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10 Things Entrepreneurs Learn the Hard Way
The Age of the Entrepreneur
Welcome to the age of the entrepreneur, where it’s no longer uncommon to hear of people leaving their jobs to start companies of their own. What used to be considered bold and daring is now ordinary to most – unless you’re really making it. Lots of want-repreneurs start companies without bargaining for what creates staying power. They try to forge a path without a plan, and they end up being taken by surprise along the way.
Of course, there will always be unexpected pitfalls and hiccups, that’s all part of the journey – mishaps don’t mean your business won’t survive (or even thrive). In fact, if you’re cut from entrepreneurial cloth, overcoming obstacles will most likely make you stronger. So today we’re not going to talk about the cliche mantras like “the customer is always right,” and we certainly don’t have enough time to address the importance of access to capital and other commonly faced startup challenges. Here are just ten (of many) things that most aspiring and fledgling entrepreneurs learn the hard way.
1.) There’s No Such Thing as “Too Legit“
Sure, it’s easy to create a Facebook brand page or business profile, slap a logo on it, and call yourself a business. So many aspiring entrepreneurs create trendy branding, a homemade website, a menu of services, and actually advise or sell to people without being at all legitimate. Yes, a home-based business or even a very small one-person operation can certainly be simple and kept relatively small if real growth is not the intention, but that doesn’t mean it shouldn’t be registered legally with the state.
Whether it’s a lack of knowledge and the appropriate steps to follow or just a desire to remain “under the radar” (and under the table), independent business owners aren’t doing themselves any favors by neglecting to file for a business registration certificate, tax identification number, and/or a sales and use tax license. It’s easy to find each state’s requirements and processes online, and depending which type of business you choose (sole proprietorship or LLC), the fees can be nominal. Legally filing also protects the business owner in the event that anything should go awry. If you are publicly selling anything to anyone as a means of income, whether product or service, the possibility of problems will always exist no matter how careful, discreet, or savvy you think you are. If you choose not to protect yourself as a legitimate business entity, it only takes one unhappy “customer” to pursue you for your personal assets.
Contrary to popular belief, you don’t need a storefront or brick-and-mortar location in order to qualify as a business, and you can keep your overhead and expenses fairly low by not hiring right away, by working out of your house, and by making valuable connections who will help you out or barter for services. And yes, you can always be found out: unreported income and unpaid tax could mean big trouble with the IRS.
If you’re overwhelmed and don’t know where to start, sites like legalzoom.com can guide you in the right direction toward filing for your business, and it’s not as confusing or complicated as you might think. If you fit into the small online seller category but you’re questioning whether to report your earnings as an official source of income, Etsy’s seller handbook is publicly available and has tips regarding legitimizing your online seller business. It will pay off in the long run, and there can actually be tax benefits to registering your own business. Trust: it’s worth it.
2.) Of All the Hats You’ll Wear, Business Will Be the Most Important One
Many people who decide to go independent are transitioning out of their career field into an entirely new one. Others, though, may stay in the same, familiar field but have no knowledge of the setting-up-shop and running-a-business aspects of the industry. Just because you’ve worked in corporate law for years and years doesn’t mean you understand the ins and outs of owning a functioning firm or practice, catch my drift?
When you first get started, there’s a whirlwind of information flying at you and a mile-long to-do list. If you’re not lucky enough to have a book of business or group of clients already aware of your new endeavor who have committed to joining you, then it’s extremely likely that you’ll get so caught up acquiring new business and doing the actual work that you’ll forget about the behind-the-scenes facets of business ownership (which are equally as important). And, if you’re starting out small like most fledgling entrepreneurs do, chances are you haven’t hired a finance manager, accountant, or IT consultant. So, as a business owner, you must be prepared to be everything to everyone all the time.
