Recommendations for New Business Owners

[KristineS]

I still kick around the idea of going out on my own every once in a while.

For those of you who have started your own business, what advice or recommendations would you give to someone just starting out? What would you tell him or her to do and what would you advise they avoid?

[orion_joel]

If you are thinking of starting the business from home, try and make sure that you have something that will get you out and about most days. Be it seeing clients, or meeting a friend for coffee even, it does not have to be something to do with the business. But it is the number one thing that i found was it really does become tedious and boring spending all of your time in your house. Even more so if by yourself all the time, while you may be on forums like this or talking to clients on the phone there is nothing like real contact with other people.

The second thing is again if you are starting from home, don't let yourself start thinking that you work from home is any sort of road block. While there re the odd people that want to be able to visit your office, the far majority often are happy with you coming to them. You can mask your home phone number with either a second line, or a toll free number or combination. Additionally you can get a mail box for mail. Above this nobody would have any idea you are working from home unless you let them know, or Video phone's suddenly take over as the only way to make phone calls.

[KristineS]

Joel, your first point is something I've thought about a lot. I do enjoy (most days) the social interaction of a workplace. I would have to find other ways to connect with people if I didn't work outside my house.

[cbscreative]

We could have a long list with this question, but let me start with this. We seem to be referring specifically to a home based business here, so you may want to start part time and work your way up.

You also want to be sure that when you go full time, you have a minimum of 3-6 months income set aside. Business goes in cycles, especially in the beginning. You want to be absolutely sure you can survive with little or no income during the lean times. Keep in mind that you can be very busy with work, but waiting for the checks to arrive while being busy. When you use those reserves, make it a priority to replentish them ASAP so you're ready for the next lean season.

This not only keeps you prepared for the lean times, there is a psychological benefit. It keeps your confidence higher so you won't take jobs just because you "need" to. I've learned that some clients just aren't a good fit, so you don't want to ever be desparate for work.

[KristineS]

Yeah, having funds in reserve is a definite must for me. I don't need the stress of worrying about being able to pay the bills.

[Blessed]

Let's see...

Use a PO Box for mail, a separate phone number (either an additional land-line or a cell phone) for your business calls, have a fax machine, have high-speed internet, set-up a separate bank account, keep good records, advertise, get out everyday and interact with real live people you can see and touch. Whatever you do make sure you stay in budget. Oh and definitely have 3-6 months household expenses set aside when you go full-time (or another income you can live on...)

Also do your homework, know who your competition is - both direct and indirect competition, know their prices, their advertising strategies and their market and find your niche. Then jump in with both feet and give it a minimum of a year to work. Two years is better - if you aren't making it at all at the end of a year quit, if you are but really need to be doing better give it another year before you quit.

I've seen lots of new business owners loose more than just their business when their business failed - because they never took into consideration the fact that it just might not work. You need to have an exit plan and be willing to use it. Realizing that if your business fails it means that your business failed, not that you are a failure.

OK, I'm sure there is more... but that's my experience and I'd better get off of here and get back to work... :)

[KristineS]

Knowing when to get out is a good point. I know people who've practically lost everything because they didn't know when to say when. You have to know in your own mind when you're going to throw in the towel, and then you have to do it when you reach that point.

[cbscreative]

Everyone involved in this discussion already knows this, but for the benefit of other readers who may drop by, I will add this. Stay away form quick, easy Work At Home "oppotunities" that promise you'll make lots of money with little or no effort. If they're selling you an ebook that tells you everything you need to know to become the next Internet millionaire, it's pretty much guaranteed to be a scam.

Like Blessed said, do your homework. Research, research, and then research some more. You'll discover either that you have a good opportunity, that it's not as good as you thought, or that it's a scam. You've got nothing to lose by going in well informed.

[KristineS]

I'd second what you said Steve. Get rich quick doesn't generally make anyone anything but poor. Slow and steady wins the race and it can't hurt to take time to think things over.

[orion_joel]

I third that opinion Steve and Kristine. Maybe a quick piece to add about the funds you set aside is that it could be worth working out what it costs you to live for a month and then add a 20-25% premium on to that. The reasoning behind this is that whe you are spending more time at home while there is some things that you will save money on eg, travel to work(which may appear to be a saving but can cost something still visiting clients and such). There are some things that will end up costing you more money, such as heating(depending on where you live and the climate) more power running a computer all day rather then a couple of hours at night.

This is probably more important if you are working on a minimum 3 month reserve, then something longer.

[KristineS]

Joel, that's a really good point. I hadn't thought of that, but you're right, if I were home all the time I would use more power so my costs would go up for that. I wonder if it would all even out though. You're home more, but you probably drive less so you use less gas, maybe the spending would just shift from one column to another.

[Blessed]

I used to commute 75 miles a day (round trip) plus going to the grocery store and etc... Since I've been working from home our electricity bill has gone up but not as much as gas was costing me. We heat with wood so me being home all day has decreased our gas bill because the furnace ran even less than normal. Also the wear and tear on my vehicle has really decreased so I agree that Joel makes some good points - but you have to look at what you are doing currently too... If you are only driving 5 miles to work it might end up "costing" you more to stay home. This is especially true if you have to start buying your own health insurance. We get health insurance from my husbands job so that hasn't been an issue. I know a lot of other self-employed people though and health insurance is a big expense for them...

must remind myself, I'm not on plurk... I can make paragraphs... :)

[Spider]

I still kick around the idea of going out on my own every once in a while.
For those of you who have started your own business, what advice or recommendations would you give to someone just starting out? What would you tell him or her to do and what would you advise they avoid?In a nutshell - use your own money and don't borrow from the bank or other financial institution to start your business.

