What you’ll find below is a bunch of stuff I learned after I started my own business. Had I know this stuff before I started, I’d be in better shape. Your results may vary. A lot of the tone below is like “YOU SHOULD!” Go ahead and give yourself a pass to do the exact opposite. I’m just getting started…
Test the effect of responsiveness in key areas of your business.
I’ve found that the need to respond to an email inquiry reduces by about 25% for every day that I let it sit in my inbox. If I let my email account go for 5 days, I can delete almost everything in it.
In the case of custom quotes, I’ve found that the chances I score deals behaves similarly. If you have a business that relies on quotes, try turning them around in less than 30 minutes and measure the effects. In some cases, I’ve found the effects to be so profound that I began working in extra margin to cover for the mistakes I’d make. Even though I was less compeftitive on price, I increased my close rate and overall profitability.
I’ve also found a similar effect when people owe me money and with our accounts receivables ledger. I’d say the chances of somebody paying their bills probably decreases by 25% after every 4 week period.
I’m pulling these numbers out of the air. They’ll be different for every business. I’d recommend you play around with this and develop your own rules of thumb.
People are going to be annoyed with you.
I know I piss a lot of you off. I’m sure I occasionally leave conversations and people are like “that guy was a douche.”
If you’ve made a difference in your community, or just made a stack of cash, you are probably pissing a lot of people off. That’s because you’re in the game. You can’t build a road without paving some meadow. You can’t build a team without firing some people. You can’t write a blog without driving people nuts, and you can’t have a point of view without miffing those with the opposite.
Your business, if it’s gonna pay you, will effect a lot of people’s lives– hopefully for the better. In the process of making the world a better place, you are gonna piss people off.
Get used to it.
Once you’ve got your bills covered, start risking your time (not your cash).
When I get my bases covered with a new stream of revenue, I put people or a process in place, and then I start exploring new ideas. At first it was SEO. Then it was traveling and meeting people. Then it became writing and podcasting.
Business owners often feel they need to stick around to hold down the fort. Instead of risking their time, they risk their cash. That often ends badly. Proof of concept is all on you, dear entrepreneur. That’s why Ian is cold calling customers for our new product lines. That’s why I’m starting new blogs. You can’t buy passion and insight.
The #1 example of this muck-up I see? Hiring big money sales “ringers.” Don’t do it.
Employees help you work less.
The promise of employees has always been that you’d have more hassles. More headaches. More to manage. My experience has been the opposite.
The first 24 months after your first invoice will be tough.
Your business doesn’t start when you put up a website, a blog post, or an advertisement against your content. Your business starts when you issue an invoice. Get there as fast as possible. From the moment you issue that first invoice, it’s very possible you’ll feel like it’ll be impossible to make a living from your shitty little product line or fleet of websites.
For months during our first 2 years I was scouting out other opportunities. No way, I thought, were we ever going to make any money. In business, 24 months isn’t a lot of time. But in my mind, when I was working all day long and stressing out about bills, it was tough to keep that in perspective.
I think the best defense against burning out in this case is not minding being broke and sticking to your mission. (In my case that was to run my own company). Minding being broke is probably the #1 reason people pack up the tent and get a job.
Networking is a multiplier.
If you’ve got nothing (0), there is no multiplier that helps. Even meeting Donald Trump won’t lead to anything if you don’t have a business under your belt. We often talk about the concept of ‘getting to the table.’ The path to the table is paved with the work, and the way to consistently get invited there is through the work. The most surefire way to have a great network is to do great work. So ditch the networking events, and stay in and build something people want to hear about over a few cocktails.
It’s not an interesting source of income until you can hire somebody to develop it.
I love the metaphor of ‘conversations’ for business. If your ebook business, or other ‘passive income’ generating site/application, etc doesn’t have somebody interacting with market forces, making adjustments, launching tweaks, putting out new content etc, your income will slowly die. Yeah that sounds right. I think I can say that again. Your income will die. That’s why the ‘passive’ income holy grail for me is finding online businesses that make enough cash flow to put somebody in charge of them. The good news is that somebody smart, flexible, and passionate about online business might only cost you $1000 bucks a month.