John Politsky, President of Speakeasy Creative and JDMK Consulting in Moorestown, New Jersey tells us it wasn’t easy to get to where he is. In the beginning, there are a lot of things that can throw you for a loop. He says,
“For me, the most difficult part of starting the company was just learning about business. There are so many things you don’t know that you should know. Things like profitability, how to invoice clients, etc. When you start a company you are so stressed about the actual work that you forget there is a ton that goes into just the back end. I think it is vitally important that you spend time learning your financials and learning about the numbers. This will save you in a pinch.”
3.) Working for Yourself Is… Hard Work
Unsatisfied with your current job and dreaming of greener pastures? Sick of working your butt off with limited potential for upward mobility? Fantasizing about coordinating your own schedule, making your own rules, and not having anyone to report to?
Don’t be fooled into thinking that working for yourself is all sunshine and roses, and make sure you’re in it for the right reasons (hint: the reasons above are great, but they’re not the “right” ones). Working for yourself requires a lot more motivation, determination, trouble-shooting, perseverance, discipline, and organization than you might be used to. It’s also chock-full of anxiety, uncertainty, doubt, and things that are necessary even when you don’t feel like doing them (simply because there’s no one else to do it).
Also, working for yourself, at least for the first year or so, means pretty much working around the clock. Sure, you can take an unscheduled lunch break and go grocery shopping in the middle of the day if you want to, but you’ll probably end up working later into the night to make up for it. Depending on your line of work, you’re probably billing clients hourly on a per-project basis, which means you’re not taking a 40-hour per week salary with paid vacation time. Translation: you only make money while you’re working. Not to mention, the sheer fact that you’re wearing ten different hats could mean that you’re pressed to handle urgent issues at any given time.
4.) Most People Will Not Care As Much As You Do
One of the most difficult parts of being self-employed is learning that no one is as invested in your dream as you are. You may be the best in your business creatively or when it comes to your specific area of expertise, but someone will always be there to knock you back a step. Whether it’s a critical customer, flaky client, or someone who doesn’t want to pay you what you’re worth, the first couple years of self-employment can be the most humbling experience you’ve ever had.
Greg Murphy, owner of Primitive Athlete (an advanced personal training studio in Ridley Park, Pennsylvania) shares:
“I have been training people for about 18 years now, and the hardest thing for me personally in the early years was expecting everyone to be as passionate about their training as I was. As the years went on I learned that not everyone is in it for the same reasons as I was, and it taught me to adapt things to the individual’s needs and what was right for them at that moment in time.”
As a business owner, you’ll have to be versatile, resilient, adaptable, and resourceful. Meeting people where they are can be difficult, especially when you know you could better serve them otherwise. But overall, the most important part of building your brand and reputation is client satisfaction, and sometimes that can mean compromise, not pushing as hard as you want to, negotiating a price, or reevaluating a strategy. Getting work is important, but customer retention is even more important. It may be difficult to understand others’ perspectives when your vision is so crystal-clear, but don’t let difficult interactions and outcomes slow you down or make you any less dedicated. Just roll with it and let it make you better.
5.) Time Is Not On Your Side
I’m not talking about market timing or perfectly strategizing the launch of your new endeavor to be sure it doesn’t collide with the competition, I’m just talking about plain and simple time management. It can be easy to fall for the illusion of having more time when you first start working for yourself. There’s no one pinning deadlines on you or strolling into your office to interrupt you, there’s no more solid 8-4 or 9-5 (even if you map that out for yourself, it’s fluid), and let’s be honest – your phone probably isn’t ringing off the hook at first, either.
Even if you don’t have a ton of client projects to dive right into, using your time wisely is of the utmost importance to the success of your new business. Why? What does that mean, exactly? Well, once you do start getting customers and projects, you’ll have much less time to devote to building your brand, marketing and promoting your company, or actually selling your product – and how do you expect to grow if you’re not actively managing your growth? Unless you have someone working to do all that for you, getting yourself set up to resemble a functional business that attracts clients is crucial.
A website is very important, and it should take some time to be done properly. Branding should not be quick and hasty. The creation of social media profiles and consistent, engaging promotional content is more time-consuming than you realize when you’re in charge of it all. Blogging is a wonderful way to stay fresh and current, but many business owners don’t have time for it (and so they outsource).
