You make a ton of mistakes when you are running a small business, especially if it is your first time doing so. A lot of people end up attempting to run a business without any formal training. These types of owners are usually really passionate about something (or really good at it). While there is plenty of help out there for new entrepreneurs, few seek it out due to a lack of time and money. Egos may also get in the way. Below are 7 small business realities I have learned from the trenches of starting mine.
Need To Develop A Training Program And Formal Processes
If you are going to grow and bring on employees, you need a training program. If you plan to bring on employees, you need them to handle tasks as if you were handling them yourself. It is insane to think that an employee will know what to do or how you want them to work without a training program in place. If you are thinking that your new hires will be plug-and-play, get ready for a harsh reality and some big-time failures.
Scaling is all about repeatable processes. Developing a set of formal processes will make scaling easier. Formal, repeatable processes will also make it easier for you to eventually exit. If you want to exit, your company needs to be able to operate without you and a set of formal processes will provide the foundation they need.
Team-Building Is Critical
Hiring employees is hard. Wait a minute, let me rephrase that: Hiring employees is really hard. I totally underestimated how difficult building a team would be. I just thought to myself, "People want to work hard; this will be easy." After some huge failures, it's obvious that finding, attracting, and retaining top employees is one of the hardest tasks you will encounter as an owner. Your company is nothing without a strong team, so don't underestimate the importance of this task.
Culture Is Influenced Not Stated
You can write your company mission down on a piece of paper and hand it to an employee, but you can't do that with your company culture. The culture of your small business can be influenced, but it cannot be stated. The culture will change as you grow and bring on new employees. Culture is incredibly important, so you can't ignore it. Employees that are a good cultural fit can be the difference between success and failure. In this video on business culture, Zappos CEO Tony Hsieh does a great job explaining the importance of business culture as it pertains to scaling your business.
Sales And Marketing Are The Lifeblood
Many business owners underestimate the importance of marketing and sales. The reality is that, without marketing and sales, you have no business because you have no customers or revenues. Sales and marketing are the lifeblood of any business.
You could have an amazing product or service with a kick-ass team in place. However, if you don't have a way to attract prospects and convert them to customers, your newfound business venture will be very short-lived.
Need To Master Cash Flow Management
As the company grows, cash flow management will become more and more important. There are two basic ways to grow a small business: invest time or invest money. In order to grow, you will have to invest both time and money, so you need to be good at managing them.
Cash always seems to be tight. I highly recommend doing a cash flow forecast for at least 3 to 4 months out into the future at all times. If you suddenly can't afford to pay your vendors and employees, don't expect them to stick around very long.
HR Is A Pain
Managing human resources can be a massive pain that you just won't see coming. If you are hiring new employees and all you do before putting them to work is have them fill out a W-4 and an I-9, you are on the road to disaster. As you grow, you will want things such as employee agreements and a benefits package. Managing the standard benefits alone, like health insurance and a retirement plan, are very complicated. Additionally, you are opening yourself up to some potentially big liabilities if you don't know what you are doing in a legal sense. Add in the complications of managing paid time off, hiring procedures, and properly terminating employees and you have a big job on your hands. A human resources department is one of those items that you definitely want to outsource as you grow, no matter how small your business is.
Get Legal Ducks In A Row
When starting a company, there is a tendency to do it as lean as possible. I've had many people approach me when they are thinking about starting a business for advice and I always tell them "Get a lawyer." The typical response is "Really? I was thinking of just filing for an LLC and going for it." I understand that funds are tight when you start out, but I can't stress enough the importance of engaging a good small business lawyer right from the beginning. A good lawyer can help you file for the right type of organization, set up employee agreements, and make many other suggestions for minimizing your legal exposure. Lawyers may seem like an unnecessary expense when you are a brand new business, but believe me, they are worth every penny.
What lessons have you learned from starting and running your own business?
