I believe that mistakes and failures are essential to eventual success. I also believe that there are some lessons that can’t easily be taught, and need to be learned through experience. Having run my own business since college, I’ve encountered a wide variety of challenges, and have made my share of mistakes. I was also able to avoid certain pitfalls thanks to the valuable resources that can be found online for young entrepreneurs, and through essential mentors in my own life.
It’s clear that I’m still at the beginning of what is bound to be a lifelong journey of learning, iterating, and hopefully growing, from the myriad of challenges and triumphs that are inherent to any growing business.
Looking back over the past 8 years, I’d like to share some of the essential lessons I’ve learned through trial and error.
Hiring friends and family because you like them or feel obligated
As a new business owner, hiring can be an enormous challenge. As a young person (especially if you’re still well integrated with college friends or close with your family), it can be tempting to hire those closest to you. Maybe you feel more secure hiring somebody you already know and trust. Or maybe they’re in need of a job, and you want to offer a solution, or perhaps you simply want to mix business with pleasure, believing that it will lead to a more fun working environment.
The truth is, hiring friends and family can be like setting up a minefield in your office. Efficient businesses rely on defined roles and a clear understanding of the boundaries of responsibility. When you involve people within your business with whom you have more complex personal relationships, it’s incredibly easy for the lines to become blurry between employee and boss.
Additionally, the pressure of running a young business is very likely to lead to high stress situations that can test the boundaries of any relationship. The closer an interpersonal relationship is, the more leeway each party is likely to feel in expressing their feelings and fears. As a result, blowouts can be common, with blame and anger exploding in ways that can destroy friendships forever.
Above all else, turning to your circle of friends when it comes time to expand your business precludes you from seeing the hiring process as a search for the best possible candidate. Each new hire is a major investment, and the productivity, attitude, and overall contribution of each employee can make or break your success. Hire for what your business requires, and strive to find the absolute best candidate for those needs.
Not hiring a good lawyer
Especially for startups and brand new businesses, issues such as legal counsel and business insurance can seem like secondary needs, or even luxuries. The truth is that an ounce of prevention is worth a pound of cure.
Finding and keeping a lawyer experienced with the industry you serve can be invaluable – not just when you face a crisis, but as an advisor and protector of your business. By hiring an attorney, you are essentially creating a barrier between yourself and a variety of potential dilemmas that can arise simply from being naive.
By setting up legal protections for your business, you are putting in place preventative measures that could save your business in the future, or at the very least, save you time, money, and a great deal of worry and stress.
Not hiring an even better accountant
As a new business owner, it can be tempting to manage all the finances, bookkeeping, and tax preparation yourself. This is another area where it is unwise to cut corners in an effort to save money. A good accountant is worth his or her weight in gold.
Understanding the financial state of your business, as well as your upcoming tax burden and other fiscal responsibilities is crucial for making decisions about how your business grows. Far too often, business owners neglect or shy away from knowing the true financial state of their company – or find it too difficult to properly account for fluctuating monthly expenses and income.
Losing sight of the numbers
Hiring an accountant is a crucial step because it helps keep you accountable for the financial health of your business. As a business owner, losing sight of the financial state of your company can be disastrous.
Having an outdated or incomplete view of your company’s financial position means that you cannot make informed decisions about growth and change. It also means that you won’t be able to spot emergency situations that call for swift and precise action. Without a clear picture of where you stand financially, you can’t plan properly for the future, or make projections about the trajectory of your growth or decline.
Thinking that your business is secure
A major emotional hurdle of running your own business is the fear associated with failure and decline. As a coping mechanism, it’s common for business owners to paint a less than accurate picture of the security of their current position, or the viability of their business in the long term.
As a business owner, it’s your job to look objectively and as accurately as possible, trying to discover key areas that need improvement, or put your business at risk over time. Landing a big, new client or closing a big, new deal can create a feeling of security company wide, which may have no real bearing on the long term viability of what you’ve created.