When you’re first starting out, the temptation to curb spending at every possible turn is strong because of the uncertainty of the startup phase but, I promise you, it’s better to spend wisely-invested dollars in the beginning to build your brand and get yourself set up administratively than it is to play catch-up later and have these things look like an afterthought. Avoid the mess in the first place and any mess you do find yourself in will be much easier to clean up.
6.) It’s OK to Cherry-Pick Your Clients
In the beginning, many new business owners will take on any client, sell to any customer, or do work for anyone (even if the terms are unclear at best and the pricing is uncertain). There is definite value in getting your name out there and getting some projects or sales under your belt but, as time goes on, you’ll come to realize that not all work is created equal (or worth your time).
For example, if you know that a specific strategy is not going to generate enough revenue for your client to not only justify the expense of hiring you but also achieve their goals and make them a profit, and they’re not open to changing their approach, then it’s probably best to decline the project and part ways before you spend valuable time and they come back dissatisfied or decide to terminate the project.
For these reasons, it’s important to establish (in writing) your terms of service, conduct initial consultations, create quotes/proposals, and write up contracts to ensure that all parties are in agreement with regard to expectations. You can find help with this aspect of your business online by using sites like Shopify, Formswift, Termsfeed, and services like Bidsketch which exist to simplify this process for business owners who aren’t also moonlighting as attorneys and experienced corporate jargon-writers. (Disclaimer: only use canned content as an example to build from, don’t ever simply copy and paste onto your website without modifying the text to specifically suit your site, or else your efforts will be in vain and you’ll look pretty dumb).
To know what makes a good client, you’ll need to spend some time learning what makes a bad one. Obviously late or missing payments would be a big red flag, but think about the way the relationship works, the demands that are made, and the level of work required in relation to the results you’ll be able to achieve. Sometimes, you’re just not going to be the best fit for someone. Sometimes, you won’t be the provider who can deliver what they’re asking for in the most effective way – and you’ll have to learn to be honest and upfront about this so that you don’t earn a reputation of being the provider who over-promises and under-delivers.
7.) Always, Always Have a Backup (for Everything)
Having backup methods in place for various aspects of your business is unquestionably one of the most crucial ways to insure yourself against many possible loss scenarios. If your business relies on the creation, use, and delivery of files that are stored on your computer, even if you also upload them to a digital cloud or shared server, an external hard drive is a MUST. Too many times a computer or laptop will crash or some large chunk of data will get accidentally erased and there’s no system restore point or way to easily recover the information. Do not be remiss to establish failsafe methods and you won’t have to confess to your clients that the reason you won’t have their project completed on time is because your computer crashed and you lost all their information.
It’s important to have backup methods for storing sensitive information, too. Secure services like Keeper and other encryption apps are great for storing passwords and financial information away from your primary device. They sync to an online server and can be backed up periodically; plus you can set them to self-destruct if the host device is ever lost or compromised and/or an unauthorized individual enters the wrong password too many times.
In certain industries, it may be more difficult to anticipate the need for a backup admin on web platforms that require you to be someone’s third-party manager. Whether access is being shared with you or you’re the one handling the account and all of its content, chances are you’ve been given administrative rights to your clients’ accounts in some capacity. There is no foolproof service, and mistakes happen all the time. Each managed account should have more than one admin role established, and you should never rely on your own personal account as the sole administrator for any other account. Set up a “dummy” account for the specific purpose of granting admin rights, and grant someone else you trust admin access to your business account should anything go wrong. Believe me, it happens.
8.) You Will Eventually Need to Give Up Control Somewhere
Remember back in point # 2 where we talked about the challenges of doing everything yourself? That can’t last forever. Because, as we explained in point # 5, time is not on your side. It is simply not possible (or recommended) to attempt to tackle everything on your own for as long as your business is in operation. In point # 4 we addressed the truth that no one will care as much as you do and, although we were referring to customers/clients, the same could be said of anyone you might end up hiring.
