early days. What I learned was, it’s very normal. Understanding this helped me to accept that anxiety was a part of the journey, and that helped me keep it in check and focus on the positives. Because it IS freeing, and it IS exhilarating and it IS liberating! You only get your first year in business once, so soak up every little bit of it, even the scary stuff.
Ultimately only you will know if business ownership is right for you, and maybe you’ll only really know by giving it a try. So where did I arrive at after my first year? I get to do what I love almost all of the time, the variety is unreal, I’ve learnt more in the past year than in the preceding ten years, and sometimes I get to walk my dog in the middle of the work day. It’s still a bit scary, money’s still a bit tight but both are tracking in the right direction. Final synopsis: Life is good!!
If and when you take the leap, I wish you all the best of luck and that you come to the same conclusion after your first twelve months as I did.