OT - MGoAdvice - Starting own business

Dream Big - Kevin from The Office

I was co-owner of a business for many years.  It was both the most rewarding and most frustrating thing I've done to date (since sold out).  As others have mentioned don't hire friends OR relatives.  Find the absolute best CPA you can (one who knows business, accounting, tax, finance, law, banking, and state funding programs) and get to know them really well. Try to avoid the triangle of hell (when your customers, employees, and suppliers are all trying to screw you at any given time).

but make sure they use proper grammar and appropriate diction at all times

Hell, call John Engler up at MSU.

I understand they have a bit of a need for brand polishing at the moment.

Prepare to ask yourself why you're doing this many times.

Make sure you are in it for the long haul. But, if you're not, maybe being your own boss isn't for you. Its not for everyone. Its not a risk-free proposition.

If you hit the point where you're making money, increase your effort. Don't relax.

If you've claimed it on a tax return, assume you will be asked to provide proof of it. This can be VERY uncomfortable if you don't have a good record keeping system from the start.

Don't be Dave Brandon.

I have failed at many businesses, and been successful at a few. Enough to more than make up for the failures.First business was a failure, but I couldn’t let go and admit I needed to shut down. Threw away a lot of money and time with legal fees, debt restructuring and accounting fees when I should have shut the damn things down and moved on. Bankruptcy court is your ally. Use it if you must and understand the consequences if you do. Most of my successful business colleagues failed more often than not. But they get back up soon after and try again. Their universal advice to me was know when something is not working and change it, or let it go. It’s tough if you have family, but life is about taking risks.

When I began my own business I had to work nights just to make sure I could survive. However, business has doubled almost every year and now I am solely focused on expanding. My biggest piece of advice is to make sure you take extreme pride in your work, know your market, and make sure you're getting word of mouth type advertisement. Good luck! Being your own boss is a beautiful thing

Is there something you can do that sets you apart from others doing your services? Maybe something that is hot or leading edge? It may be less of a money maker as a way to make you look different that everyone else.

Do you have some indusry expertise or background. Figure out what sets you apart and make that part of your initial pitch. 

As others have said - always have the perspective of the client - what's in it for them? Why you? Why now? You will lose more business to indecision than competitors.

Try to find customers before they realize thay have a need - once they have recognized the need you will be one on the dozens of people they will be considering/shopping. If you can get there first and establish credibility - maybe freemium to start, there is less competition.

Always
Be
Closing

it will scare people.

now for the serious stuff:  do incorporate.  if you don't think your 2-4 biggest clients will go with you then you may not be ready to make the jump to light speed - and the part time deal might be worth a go to see what you can generate on the side.  use social media like a big dog. 

really sit down and think about financing.  how much to keep your house/family going?  does mrs. dennis make enough doe to keep you guys afloat for a while?  where can you cut debt and expenses? 

finally, as to your present job i would give you this advice:  leave 'em laughing.   and by that i mean when its time to go make sure you are the most gracious and thoughtful employee they ever had in that context   i love my old partners and still send them business, and they to me, too.  thats the way its supposed to work.  doesn't always, but keep that goal in mind.   

While I’m not an entrepreneur, my Dad was one and he ultimately became very successful, having sold his company a few years ago and being able to retire before he even hit 60. Some things that I picked up from him along the way:

Never, EVER hire your friends. Or relatives. Just don’t do it. I have siblings in the same line of work as my Dad (accounting), and he made it clear they would never get a job working for him. The minute something goes wrong at the office (and it will), you really don’t want those problems spilling into your personal life as well.

Your employees are not your friends. Same paradigm works in parenting. Saw too many of my grade school friends who had parents who tried to be their friends instead of being parents. Those kids, by and large, grew up to be entitled douchebags. Your employees obviously deserve your respect, but they work for you. Too often employees are of the “if you give a mouse a cookie” variety. They’ll keep pushing little by little to see what they can get away with unless you lay down expectations and hold them accountable from Day 1.

Hope you’re prepared not to make much money in the beginning. My Dad always told me that when he and his partners were starting out, they made sure that they were the last ones to be paid. All their employees got paid first, and the partners split up whatever was left.

Lastly, remember to have fun. This is your business and make sure it’s something you’re passionate about. If it’s a job where you can work 80 hours a week, take home a fraction of what you’re currently paid (at the start) and go home happy, you’re in the zone. I envy you for taking the plunge, as I don’t have the guts. But mostly because I know that what I’d want to open a business for (dog shelters) will not provide a secure financial future.

I must have hit the button on my device twice. I apologize.

