Business Building

How will I ever find the TIME?

Not only do you need to do the core activities that get the work done for your customers (or clients if you call them this), but you now have to do many other things too:

Bookkeeping, taxes, CPAs, lawyers
A shoe box full of receipts will not cut it. This is not your personal tax return being done at the last minute (not anymore anyway). Accurate records need to be kept using financial software designed for this purpose. Start with one of the basic ones and grow in sophistication (time and money) as you can afford and need to.

In addition to accurately knowing where your business is at every month (or preferably every week), you need to be actively managing your cash flow. This means producing invoices and tracking Client payments on an accurate and timely basis. Clients like to be able to discuss any queries that they have in a prompt and professioanl manner (it helps them to know that they made a wise choice in selecting you to work with).

This means that either you, your spouse, or an external (part time) bookkeeper will need to do this. Note that if you go for the external option, it still takes you time to prepare the information for them and to review the accuracy of their work. After all, it is your business! You need to understand all of this and accept that you are ultimately the person responsible. This is after all of the time that it will take you to find, interview and select a high quality one

...and then there is the minor cash flow item of paying them. It is more important to make sure they get paid than it is to make sure that you get paid. If you do not know where your business stands in an accurate and timely manner then you may well end up not getting paid at all!

So yes, this will take time. You have just signed on for becoming financially knowledgeable. It will take you time (and hopefully not too many mistakes) to get this experience. It will also take you time to continue to fulfill on this role.

Sorry, but it does not end there......

You have to think about taxes. you have to think about the legal entity that you are using to do business through (hopefully you took the time to select this appropriately before you got started ...but it is still salvageable if you did not). There are enough books on these two topics alone to take up a lot of shelf space at your local bookstore. Some of them are useful, some of them are very valuable to the business person in helping them to make informed decisions and to navigate this whole minefield that you just discovered that you have wandered into.

Taxes - this requires that you have an accountant (referred to as a CPA in the USA) for your business and personal tax accounting. You may have to provide them with financial results regularly during the calendar year which they will then use to have you make estimated payments to the tax collecting authority in your country - Internal Revenue Service (IRS) in the USA, Revenue Canada in Canada, Inland Revenue in the UK. ...you get the picture. If you do not know this entity well enough by know then you either have bigger challenges than we are discussing here, or else you are just getting started in your life's financial endeavors.

Legal business entity - if you are going to go to all of the effort of building up a customer base, satisfying their needs, and coping with all of the other challenges and distractions that impact an entrepreneur ...then you had better make sure that it is worth it. Make sure that no one can take it all away from you just because they want an easy source of income by suing you, or because a genuine accident occurred and you did not take the time to put together the business and its insurance-based protection (which benefits both you and the unfortunate victim) along the way.

Legal. Yes, that means you will be dealing with a lawyer. Now call me masochistic, but I have not found them that onerous to deal with. Then again, I did not just go out and use the Yellow Pages to find one. I took some time and obtained qualified referrals from people that had actually had successful and useful experiences with them (not just because their drinking buddy has gone into business for himself with his own law practice). After all there are great lawyers and then there are average and below average lawyers ...you get what you pay for.

It will take some time to interview them and have them propose their fees and how they do business with their clients. Some take an upfront retainer and then work through that (sort of like prepaid phones or putting fuel in your car) ...you would be amazed how many people lie to lawyers and attempt to rip them off. Kinda dumb if you ask me. Others, will invoice you weekly or monthly as you use their services. Word of advice: make sure you pay them promptly and in full. You never know when you may need to ask them to do a rush job for you as a favor.

Take a deep breath
Are you hiding under the bed yet? Just wait until we start to cover IT, payroll, benefits, insurance (lots of this to cover), banks, debt and cashflow. We are just getting started. Maybe we should provide you with a book list in some future post - now is about the best time to accept that you will never stop learning.

Seriously though. It is worth it. It is just that most of us tend to plunge in without having a clue quite how much is involved. Then we struggle through the shocking series of events that let us know how much we were clueless about. Then we find out that the business owns us and we are the hamster on the treadmill that is speeding up all the time. It is possible to do it differently. It takes knowing what to handle yourself, and what to outsource to specialists. It takes, time, money and energy and a lot of patience and willingness to make mistakes that you learn from.

It takes keeping customers happy, keeping up with ongoing events and development in your industry, keeping the sales effort going to grow your customer base and being able to eventually (should you choose to) afford to hire a professional administrator or manager to run the parts of the business that you never wanted to run in the first place!

Somewhere in all of these spinning plates, you also have to remember to have and enjoy your own life. Translation: those things that you used to spend time on and the people that you used to spend time with, that having nothing at all to do with business!

posted by Gray Matter LLC @ 9:52 AM 0 comments

Entrepreneurial growth - luck or design?

So, you want to be a successful entrepreneur huh? Dreams of setting your agenda and controlling your destiny.

I am sure that you will have already heard all of the cliched statistics about how many businesses fail in the early years. No? Well, just start telling the people that you know (and some that you don't) about your dreams and ideas on going into business for yourself and I promise you that you will not have to wait long. Multiple someones will be most eager to inform you of the economic Russian Roulette waiting to wipe you out just around the very next corner. Don't fret though, all they are saying is that they wouldn't be comfortable doing what you just told them you are going to do. It doesn't (necessarily) mean that you should not be doing it yourself.

Most likely you slot into one of a few categories:

-You are someone that is having to (or choosing to) make a substantial career change. If you have actively chosen this then congratulations on getting yourself into a position where you can take this plunge without being financially or emotionally irresponsible. If you are doing this in response to a being down/right-sized, then I hope you have managed to stack the odds in your favor as much as possible somehow.
Most likely you have a particular skill, substantial experience and credibility or else a stable of stellar contacts and are choosing to make a go of being a consultant or freelancer. Possibly you are going to get started with one "anchor" Client.

-You have an idea or a passion that you believe in enough that you know you will be able to MAKE it work. Come heck or high water.
Good for you. Many people all over the world would never even take the first steps on this path of yours, for fear of abject and crushing failure.

-You have the backing of someone that believes in you and your ideas and is willing to back that belief up with capital.
Whether or not they are qualified to make that assessment is another matter for debate. Still, if you have briefed them on your business idea, market, strategy for executing on the plan, proof of concept and maybe even a little market research ...and they are still willing to put up hard earned cash, then you have better confirmation than many successful entrepreneurs ever get.

Especially if you are getting started on your own, you will soon be facing the startling and unexpected reality that, whilst you may know how to do what is required to fulfil the work for your customers (a good thing), you actually have less than no idea of the multitude of other things that you are immediately expected to be an expert at in order to run your business in even a haphazardous way (worse news than you would even believe ...). The learning curve here is worse than vertical (it is an overhang).

I will dig into these areas in a future post and clarify what is required in the constantly evolving game of professionally managing a growing business.

Hints: Financial management. Sales & Marketing, Operations, Recruiting, Human Resources, Legal, Procedures and documentated systems, vendor management, Client account management, research and development, professional and personal development, mentoring and coaching, pricing, advisors and board of directors.

posted by Gray Matter LLC @ 9:53 PM 0 comments