The need to control everything and have all tasks executed according to your preferences and specifications will run you ragged. Not only is it much too time-consuming to do everything yourself, but it’s more likely that you’ll make a mistake because you’re so focused on all these other things (and there’s the irony in wanting everything to be done perfectly, your way). It’s wise to take a step back and consider that there may be easier ways to do things that are still just as effective, that perhaps haven’t occurred to you while you’ve been so immersed.
With your head down and the details on your mind, you can’t absorb or learn about new methods that exist. We’re not saying you have to hire someone immediately, but there will come a time when you’ll have to relinquish control of the tasks that you can no longer tackle yourself and that are not vital to the identity of the business. Figuring out alternative ways to accomplish these tasks (whether by outsourcing, hiring, or using a third-party service) will pay dividends in both the availability and sanity departments.
9.) You Will Get Blown Off
If you’ve been in business a year or more and you haven’t been blown off for a payment or commitment yet, consider yourself lucky. It happens. As much as it’s a pleasant surprise when your first big payment arrives or when you realize you actually have multiple clients who are paying on time, baby business owners can be just as naive in thinking that this is the norm without exception. Being blown off is as real as teenagers going out to a restaurant and not having enough money to tip. It happens for all kinds of reasons: forgetfulness, miseducation, misunderstanding, miscommunication, dissatisfaction, irresponsibility… sometimes it’s intentional avoidance, other times it’s an honest mistake. That’s not the point. The point is that it doesn’t detract from who you are or what you offer – you just need to have a plan in place for when this does happen to you.
Being prepared by knowing in advance how you’ll handle adversity will make everything feel far less catastrophic when a wrench gets thrown in your plans. If it’s a financial concern, making sure you always have a certain “cushion” in the bank in case a client doesn’t pay will alleviate the stress of counting on that payment. Having a contingency in place for any legal fees you might incur while pursuing a client who has violated contract terms in some way will definitely ease your mind and keep you protected.
And, just like we established in point # 4, since not everyone cares or takes things as seriously as you do, there will be people who contact you and seem interested in starting the process (or even have a consultation) and then just fall off the face of the earth, never to be heard from again. Don’t let it change the way you’re doing things; some people just like to shop around, or maybe they can’t afford you. As long as you have a healthy amount of business with satisfied clients, losing the occasional lead is no big deal.
10.) Always Stay Open to Switching Directions, and Know When to Fold ‘Em
Entrepreneurship is funny: it can make you question why you do what you do, it can lead you into something that you love much more, or it can open doors to serial entrepreneurship where you find yourself developing one successful idea after another! The other thing about entrepreneurship is accepting that not all businesses are great, and not all ideas have what it takes to create a business around. Just because you can’t imagine how anyone could live without your plaid fleece ankle-warmers for dogs doesn’t mean you have what it takes for major niche retail success.
The business you start now may not last the rest of your life. Changing directions is always an option: having an exit strategy in place when the time comes will be helpful. Being flexible and knowing when to change directions is a struggle for many business owners, especially when they’ve devoted so much of their lives to a certain path, but detaching your emotion from your business and being open-minded instead of clinging to a sinking ship can make all the difference in the world when it comes to your happiness.
Linda Orsuto, the owner of a group of consignment and antique specialty stores called Lola’s Menagerie in New Jersey, is a former salon and beauty industry heavyweight who has embraced her next calling.
“I recently ended a stellar 40-year career (not by choice, just circumstances) and realized I was meant to do something completely different for the next half of my life! Passion and marketing and networking have been proven to get me to reach every dream or goal I’ve ever had and are proving that all over again for me. More importantly, when at a crossroads in my life, I ask the Lord to open my ears, eyes, mouth, and mind so that I will be able to receive whatever information I need in order to be where He wants me to be. It works every time! Sometimes I do not know what to do or where to turn, but He does… if we only ask!”
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