When I was growing up my grandfather always told me he went to the school of hard knocks. He didn't go to college he went to the army and served his country. He then worked his butt off for the rest of his life in everyday normal jobs providing for his family. He worked right up until the very last few weeks of his life. He was a great American that wanted nothing but a good life for his family.
I was thinking about him the other day and was laughing because of the school of hard knocks comment. He would say it to me several times a year, "Matthew you know what I tell people when they ask me where I went to school? The school of hard knocks!" Then he would slap his knee, laugh and take a sip of his high ball. There are a lot of lessons we all learn from the school of hard knocks and here are mine as they pertain to the business world.
Scaling a Business is Hard
The reason that the small business failure rate is so high is because scaling a business is extremely difficult. People start a small business because it is the American dream to do so. People find something they are good at (often a hobby) and decide to go on their own.
Another route I often see people take is leaving an employer because they don't see why they can't do it on their own. They think to themselves, "I'm doing all the work, why shouldn't I make all the money? I can do this on my own."
The reality is that running and growing a small business is very difficult. While I was told this endlessly before diving in head first you can't really imagine the challenges you will face. Just understand that there is a lot that goes on behind the scenes of a small business that you may not know or understand. On the surface running a profitable business may seem simple, but believe me it is not.
It's Easy to Quit and Hard to Keep Going
Perseverance in small business is essential. There are so many times you want to quit. It's very easy to quit, but really hard to keep going when things get tough.
One classic example I see often is that people realize they aren't making as much money as they were when they were working for someone. Many start their own business because they know they can do it on their own. What they don't know is if they will make more money than when they were an employee.
It really sucks to start a business and take a pay cut but that is the reality for most people. Those that can push through the tough times because they believe in themselves succeed and are rewarded. Those that can't get past the fact that they are making less now than 6 or 12 months ago typically quit and go back to being and employee.
It's a Roller Coaster Ride
The best description I can give of running your own small business is one of the craziest roller coasters you have ever been on. The high points have you smiling and laughing feeling great. On the contrary the lows are deep and they hurt, they give you that upside down feeling you get in your stomach when riding a roller coaster.
It's tough for many people to handle the emotional swings that most small businesses provide. There is nothing better than having things going well and then they get better and you go even higher. However, inevitably things turn and you hit some lows. Those that can handle the swings eventually figure it out and the ride settles down.
If you can't handle stress, hard work, and rejection don't even think about starting your own business; it's a wild ride.
You Need to Plan to Exit
Every small business owner needs an exit plan. It's hard to think about exiting your business when you haven't even started it, but it is necessary. Every good plan starts with the end in mind.
One mistake I often see business owners make is automatically equating exiting a business with selling it. There are tons of different options with exiting including: taking on a partner, taking on a different role, going public and passing your business to a family just to name a few.
Two other common mistakes are thinking that an exit strategy is stagnant and never reviewing it. Things are going to change as your business evolves. Develop an exit strategy no matter what it is and review it several times per year. An exit strategy for a small business owner can be simple; maybe just a few sentences or paragraphs. Develop your exit strategy, read it a few times a year and update it as needed.
Hiring and Firing are a Reality
Hiring and firing is part of the job as a small business owner. This doesn't just apply to employees. Hiring and firing also pertains to vendors and customers. Nobody likes to fire someone, but sometimes it is the right thing to do. You have to remember that you are running a business and you have to do what is right for the business.
Hiring is equally difficult. I tell people the finding and retaining the right people is one of the biggest challenges of running a small business. Finding the right people for your business is tough because it is hard to find someone to do the job like you would. What you need to do is stop looking for someone like you and look for someone that can do the job better than you. Retaining top talent is tough because nobody will ever feel as vested as you the owner. Even with equity offers, profit share and bonuses it is tough to get someone to buy all in to your business. My best advice is to build a strong culture and make sure it supports your vision.
Business Decisions are Tough
Running a business is tough and so are the decisions you are forced to make. I laugh a lot with my operations manager because he says that I really only get called in to make a decision in crappy situations. Once everyone has followed their procedures and exhausted their efforts the big decisions and the crappy situations fall on you as a business owner. Having a good business mentor in place can help you get a different perspective on situations to help you make better decisions.
Additionally life happens. Things are going to happen in your life as well as the lives of those that interact with your business that are going to have effects on your business. You are going to have to be prepared to make tough decisions quickly.
My advice on this is to try and put what you consider to be big decisions into perspective. This is much easier to do after a big life changing event. When you have a life changing event like the loss of a loved one, a near death experience, or a life changing illness you realize that most of the "big" decisions you face in your business aren't that big of a deal. Keep a clear vision of where you want to go and make sure every decision you make supports that end goal.
What hard lessons have you learned from running your small business?