When Friday Isn't Payday: A Complete Guide to Starting, Running, and Surviving in a Very Small Business
By Randy W. Kirk
Being your own boss will likely be the hardest thing you'll ever do in life. This is not meant to scare you, intimidate you, or even discourage you from trying. It's simply a fact.
Being the boss means making important decisions every day from less-than-complete information and experience-decisions that could destroy the business you've built and all that goes with it. You alone can make these decisions, regardless of the input you might get from employees, partners, spouses, or outside professionals. When all is said and done, it's up to you, and you'll harvest the fruits of your decisions ... sweet or bitter. This is why we say, "It's lonely at the top."
If you have a friend or relative who owns her own business, she's probably bored you stiff with complaints about the hours she must work, her cash problems, or the loss of a major customer. There's a tendency to see her problems as overstated. Because you have a working acquaintance with hiring, firing, pricing, collections, and lawsuits in your current business, you believe that you have an insight into how tough it really is. You don't.
If you run out of cash at home, you borrow twenty or fifty dollars from a coworker until Monday. If the crisis looms larger, you might tap your brother or dad for a thousand bucks until your tax refund comes in. When you run out of cash in a business, where do you go to make a fifteen-thousand-dollar payroll tomorrow morning? How do you come up with thirty thousand dollars to repay the bank today when failure to do so could mean the bank gets your business and your home?
When your favorite grocery store goes out of business, you drive a few extra blocks and shop somewhere else. When a supplier of one-of-a-kind merchandise closes, where do you find a new source to make up the 30 percent of your sales that that vendor's merchandise represented? What expenses or which personnel do you cut if you can't find a way to make up the lost sales?
When you make a decision to rent or buy your home, you sign a long-term document that means you have an obligation to pay some amount each month to stay there. If you try to get out of a rental agreement on an apartment, it might cost you a few months' rent. If you try to abandon a mortgage, it will rarely cost you more than your original down payment. When you rent a piece of commercial property, however, you may be signing a document that puts you on the hook for hundreds of thousands of dollars whether you succeed in your business or not.
As an employee you may have complained about the extra work on your desk when your assistant quit to move out of state. You faced this extra burden at least until you could find and train a replacement. Imagine the headaches you'd have if your right-hand person in a three-man shop left to open his own place down the street ... in competition with your fledgling enterprise.
Now you're sure this is meant to scare you off. Not at all. It's meant to suggest that just as the weak-kneed shouldn't try hang gliding, the weak-minded shouldn't go to medical school, and the weak-spirited should forget small business.
If you have the right stuff, nothing is more fun, more challenging, or more rewarding than being at the controls. There are times when your heart will be in your throat, and times when you'll feel as if you're carrying more than your shoulders can bear. However, there are few experiences in life as exciting as landing the biggest account in your field, or scratching out your first profitable year. There's real exhilaration in knowing that you're creating careers that are supporting families. It feels good to build something, even if it's just a hundred-thousand-dollar-a-year tax-preparation outlet with yourself and one employee.
The very first set of questions you should ask yourself is: "Am I willing to put up with sixty-to-eighty-hour weeks the first four or five years? Do I want to be on an emotional roller coaster for the rest of my career? Do I have the stomach for making several tough decisions every day that might affect not only my own investment, but the livelihood of employees and their families? Is my family ready to cut back financially if necessary?" Then there's a big one: "Am I mentally prepared for failure?"
Now is a really good time to stop. Go back. Reread the last paragraph and think about each question. Unless you can be honest with yourself regarding these questions, your continued reading of this book will be largely wasted. You may protest that you really won't know the answers until you've tried it, and no one could argue against you on that point. However, it's essential that you give the best answer you can, because it is a lead-pipe certainty that you'll find yourself in each one of those circumstances.
Let's take another look at that last one. Failure! You will fail. Even if your enterprise is a success (and you've certainly already seen the statistics on that), you'll endure many failures on the way to success. Even if you were to follow every idea and approach in this book to the letter, the varieties of circumstances facing a new enterprise are infinite. Business is a process of succeeding from one failure to the next.
Thus, a real measure of the potential of any individual who wants to make it in business boils down to how that person handles failure. Examine yourself in your present endeavors. Do you pick yourself right up after an expensive mistake and keep on keeping on? If the customer says no to your sales pitch, do you still pick up the phone and call the next prospect?
When you work for someone else, you may be able to go into a slump for a few days after a major letdown. If you're on commission, it may affect your income that month. However, unless your sales manager is extra tough, you probably won't see any lasting consequence of being "off' for a few days.
When you own the store, you have no such luxury. If anything, you have to be ready to work harder and smarter after a failure than before. Think hard about this. Don't let your ego get in the way of an honest evaluation. Do you have the mental and emotional toughness to get back up on the horse immediately after you've been thrown and put the spurs in deep?
Next let's consider the issue of work habits: Don't believe for a minute that you're going to be successful working forty-hour weeks. For the first few years, expect to spend almost every waking hour either working at a specific task related to your enterprise, or at least thinking about it.
