How Not to Start a Business
You have thought about it for a long time. In fact, the vision of the business you want to start creeps into your dreams. You know that you can do it better than the competition. You can visualize your customers being impacted by your business and you see the money stack up in your bank account. You are over taken with a beautiful feeling as you can imagine the inner workings of your business. Now it is time to turn the dream into a reality. So you begin by sketching ideas in your notebook. You write down the rough draft to your business plan by dropping out the services, the prices, and marketing ideas. "How many employees will I start with, if any?" "Where is the ideal location?" "What kind of licensing and permits will I need?" Ideas are flowing from your brain to your fingers onto the paper. The beginning of a masterpiece begins to emerge. You are taking the first step of planning like so many other entrepreneurs before you. "Bill Gates, here I come."
Now it is time to start calculating expenses and upstart costs. "The office lease is more expensive than I thought." You say. As you begin to take into calculation all the little details the task seams daunting but you know you will be successful. You move forward. Someone loves your idea and is ready to bank roll your vision. Bring out the champagne, because you have made it farther than millions of people out there that never do anything about their ideas. You even beat the odds further and got someone else with money to believe in you and your vision. Now it is time to get real. I personally know someone who is in just that situation. I was excited for their vision and believed in their idea. When I first had a tour of the office, I was surprised at the high priced location and expansive office space. The office is lined with 30 beautiful desks and chair. The doors on the individual offices are custom designed Italian. The walls of the offices contain six 52 "flat screen televisions. The televisions are installed in the reception area, conference room, the main office, the break room, and the two executive offices. the employees. Many of you are thinking, "Wow, I would like to work for that company!" Yes, it sounds great. The compensation and benefits package is very rewarding as well. behind like an old pair of jeans to come to the "promise land."
Anticipation was in the air as the employees arrived to their first day of work. The phones and internet is not ready yet because the suppliers did not deliver. "Well" thought the owner. "Many of them left jobs to be here, so I'll just pay them this week to do nothing." The website was not completed because the web designer could not meet the deadlines. The marketing campaigns and products that were to be completed were not, everything was contracted out to outside sources so the employees had nothing to do but wait. A few weeks later the phones were installed. A few weeks after that, the website was finally completed. Meanwhile, the employees sat their doing nothing, getting paid salaried for doing nothing. Some have already walked out from frustration and fear as they realize that 6 weeks of expenses and zero revenues, spells disaster. The employees who did stay, got a look a while ago as their paychecks bounced and the phones were temporarily disconnected. "Hey, but look at the beautiful television we have in our break room!"
Your ego can really get you in trouble when starting a business. You want your friends and family to admire you, as they take a tour of your beautiful office. You want your employees to say "wow" as they pour themselves a coffee from the fancy roaster and sit themselves in their plush chair. Your ego can destroy your business. Your employees will be more impressed with getting paid and the sharing of future profits, than they would be with a custom Italian door. When starting your business, less is more. I have a friend that placed a door on top of two boxes and called it his desk for two years as he built his mortgage business from his basement. Take a look at some of the things to remember when starting a business geared for profit instead of prestige.
o Determine who your business serves. If you really will not have visitors, then do your business from home at first.
o Test your business out before hiring new employees. The products need to be finished, and the first sale made by you the owner. The systems and infrastructure should be in place. Unless you are a service business like a restaurant, do not hire new employees until you get too busy to do it yourself.
o Make more money than you spend. Is not this a no brainer? For some, this concept is foreign.
o Be prepared for unforeseen expenses. There will always be expenses you did not calculate for, make sure you have reserves for this occasion.
o Do not expect to make a profit right away. Budget three to six months of expenses in your plan.
o Determine the best use of your marketing dollars. Will you reach more people by internet or radio? Do you have an expert in place for search engine placement? What is the brand image you are trying to create
o Motivate your employees. You do not have to offer a huge salary at first to motivate an employee. Offer your employees a profit sharing plan and show them the books. The employee will help you bring in revenue and cut expenses.
o Create loyal customers. Empower you employees to delight the customers. Use customer and employee feedback to consistently improve products and services. Analyze your systems and determine and repair flaws. Create a loyalty program for your frequent customers.
Fancy furniture and state of the art office technology does not create income. Offering a better value for the products and services is what creates income. Letting the most people know know what your business does, brings money into your pocket. Throw your ego out the door and stick with the business basics. Walk before you crawl and reward the employees that stuck with you in your raw stages. When your business is making a handsome profit and you are outgrowing your current space, then you can look into making upgrading your look. Until then, be happy with the extra money you are making because you were smart enough to keep your expenses low from the beginning. In the long run everyone involved will benefit by you putting profits over prestige.