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3 Things I Learned in the First 3 Months of Starting My Company Starting a new business comes with financial, technical and employee-related hurdles that one may not think to plan for ahead of time.

By Scott Ford

Key Takeaways

  • Make as many financial preparations as possible to counteract those first few bumpy months of starting up a new business. Expect the unexpected.
  • Invest in good equipment whenever possible, and makes plans for backup methods of managing your business if things break down.
  • Focus on creating a good environment for your team, and realize they may struggle during the first few months of a new business as well. Work to foster the growth of a collaborative culture that will withstand the inevitable stress of starting a new business.
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It goes without saying that starting a new business comes with unexpected challenges and hurdles along the way. Despite the best-laid plans and attempts at preparation, here are three significant challenges that permeated the early months of my startup and are worth keeping in mind for those who also intend to branch out and start their own businesses.

1. Money will be tight

When going out on our own, I spoke with many of our clients and told them of the transition. After those calls, I'd estimated that we would retain about 75% of our initial clients. However, only about 50% followed us to our new company for various reasons.

Starting out, I did all my planning based on those clients paying on net 30 payment terms. Despite my expectations, those first 30 days came and went without any payment. When I sent out the next month's invoices and late notices, there were many unexpected issues like missing W9s, paperwork, miscommunication and new vendor setup.

Unlike my clients, my vendors didn't offer much payment leniency. Many wanted payment upfront or on delivery. Finding office space that was sufficient and also didn't require significant down payments was difficult due to our status as a new business. We used credit cards as much as possible to help preserve cash, but low balance limits and other limitations brought us close to maxing out several times.

We started day one with two employees. This meant payroll and benefits were paid every two weeks. Staff has always been our most significant expense, and we were lucky to pay ourselves even minimum wage. I stayed the lowest-paid person at my company for the first few years to ensure that payroll was never late or missed. It felt wrong to take a paycheck while we had little cash in the bank and had balances on our credit cards, too, especially those with interest. Paying those off felt essential, so finances were incredibly tight during these early phases of the business.

Related: 4 Great Ways to Finance Your New Business Venture

2. Everything will likely break

We purchased the best equipment we could afford when starting out, given our financial limitations. We were using desktop computers as servers, an internet phone company, and our website hosting service was also hosting our email service. We hired a professional IT company and web developer to confirm that the systems weren't great but would still get the job done, given our small size. Despite making this more affordable setup work for a while, calls started dropping, emails stopped being delivered, and server backups disappeared.

Although temporary, I had expected our systems to last longer than just a few months. I could've just accepted that only one out of every 30 calls would drop or one out of every 50 emails would get lost, but it was evident that it was affecting our brand, both internally and externally. Our clients would get frustrated, and our employees hated the systems. Luckily, we found new vendors with better products and services, albeit at a higher cost. If we waited any longer, though, our bad equipment would've created a bad image of us to our customers that we wouldn't have been able to overcome.

Related: Equipment Financing and Leasing: What You Need to Know

3. Employee turnover can be high

We had between 50% and 100% turnover in the first couple of years, and it felt like a revolving door at the office. This was for numerous reasons, some of which were outside of my control and some due to my poor and over-stressed leadership at the time.

When starting a business, you give it everything you have. All of your waking thoughts are focused on making the business survive for the benefit of everyone, including the team. There was no plan B if the business failed. The stakes were high, and we were working like our lives depended on it — because, in many ways, they did. This pressure made it far too easy to push people too hard.

Putting that much pressure on my team wasn't right, and it wasn't the culture or environment they had signed up for. As the business leader, you need to shoulder that pressure and not let it flow to your team. Many problems exist for those higher up in the company, but problems should only flow up, not down. My military and law enforcement leadership experience needed to take a back seat, and I had to learn corporate leadership the hard way. It's safe to say it took me far too long to learn this leadership lesson, which I still struggle with occasionally.

Related: 5 Ways to Turn Employee Turnover Into Opportunity

Conclusion

I made many initial predictions when starting a new business but quickly discovered I was wrong by a long shot. Everything was harder than I thought it would be.

I'm familiar with hard work, but nothing has compared to the experience of first starting a business. Working twelve-hour days, seven days a week for almost the first year and not taking more than the occasional weekend off for the first four years was rough. Making time for my family and well-being and still putting in the extra hours to keep the business heading in the right direction was a heavy weight to shoulder.

The mental exhaustion of the number of hours, daily in and day out, combined with the pressures you can't really talk to anyone about, and the guilt of being at work while your spouse and child are eating dinner at home without you… that's something you can't prepare for. It's also been the best years of my life.

Scott Ford

President

Scott is the Co-Founder and President of California Builder Services, a Real Estate consulting firm specializing in new home developments and homeowner association analysis. He earned his M.B.A. with an emphasis in Real Estate Finance and created an app that provides estimates for new developments.

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