We're not just talking here about whether you have the stamina to put in long hours. The issue is whether you have the willingness to put everything and everybody else on hold until you have the ship afloat. Your spouse and children will be the ones most directly affected, but it will also take a toll on your friends, other relatives, sporting interests, hobbies, and, of course, your TV habits. When you first start out, you'll even have to give up vacations. Not until your company is big enough for you to turn things over to a trusted second-in-command will you be able to afford the luxury of more than a long weekend.
Doubtless, some of you are skeptical. "C'mon," you're saying. "I agree with your premise that I'm not trying to be the next Microsoft. I just want a nice little business that nets me a cool hundred grand a year. Surely I can do that in forty or fifty hours per week and not bring my problems home to the bedroom."
No. No. And no. It just doesn't work that way. Whether you're starting a future General Motors or an ice cream parlor, the first several years are going to require your undivided attention if you have any hope of success. An associate of mine didn't buy my advice; he set up a retail business with the full intention of working nine to six with an hour lunch, five days a week. The company is still in operation today, although my friend now has a 75 percent partner. Worse than that, the business generated no take-home income for five years. One can only guess at the success that might have been attained with 25 percent more effort.
The next question would seem to be an obvious one, but so often this is the very issue that sinks the budding entrepreneur who otherwise has everything going for him. Are you a self-starter? An early riser? A go-getter? Three different questions? No, all three are the same.
Most people need management. They need someone to jump-start their motor when they have an off day, week, or year. They need a mentor to fill in the blanks of their knowledge and experience. They need a patient listener to bounce ideas off of or to complain to. They need a team to help with the brainstorming when the idea well runs dry.
The newly self-employed can kiss all those luxuries good-bye. Your spouse may or may not want to fill some of those roles. Ironically, the spouses who are the most capable of providing help in these areas are usually married to folks who might accept that advice and help from anyone but their husband or wife.
Parents, friends, and old business associates might be able to help with ideas during a crisis. There are many kinds of associations you can join that will broaden your knowledge and provide networks of businesspeople similarly situated. The fact remains, however, that you're going to have to do 90 percent of the hard stuff on your own.
There will be mornings when you're certain that someone has put Super Glue in your bed. You'll try to convince yourself that it really doesn't matter whether you open the doors at 9:00 a.m. as dictated by the posted hours. No one is ever there that early anyway.
Try to picture yourself in a retail setting. You arrived at 8:30 a.m. It's now three in the afternoon and the door has yet to open except for the hourly trip you make to the sidewalk to see if the town is still populated. You've restocked the shelves. You've posted all the receipts. You've even taken out the broom and cleaned up the place. You know in your heart of hearts that you should now pick up the phone and find some excuse to call a few customers and offer them a good reason to come in. You consider in your mind a few ideas you've read in trade magazines for improving traffic flow. Unfortunately, selling over the phone and planning promotions are not your favorite thing to do. You have no real experience at either one, and you're nervous about trying your hand at them.
If you can see yourself in the picture above, think long and hard about going out on your own. You're going to have to do whatever it takes within the bounds of legality to make your business go when it ain't. If you prefer to be closed on Sunday, but you're not paying the rent, you have to be open on Sunday. If you're in a service business, you'd better join a few organizations like the Lions Club, the Chamber of Commerce, or LeTip even if you're not the joining type. Not only will you gain important information just from joining, but you'll have to be active if you're going to make contacts.
No matter what line you decide to pursue, you're going to have to sell. Many, if not most, new businesspeople don't like to sell, have no special gift for selling, and have absolutely no training in selling. Those of you who fit the above description are now arguing out loud with the idea that you must sell your product or service. You're absolutely convinced that your idea is so amazing, and that your future customers are so needful of your stuff, that they'll beat a path to your door based on a three-line ad in the phone book.
You couldn't be more wrong! Nobody ever has-or will in the future-beat the door down to buy any legal substance. If ever there was a product that amazing, the competition would spring up within days to cut short this perfect opportunity.
There are many ideas in this book that will help you immensely if you follow the broad precepts. On the other hand, there are a few "golden nuggets" that are so important, they really do represent the difference between a big success and a bigger failure. Here's the first golden nugget. Learn to sell.
Selling is a profession. In its finest form it is at least as difficult as doctoring, lawyering, or pastoring. There is no profession that requires more continuing education. The truly great salespeople are constantly learning new approaches and reviewing the old standards.
You needn't be suave, charming, or brilliant to be a good sales rep any more than those traits benefit a CPA or an engineer. What you need is a good grounding in the specific skills that make for sales success. There are hundreds of books on the subject. Read them. Reread them. Keep them handy. Be prepared to read them again during the first few months after opening. Nothing happens in business until something is sold.
Let's review what we've covered thus far. Being your own boss is hard. You'll work harder than you ever have before. You'll need to work smarter than you did as an employee. You'll be the president in charge of everything-including selling. You'll be all alone at the very moment when you need a big, experienced team. You'll very likely have to reduce your standard of living, and you may forget what some of your family and friends look like. The question is not "Do I want to attempt this life?" Rather, the question you should ask yourself (with the hope that you'll give yourself a very honest answer) is "Can I do it? Do I have the mental and emotional tools necessary to handle running a very small business?"