I started a law practice, and after quite a while in law, started a company in the music business. Both did fine. Back when I was a lawyer, I told folks to be patient. It takes about 5 years to have even a potentially successful business reach the point where it’s (IMHO) truly stable. As everyone else has said, work hard. One thing I used to do was set goals for the business on a weekly basis. I constantly evaluated costs, cash flow, financing, overhead. I also made reasonable projections in order to set those goals and make business decisions, such as expanding, relocating, hiring, etc. Finally, the last bit of advice is don’t lie to yourself. If it’s not going well, don’t think it will eventually right itself if you just keep doing what you’ve been doing. Fix the problem, or shut down the business. If you go off blindly into the night, you can end up with very substantial losses. So the minute you see things objectively, without the rose colored glasses, the better off you’ll be. Also, sales are your lifeline no matter what line of work you’re in. No clients, or no customers, and you’re out of business even if you’re very good at what you do. If you’re more of a creator and aren’t into sales - it is, after all, a specialty - find someone who is and bring them aboard. Good salespeople are worth their weight in gold. By the way, never say never. I hired my brother in my law practice, and merged firms with my best friend. Things worked out fantastically well.

Doesn't have to be a full fledged plan, model or anything. Just start now. Get the ball rolling and build momentum. The details will sort themselves out yet your first job or contract will inject life into your vision and carry you to new heights.

Creating a business model isn't hard. Having an idea isn't hard. Starting is hard. That's where the wheat separates from the chaff.

Lots of good advice on here!  Especially the one about making sure you are well capitalized.

All I can add:  make sure Mrs. Dennis is fully aware and on board.  I started my own business 9 years ago, and Mrs. k1400's support has been essential throughout.  It's hard to focus on the business if you're having to fight battles at home, especially if going through some lean times.

Maybe not the OP, but this is helpful to anyone considering a startup based on a new product or service.

https://www.udacity.com/course/how-to-build-a-startup--ep245

I enjoyed reading all the posts. I've started several companies including one that handled up to 14 full color publications a month and my last (prior to semi-retiring) handling about $1.5 billion in annual sales.

I quit my job as a newspaper reporter/columnist to venure out into the business world and frankly I did not know what a Chamber of Commerce was so I was totally unprepared. Fortunately today's startup guys have tons of information at their fingertips so use them. 

I always paid my staff first, my vendors second (particularly my printing associates who printed my magazines), any necessary office updates and finally myself. Seemd to work okay for me.

Anyway, for a Wolverne fan I'm available to offer FREE consultations. If interested please provide a way to communicate and I'll reachout  to you.

I'm excited for you.

 

 

 

I went out on my own in 2016 and it's scary af but totally worth it. Here is what I did / recommend.

I saved 6 months worth of living expenses and decided if I couldn't make money is 6 months, it probably wasn't going to work.

I spent two months networking and making partnerships trying to drum up work before making the jump. This resulted in getting a decent project in my first week of being on my own, which helped ease the income concern.

Don't sweat the lows. You will have very busy seasons and very slow season. Work your ass off during the busy season and take the time during the slow season to drum up more work and focus on things like updating your website, writing blog posts, etc. Stay the course. Don't get discouraged.

Build a reserve in a business checking account. Let that grow. Try to establish 6-12 months of business expenses (salary, cpa, etc) and keep it there. It will help with the slow seasons.

Hire a good CPA. Take 32% of every payment received and put it into a business savings account for taxes. Don't touch it and enjoy the distribution at the end of the year.

Work your ass off! You have complete control and nobody is stopping you but you.

While purely anecdotal, and I haven't collected stories from many other entrepreneurs, I also have some experiences to share. Considering my consultancy is a similarly functional agency as I expect your is, I have two points (plus a bonus because why not?): 1. Try to find, but don't force, a good partner that balances you. I couldn't have done it alone my first time around. Our first client, the largest bank in our region, told us bluntly that without both of us they wouldn't have hired us and if we don't both stay on, they won't retain us. Five years later they are still our best client. 2. Don't be afraid to take a big loss on your first contract. Even with a personal portfolio, you need the market to trust your new brand. Show them you can be trusted, but don't give any work away for free in an attempt to build your business. You need them to value the work and take you seriously, ie. get approval from superiors and get used to writing you a check. Oh, and value your loss against your normal pricing so you can eventually recoup it. And now your bonus, 3. Be known for something. In the beginning you've got to create a following. Don't be too far reaching and bold, but figure out the next big thing or master a product that is already mainstream and then repeat, rethink, repeat, rethink, repeat...

Maybe best to have a more in-depth conversation on this at the camping trip. Could also be good time to recruit future employees.

One blazing failure. One tottered along at break even until it was closed. One moderately successful that was sold. And one, the first that was very successful, was the basis of my career, and out lived all the others, and it was a consulting business.

The comments that you need a year in the bank are spot on. Good advice. But better advice is start your busness before you quit your job. Make the contacts outside your main job and build an oustide business. Develop a few satisfied clients who'll provide referrals and references. Plan on working north of 80 hours a week between your job and your business. Once you have that year in the bank, and you have your side business up and running, all the legal, financial, and basic marketing in place and it's generating no less that 40% of what you earn at your job. Then and only then launch on your own.

Or find a client whose business will pay you 18 months of your regular job. Cash flow is almost as good as money in the bank. Better in a way because you can borrow on your invoices and a big client can often give you leverage pursing new clients.

Bottom line. When you are starting out minimize cash flow risk. Get an income stream started before you jump. Be extremely frugal with your spending. Never stop seeking new business, no matter how busy you are. Good luck.