5 lessons learned starting a new business
By Brian Leadbetter
Starting a new business is daunting. To go from an abstract idea of “Hey, I think that would be great” to putting concrete pieces of a complex puzzle together can be a bit overwhelming. It takes time, more money than you think, and you’ll have some setbacks along the way – likely lots of setbacks along the way. But, that’s okay.
1. Don’t be afraid to fail
If job certainty is your motivator in starting a small business, you’ve likely chosen the wrong path for you. These are slightly outdated stats, but it’s generally understood that 50% of new businesses fail within five years, with 25% failing within year one. The odds of success are better than winning the lottery or unfortunately getting hit by lightning or attacked by a shark, but guaranteed success certainly isn’t a sure thing.
Fear of failure is absolutely normal. It’s what you do with that fear that counts. If you channel it toward positive outcomes and setting yourself up for success in having a strong business and marketing plan, or a defined business development and networking approach, your roadmap is bound to be a bit less bumpy.
2. Double your start-up budget
Starting a new business cost real money. A Kauffman Foundation study puts the average cost of starting a new business (or start-up) at $30,000. The good news is that these costs are less if you’re starting a micro-business or home-based business. But, eventually with all new businesses, dollars go from being ornamental notes on a spread sheet to leaving your bank account in a very real way.
My advice is to double your start-up budget. There are hidden costs in everything you’ll do. If you’re incorporating a business in Canada, you can do so federally or provincially, or extra-provincially (if you’re doing business in multiple provinces). Beyond the direct cost to incorporate or register a business (and the annual cost to renew said business registration) I’d highly recommend using a lawyer to manage the incorporation process. Firstly, this is what they do every day and they know what they’re doing, and secondly, the initial cost for legal fees will likely save you in the long run if you’ve made any errors going it alone.
Business basics like a company website come with anticipated costs of web development and design, but you also have to factor in web hosting fees, domain registration and regular web maintenance. These costs sneak up on you if you haven’t budgeted properly.
Of all the places you can cheap out, don’t do it on your business accounting. Business accounting platforms like QuickBooks or FreshBooks are a god send for small business, and allow you to do literally everything (estimates, invoicing, payments, time tracking, banking reconciliation). My advice is to make this nominal monthly investment, and supplement with a bookkeeper or accountant to manage quarterly and annual tax filings.
3. Partner with like-minded businesses
Partnering with smart, creative and dynamic people (and their businesses) is easily one of my favourite things as a small business owner. You get to both collaborate on fun client projects and learn new things from experts in their field as you go. Talk about win-win.
In the public relations consulting space, I’ve been fortunate to collaborate with start-up brand builders Salt & Pepper Media Inc., video story-telling pioneers Gruvpix, and visual identity and graphic design visionaries zdesign.
Don’t feel that you’re bound by geography in terms of who you collaborate or partner with. I’m not. We’re collaborating with the best and brightest from coast to coast in Canada, in the US and around the world. You’ll benefit from different perspectives, and your clients will too.
4. Some doors close, others will open
When starting a new business venture, it’s common to call upon your existing network of contacts – friends, former work colleagues, business acquaintances, or contacts on those many business cards you collected over the years.
Sure, you’ll generate some business from your existing network, but don’t be worried if your inbox isn’t flooded or phone isn’t ringing off the hook (an homage to when phones had hooks). You’re as likely to generate leads and a client base from new contacts as you are from existing contacts. Don’t let no, not right now, or false starts with your existing business network get you down. You’ll find over time that when one door closes, another will open. New clients are attracted to what you bring, not who you know or once knew.
5. Try new things, you’ll like it
If you’re like me and your corporate or government world was 90% meetings or meeting about other meetings, you’ll likely find that running your own business provides a level of freedom that is equal parts liberating and scary as hell. You become an [insert name here] of all trades. From accounting, client billing, and tax law to web maintenance and digital advertising, you get to dabble in all sorts of new fields. My view is to embrace it. If you’ve been in executive-level roles you get to forego the managing and focus on the doing.
I’m the first to admit that in retrospect, what I didn’t know about starting a business far exceeded what I did know at the beginning. And, that is life. We learn, we grow, we fail and try again. It’s the trying again that will set you up for success.