I’ve heard many of my fellow entrepreneur friends say that starting a business is like a rollercoaster ride. While it made sense, I don’t think I fully internalized that until this year.
I started my business in November 2018.
Now in my 13th month, I can say that I experienced more intense ups and downs than the prior three years combined.
While I had some wins (especially in the second half of the year), I also made a ton of mistakes and have lots of “opportunities for growth.”
In this post, I’ll share some of the key lessons that I learned.
As a whole, I’m pleased with how my first year went.
I went in with the goal of matching my previous salary from my day job.
In reality, I managed to nearly double my income my first year in business. (No complaints there)
Note – actual numbers are hidden, but this is my revenue trend for 2019.
My first $10k month was a big milestone and I hit it just six months into my business. Having my first five-figure sales month was an even bigger deal. It gave me a much-needed confidence boost.
Results tend to follow where you invest the most time, energy and attention. That was definitely the case for me this year.
Every year, I choose a word/theme for the year ahead. This year’s word was FOCUS.
While I worked more hours this year and sacrificed a lot of the freedom that I’d built for myself (as a remote worker over the last 3 years), the intense focus on building my business is starting to pay off.
Why consistency matters
Focus is only part of the equation. The other part is consistency.
For me, it’s easy to focus when I see some wins right away. It’s much harder when the payoff is three years or even three months from now.
However, consistency leads to results.
For example, I set a goal to be more consistent about posting on Linkedin each week. Putting myself out there is scary and I heard crickets more often than not at the beginning.
Time management skills are underrated
Being dependable and reliable can get you far. For example, I’ve never missed an important deadline for a client. I’m proud of this and it’s gone a long way in building trust, credibility and lasting relationships.
However, I’m not always proud of how I accomplished this. There were more than a couple of times that I found myself staying up into the wee hours of the morning or waking up early to finish a project on time. Managing my time and being better about delegating tasks is something that I need to improve in my 2nd year of business.
Reframing my perception about sales
I went into my business with a negative perception of sales. I didn’t recognize my preconceived notions until I had to learn to sell my company effectively.
Passively waiting for people to come to me wasn’t effective. I had to work to get projects and clients. I needed to learn sales if I wanted the business to succeed, grow and (you know) pay the bills.
I’ve come to realize that the best salespeople are great problem solvers. They aren’t “salesy” or “overly aggressive.” Instead, they approach sales calls by getting to know the prospect. They know how to listen, and they ask great questions.
Before I changed my mindset, I used to dread sales calls. I felt like I had to be overly-confident and know all of the answers. I didn’t want to sound “salesy.”
Things changed when I reframed sales calls as “discovery calls” and treated them like a conversation. In discovery calls, I get to know the client, the problem they’re looking to solve, and ask questions to learn about the company.
Making sales calls into discovery calls meant I was less nervous. The calls went better, and I closed more deals.
Cash flow is king
“Revenue is vanity. Profit is sanity.”
This is a quote that I first read in Carrie Kerpen’s book, “Work It.”
It stuck with me ever since then. I’d add to this quote,
“Revenue is vanity. Profit is sanity. Cash flow is king.”
I learned this lesson the hard way. There were a couple of times in the first few months where I had enough revenue to cover all of my expenses, but found myself having to turn to my savings to pay expenses on time because I wouldn’t be getting paid until after the expense was due.
While profit is important, cash flow matters more, especially in the early days.
Stack the odds in your favor
Starting a business is hard.
Anything you can do to make it a little easier can pay off in spades. Most businesses that succeed had at least a couple of advantages to leverage early on.
This could be anything from:
- An emergency fund
- A loan from family or friends
- An anchor client or two
- VC / PE funding
- Strong business network or connections in the industry
For me, I had saved up enough money in advance to have runway for about 7 months. My previous boss also became one of my original anchor clients. This gave me peace of mind in the first few months as I was still getting a feel for how to run a business.
Client fit is crucial
Would I want to have a coffee or beer with this client?
While it sounds simple enough, this is the question that I ask myself before working with a new client.
You don’t need to be best friends with your clients. But, there’s something to be said for being a good fit.
When the client and I both are on the same page, communicate well and trust each other, projects go so much smoother. Plus, it is a lot more fun to work with these clients!
Never ignore red flags
My biggest mistake by far was ignoring potential red flags on sales calls, and taking the work anyway. At the beginning, I said “yes” to any project or potential client that expressed interest in working with me.
As a whole, this has worked out well and helped me build a stronger portfolio. But there were a few times where this made my life harder than it needed to be.
When I look back on those learning experiences, I realize I was working out of a sense of scarcity or fear. I was afraid that if I turned down those opportunities, no new opportunities would pop up and I wouldn’t be able to make ends meet.
In reality, taking on a couple of clients that weren’t the right fit had the opposite effect. I spent too much time trying to make it right, instead of investing the time to find another client that was a better fit.
There was a silver lining that came from these painful experiences. It forced me to create a “red flags list” which I add to on a regular basis. Some of these red flags are obvious like paying the project deposit late or not wanting to pay it at all.
Others are more specific to my business and past experiences. For example, a prospect wants me to sign an NDA before the initial discovery call or a pre-revenue startup. Any business in the following industries is a no-go for me – life coaching, MLMs, payday loan companies, dietary supplement brands, or adult entertainment.
Invest in your business
I’m naturally cautious and risk-averse. Starting my own business was a huge risk and investing money into the business was even scarier. But I found that certain investments were 1000% worth it.
One of the biggest – and scariest – investments I made was hiring a business coach. Hiring a coach with experience that had built the exact type of business I was growing has paid off in spades:
- I have a “grown-up” on my advisory board who can provide a more objective and balanced view since he’s not in the business day in and day out.
- I can fast-track some of my learning and avoid some of the common traps and mistakes that new entrepreneurs fall into.
Other big and scary investments that I made this year include:
- Building a small team of VAs and freelancers that can help me with administrative tasks as well as some “overflow work.”
- Paying for and attending a handful of conferences to improve my skills and build my network.
In sum, starting a business is one of the hardest yet most fulfilling things that I’ve done. I worked harder this year than I ever have before.
I made a ton of sacrifices. There were many late nights and Friday nights spent in front of my computer instead of going out.
In the end, I’m also building something that’s truly my own. And that’s deeply satisfying.
Next month, I’ll share my word for 2020 as well as some of the goals and plans that I have for the business in year 2. If you want to be the first to know when it goes live, subscribe to my newsletter below. (I’ll also send you the five best things I read each month.)