Don’t start a software company if you don’t develop software.
Make an exception at your own risk.
Way back in 2007, I read “Getting Real” by the guys at 37 Signals and thought I’ve got a great software idea. 20K+ later I had a huge bundle of shit software and a not-so-happy investor. I was a competent manufacturer trying to start a software company. Worse, I didn’t even have the basic sense to start learning the software language my entire company would be founded on. I was smart enough to not throw any more good money after bad. After the 20K debacle, I closed up shop and started a manufacturing business.
Your accountant does not know about offshore entities.
If you haven’t talked to an accountant lately, you should. It’s cheaper than you think (couple hundred bucks a month) and it’s a wonderful exercise to talk to a third party about your finances.
Unfortunately for us traveling types, your local accountant probably won’t know anything about opportunities to start offshore companies or trusts. They’ll probably even dissuade you from seeking international diversification. My accountant is a really smart guy, but basically clams up when I ask a simple question like “should I be working to develop some of these business entities in other countries?”
A few reasons seem clear: 1) they’d lose any business clients take offshore and 2) they could get themselves in hot water by suggesting stuff that violates rules. One of the key roles of your accountant is to ensure your financial reporting complies with the law. Since there is still a lot of legal overlap and grey area when you start to consider overseas incoproations, international diversification is more about interpretation and creativity than reporting and compliance.
If your local accountant knows nothing about offshore stuff, who does? In my experience, pretty much only people who have offshore stuff going on themselves. That’s a relatively small group of people who aren’t exactly available regularly for free consulting. My advice is to experiment with this stuff and have some fun with it. It’s a lot of fun and as long as you never hide a source of income from the IRS (which is a crime), you aren’t putting your business at risk.
Your logo does not matter.
Back in the day Ian and I used to run off and get a logo developed the moment we had a new business concept. Now we even have a full time designer to indulge our logo dalliances. Having sweet logos is cool, but I can assure you, it doesn’t fucking matter. Also, you can change your logo anytime. Nobody cares.
Money is a bad for motivation, but great for measuring and setting perspectives.
You might have heard that when you offer cash as a reward for intellectual tasks, performance decreases. It’s also good taste for entrepreneurs to say “I don’t care about the money.” I think that’s the right instinct. Although Ian and I are aggressive and consistent about setting clear revenue goals, it isn’t really the money that drives us day to day. Charging for stuff is probably the best way to figure out if people care about what you are doing, but it’s no reason to wake up in the morning.
This week we set a revenue goal for 2012. The number helps our organization measure overall health, impact, and growth– but the primary impact is in expanding our perpectives. If last year I wrote as a person who runs a million dollar business, what would it look like to write as somebody who is doubling that? How does such a person think differently? If I’m the sales manager in such an organization, what do my responsibilities look like this year if the total volume of orders doubles?
Cash behaves like water.
The reason they call cash “liquid” is that it’ll seep out the cracks. Business money doesn’t work like the money in your wallet. It flows around from customers, employees, services– you name it. If you want to keep cash in your business, you’ll need to define exactly how it’s going to be earned. I still don’t really understand this stuff. I know this though– if you don’t define how much cash you plan to have at the end of the month, chances are, it’ll find it’s way into some crack (or “investment”) you didn’t know about.
Buy an Apple computer. It won’t take you long to learn the software.
Unless you are neck deep in HUGE excel spreadsheets or playing some massive online multi-player game thing (you aren’t), you should get a Mac. Try one of those slick Macbook airs. Both the OS and hardware are significantly better than the PC experience. You spent a huge percentage of your waking hours on a computer, and you should stop messing around with subpar stuff. You’ll learn mac software in less than an hour.
Your niche isn’t a niche. It’s a freakin’ industry.
That thing you are calling a niche? It’s not a niche. It’s too big. It’s vague. It’s general. It won’t work.
Here’s the format:
[The specific problem I solve.] [The unique point of view I solve it from.]
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