When we founded Lotus Communications, we had a combined four decades worth of work experience between us- so we knew our industry inside out, and we were fortunate enough to have clients lined up wanting to work with us before we even started. That doesn’t mean it was easy; even though we rode on a wave of very early success, we soon learned that we had plunged into the world of entrepreneurship without looking at the fine details of what was involved in setting up and running a business.
For us, this worked to our advantage as we didn’t have the chance to be afraid of the challenges. We simply had to land on our feet and learn along the way. Here are six lessons we learned the hard way:
1. ADD 30%-50% ON TOP OF WHATEVER YOU ESTIMATE YOUR COSTS TO BE
It’s true that setting up a business costs blood, sweat and tears, but it also costs real money- often a lot more money than you originally plan for. Startup costs are one thing, and then continuing to run the business and maintaining your success level will cost a significant amount of money as well. Whatever you budget for initially, add an extra 30%-50% as a safety net, because you’ll probably need it. Whatever costs you are quoted, for example for a trade license, ask if there are any hidden costs, any extras or any fees that will pop up later on. Then when you get the answers, ask again and then still be prepared to pay more.
2. ASK EVERYONE FOR HELP
Whether you’re creating a business around a wonderful idea that you’re sure will take off, following a hobby that you’re passionate about and turning it into a full-time job, or whether you’re using your expertise and skills that
you have in your current job to become self-employed, you will need lots of help and advice, so don’t be shy to ask for it. Reach out to every single person in your network and ask for help.
We were actually surprised to find how many people were genuinely willing to help us, from friends and clients referring new business, to family members who were a dab hand at IT offering us advice on our website and technical issues, to a close friend who is good at finance and accounting. People are often inspired by the fact that you’re following your dream and taking a risk they wouldn’t take themselves, and they are also flattered that you are asking them for their expertise. Don’t assume that because you’re very good at what you do, that this will translate into setting up a business with ease.
3. DRAFT A BUSINESS PLAN
It can be quite surprising that even after months of talking about it, planning, and even actually setting up and doing it, you will struggle to write up a proper business plan. It is easy to say, “I want to run a boutique in a mall” or “I’m going to set up a marketing agency”, but a business plan is extremely useful as it makes you think about how much money you are planning to spend, how many employees you plan to have down the line, who the customers are that you are targeting, how you envisage your company growing, and how you plan to actually manage everything.
It is particularly important when you have a business partner as it forces you to re-examine exactly what each of you wants to get out of this, and how you plan to divide up responsibilities and profits. Having a plan written down on paper makes things more concrete and forces you to look at areas you might have been avoiding or might not have even been aware of. The business plan will prove very useful when dealing with your bank or getting your trade license, so get it done early on.
4. START THINKING LIKE A BUSINESS OWNER
You have to balance thinking with your heart and thinking with your head. Just because you’re now your own boss doesn’t mean you can sleep in every morning and only work with clients you like. Sometimes you have to turn down a project very close to your heart because it’s not profitable or feasible. Other times you have to take on projects you don’t particularly enjoy because it makes sense for the business. There are times you will have to turn down friends’ requests to do them a favor because it would not make sense for the business to work on a project free of charge at that moment.
You may be willing to donate your personal time free of charge, but donating your business’ time is a very different issue and you have to separate the two. You will have to be tough sometimes and use the old cliche?, “Sorry it’s not personal, it’s business” – get used to saying it, and start believing in it, otherwise you won’t get anywhere.
5. BE PROFESSIONAL AND DON’T COMPLAIN
When you are first setting up your own business, you will be incredibly busy. You will find you are the tough- est boss you have ever worked for and you literally will work round the clock. Your friends and family won’t see you for a while. You will be too busy to talk, too busy to go out and too exhausted to make any kind of social plans when you finally have time to switch off. At the same time, you will probably be asking these same people for help and maybe even borrowing laptop, equipment or even money from them and then telling them you are too busy to see them! The last thing they want to hear is you complaining when they’ve just put up with you being awful while helping you build your dream. When you finally return to the folds of normal humanity, you want people to still be happy to see you, and not retreat in fear from a miserable, complaining monster.
Remember, everyone around you is a potential client or potential referral opportunity. Act professional, tell them everything is going well, be positive and show you are on top of things. They will assume you are well on the road to success and will want to work with you or refer business to you. If you are always complaining and miserable, they will assume things are not working out and that you probably can’t cope with any new projects.
6. DON’T GIVE UP
One of the best pieces of advice we were given by an extremely successful entrepreneur is that lots of people have great ideas and dreams of setting up their own company, but most people talk about these things one evening, and then they get up and go back to their regular job the next day and never actually do anything about it. The successful entrepreneurs are the ones who actively take a risk, quit their job, make a change and actually see things through and keep at it.
Giving up is not an option in business. If necessary, assign yourself a mentor. Whether it’s someone who is already successful in business who you admire, or even just your best friend who is tasked with always pointing out your successes when you’re down, and refusing to let you get weighed down when you’re about to give up, make sure you have a dedicated cheerleader to keep you on track.