Producing systems that are scalable, maintainable, reliable, and trackable are necessary for building security within your company – but there will also always be a degree of uncertainty and risk that comes along with owning your own business. Managing risk scrupulously and identifying potential dangers and obstacles in an accurate and level headed way should be the goal.
Making unsound decisions when you’re emotional
Paradoxically, the times in business where a clear head is needed most are also the times that can feel the most emotionally overwhelming. Some of the heaviest and most important decisions you’ll need to make in growing your company often involve multi-faceted, complex inputs, and a great deal of ambiguity.
When we’re overwhelmed by our emotions, our rational side is subdued and diminished. We’re unable to see solutions to problems and are likely to react or overreact in a knee jerk fashion. As difficult as it may be, sitting with the uncomfortable weight of a big decision is critical. Give yourself time to absorb the gravity of your situation, and arrive at a sound decision once you’ve had time to calm down and assess your options from a reasonable, and well thought out point of view.
Thinking that working more hours equals more success (law of diminishing returns)
As a new business owner, there are often so many things to be done that you feel paralyzed. As a result, completing the simplest and most mundane of tasks can decrease stress levels and make you feel like you’re moving forward. The truth, however, is that wasting time on the wrong things, or working excessive hours without being effective can be extremely harmful to your personal wellness and also to the health of your business.
Becoming cognizant of your own frame of mind, and evaluating your ability to be productive at different points in the day is essential for optimizing your efficiency and harnessing your potential. Working longer hours can make you feel accomplished, but long, hard hours don’t necessarily correlate with increased success. Finding opportunities to recharge, coupled with a concerted effort to work diligently during your most productive hours is a key to finding balance and growth without burnout.
Working in your business, instead of on your business
One of the most important books I’ve read is Michael Gerber’s E-Myth. At its heart, E-Myth teaches us that businesses become successful when you’re able to step out of the technician’s role. In other words, being the core producer, the person doing the actual work of the business, precludes you from the tasks that can drive your business forward.
There is a fundamental difference between working in your business, as the technician, and working on your business. This paradigm shift allows you to begin seeing your business as something that works for you, and as something that can and should be able to run without you at the core.
Failing to market yourself because you’re too busy helping your clients
This pitfall is an extension of the lessons E-Myth teaches us. A core responsibility of the business owner is to drive the growth of the business through new sales and partnerships. This growth is driven by your ability to properly market your company, and through a directed and driven effort to create awareness for your brand and its differentiation.
If the cobbler’s children have no shoes, the cobbler has neglected to recognize the importance of creating stability at home. A stable business is efficient not only in the tasks that make the company money, but also in the tasks that drive its growth and visibility.
Not celebrating wins, even if they’re initially small
Creating a profitable business can be incredibly rewarding, but eventual success is more often than not, the culmination of many small wins. As cliché as it may sound, it’s really the journey that is ultimately the most rewarding part of owning a business.
Celebrating every win is key to enjoying the journey. Overcoming new challenges, landing new clients, or closing new sales are all opportunities to celebrate your growth. Celebrating company wide achievements, as well as the personal achievements of your employees and self are one of the most essential, yet easily overlooked tools for increasing morale and boosting productivity. Concentrating on the positives and emphasizing progress can drastically change the mood and perception of the company, from the inside out.
Not encouraging time off
Taking time off to recharge your batteries can make you exponentially more productive when you return to work. It also has the added benefit of giving you some perspective on your work and daily schedule. When you’re fully entrenched in the day-to-day of your business, it can be extremely hard to extract yourself and obtain the birds eye perspective that is necessary for a business owner to possess.
Accept that your time is precious, and your mental energy as a resource that can be depleted. Utilize time off as a way of renewing that cherished resource, enabling you to work smarter and more effectively. And remember, your employees are in the same need of rejuvenation, especially during stressful times. It’s not possible to tap water from a stone – attempting to mine resources from your employees or self when you’re tapped out is an exercise in futility, and dangerous to future growth.