Six things you need to know before starting your own business

The purpose of this essay is to provide you with six pieces of information that I wish I had when I started my own business.

First thing to know: You probably shouldn’t do this. I don’t want to discourage you, but you need to know that a large percentage of new businesses fail. I’ve seen law firms, medical practices, restaurants, grocery stores, coffee shops, and every other kind of business you can imagine run into the ground. Sometimes businesses fail because the owners make mistakes, sometimes businesses fail because the market changes, sometimes businesses fail and it happens so unexpectedly that nobody can tell what happened. This is a gamble, and the stakes- both personally, emotionally, and financially- are as high as it gets. So if you’re wondering if you should do this or not, the answer is that you probably shouldn’t.

Now If you’re still around after hearing all of that, here’s the Second thing you need to know: If you’re self-employed, your boss is going to be a jerk. The schedule is unrelenting. Recording these videos is part of how I publicize my law firm. I wrote the script for this video at 11:30 on a Saturday night. I was awake, and it needed to get done. Running your own business means being self-motivated, which means you have to have an unrelenting desire to work. For example: If it’s a weekday, unless I’m in court, I’m going to be at the office at nine in the morning, and I’m going to be there, doing work, until at least five o’clock, and usually more like six. If I get pulled away from that, I tend to get annoyed. Here’s why: If I don’t make myself work, nobody else will either. If you’re not disciplined and self-motivated, this is not for you. All the crappy work that you used to push off on other people? You do those jobs now.

The third thing you need to know: Before you start, you need a plan. This is especially important if you’re going to borrow money to start your business, as most lenders are much more willing to lend to someone who walks in the door with their crap together. You need to be able to tell people what you plan to do, how you plan to do it, who you’re competing with, the strengths and weaknesses you bring to the project, and a basic idea as to what your expenses and projected revenues are. Put this in writing, and make it as professional looking as possible. If you have trouble putting any of those concepts into words, then you probably need to think and develop it some more.
The Fourth thing is short, but it’s important: Start small, and keep your overhead low. Having to buy more stuff or hire more staff because you have too much business is a nice problem to have. Closing your doors and letting people go because you can’t make payroll is very painful. The virtue of growing slowly is that you can gradually adapt to the challenges that come with new business.

Fifth thing to know is one of those things a lot of people ignore: Doing your actual job is only a small part of running your business. I practice law of a living, but I probably spend two hours a day, every day, working on other things that are associated with running a law firm. Whatever your product or service happens to be, you are also in charge of Marketing, Accounting, Human Resources, Maintenance & Janitorial Work, and Tech support. You’re going to have to allot a certain amount of time and money to each one of these things, and ignoring any one of them can have a devastating effect on your business.

Sixth and finally: Organization will retain your sanity
Don’t depend on yourself to remember things. Lists are good, spreadsheets are better. I use evernote to remember case notes, things I need to buy, things I need to do, because I have two many things going at my office to remember them all. Here’s the thing: I’m not exactly sure when I grew to the point where I couldn’t remember the details of every case, but I know it happened. The same thing will happen to you if your business is even incrementally successful. I feel very fortunate that I was proactive about integrating software programs to organize and keep track of everything, because otherwise cases would have fallen through the cracks, and my clients would have gotten hurt. My business succeeded in part because I didn’t let that happen to me, and I would encourage you not to let it happen to you. Place the organizational infrastructure in place that lets you keep track of things so that you don’t have a hundred different things you’re trying to remember. So you need some sort of organizational infrastructure to track individual clients, and you need to buy an accounting program to keep track of what money is coming in and going out. Could you do it with a ledger book and a calculator? Sure, but you won’t. What will happen is you’ll get busy doing your actual job, you’ll get behind on your books, and before you know it, you won’t know who you owe or who owes you. The simple start version of QuickBooks is $120.00 as I’m recording this. If you can’t afford that, you probably need to rethink this, because I can assure you, the costs are going up from there.

So those are six things you need to know before starting your own business, whether that business is practicing law, repairing motorcycles, or whatever else: First,. you probably shouldn’t do this. Second, being self-employed means your boss is a tyrant. Third, Create a business plan. Fourth, start small and keep your overhead low. Five, doing your actual job is only a small part of running your own business. Sixth, and finally, stay organized, or you’re going to waste a lot of time, money, and anxiety. This isn’t an exhaustive list, but it’s enough to get you started.

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