Going from employed to business owner, you will already be exchanging one boss for several (your customers.) Don't add what will be the most demanding of all bosses - the bank. Use the bank as a servant, as an employee, never as a boss.

[KristineS]

Health insurance is a big issue for me, and I think one of the primary obstacles to going out on my own. I know it would be expensive, especially since I have pre existing conditions. So that's something I'd have to investigate very closely.

[KristineS]

Frederick, you make a good point. I would never borrow to start things off. I'm guessing what will happen is that I'll freelance for a bit, part time, and see how it goes. I can bank that money and save it for whatever I decide to do next.

[Spider]

Depending on your business and your own personal attitude, appearing to be not working from home when you are, in fact, working from home, is starting your business on a falsehood. Don't do it!

If you are going to be ashamed of working from home, then rent an office or small retail space. Personally, I have no problem with people I deal with working from home - it's the old country doctor idea. But I do have a problem with them trying to make me feel they are a large corporation when their office is their spare bedroom! If I cannot trust them to tell me the truth in something so meanigless, how much can I trust them when it matters?!

[Spider]

As quick as you can, get past this concern for nickels and dimes -- it will cost more in electricity to run a computer at home -- I'll save gas by not having to commute 20 mles to work every day -- spend more on heating/cooling -- spend less on lunches.......

Focus instead on making money in your new business - so much money that you will soon be laughing at your penny-wise-pound-foolish concerns.

It's all a matter of attitude. If you plan on starting a nice little business - as most people do - that is what you will have, a nice little business. But if you think about starting a big business, you will plan accordingly and build yourself a *big* business.

[KarenB]

Patience was one of the biggest challenges I faced when starting Office Support 911. Two years later, I am extremely glad that I remained committed to my dream, but it wasn't easy in the beginning. In fact, it became downright scary at times.

What I have learned so far is:


Word-of-mouth recommendations are worth far more than their weight in gold.
Quality work for quality people will likely result in quality referrals.

Excellence will never go out of style--strive for this always. Your clients will appreciate you and may reward you in ways that you never dreamed possible.

[Spider]

...Excellence will never go out of style--strive for this always. Your clients will appreciate you and may reward you in ways that you never dreamed possible. Loved that, Karen! But in addition to doing it for clients and for the rewards, do it for yourself.

Doing excellent work for no other purpose than because you are an excellent person is very gratifying.

[KristineS]

Patience was one of the biggest challenges I faced when starting Office Support 911. Two years later, I am extremely glad that I remained committed to my dream, but it wasn't easy in the beginning. In fact, it became downright scary at times.

What I have learned so far is:


Word-of-mouth recommendations are worth far more than their weight in gold.
Quality work for quality people will likely result in quality referrals.

Excellence will never go out of style--strive for this always. Your clients will appreciate you and may reward you in ways that you never dreamed possible.

Patience has never been one of my virtues Karen, so you have a good point there.

I think everything you've said is right on target.

[cbscreative]

I like your point about excellence, Karen. You may not win everyone because some shop price alone, but you will definitely gain a loyal following. And yes, patience is very important.

[Ad-Vice_Man]

A couple Suggestions for starting out..

1. Have a solid business plan and have it reviewed by someone already in business. Be it a trusted friend, and SBA/SCORE type program or Even a Consultant (if you have more cash than time). this is a living breathing document that allows you to gain a clear picture of how you're going to operate and what financial realities exist for your business

2. Interview and select a primary care CPA and Attorney... these are people you'll want to know BEFORE there's a problem.

3. Find and set up a seperate Free/Low Fee Business Checking account with a Credit Union or Bank. MANY financial institutions are now offering "free" business checking... there is no need to pay $50-$100 a month for a commercial checking account.

4. Register with the state and the Feds... as a sole proprietor you COULD use your Social for taxing/reporting purposes, but who wants their SS# floating around out there. Getting a fed Tax ID is FREE and Fast from the IRS you can do in online in less than 5 minutes.

[KristineS]

Good recommendations Ad-vice Man. I especially like the one about a separate checking account. I'd guess that some people would mix their funds and run into problems in the future.

[llcollins82]

Wow, you all have great tips. These are fantastic for anyone starting their own business. I especially like hearing that you need to have 3-6 months expenses set aside, because sometimes i think people dont think about that stuff.

fantastic, everyone.

[cbscreative]

I thought of another one to add to this thread. Personally, I think it is better to get a little from a lot of places than a lot from only a few places.

Here's the principle so I can illustrate what I mean. Many business owners understandably want to get big accounts. That can be good, but it can also be bad. If you rely too heavily on one source, losing that source could be devastating to your business. I have seen this happen to self employed people and other businesses.

I look at from the perspective of why I am in business for myself instead of having a job. A large account could easily become like a job with all or most of your income from one source. We all know that job security is an illusion. I am not saying I would turn down a large client, but in my case, I don't pursue them, which is worth considering if you are starting out in business and looking at how you want to build your business.

Also keep in mind that the competition to get large customers is usually more fierce and cut throat, and those customers often enjoy lording their power. Large customers are also highly prone to "restructuring" or other changes where they stop buying or change vendors for any number of reasons.

By having several "small" clients, I do not have the worries of losing a large stream of income. No one client has the ability to make or break my company. No one can be like a tyrannical boss where I stay simply because I fear losing.

Sure, getting a large account can jump start a business, but slow and steady growth is much healthier. It's not the fast track, but once you get there it's easier to keep growing.