Work For Yourself: The Entrepreneur’s Checklist
In March, I left my fairly awesome job working from home as a project manager to pursue entrepreneurship full time. My wife and I were almost done with our Web Technologies program at the local community college, and I’ve been doing websites for over 10 years. Both of us had experience with WordPress and customizing it, so we decided to give it a shot. In this economic upswing, we had enough savings to get by for about 12 months. It’s been 3 months, and we’re still alive to tell about it. I’ve picked up a few handy ideas along the way, and I thought I’d share them.
1. Get money.
Short of having a super amazing product or service that no one else is selling, you can expect to be in the red for a while – unless you don’t quit your day job. Which, I recommend everyone assess and make their own judgement about. If you can’t reasonably run your business and work a day job, then you need a healthy savings account to get you through the tough times.
For me, I used my retirement savings – I’m not a financial planner, so don’t take that as advice. Figure up your bills. Once you know how much you actually need each month to pay bills, tack on another 20% to be safe. That’s unexpected trips in the car that require gas, extra meals, supplies, and whatever else you might need. If your business requires overhead, your number’s going to be much higher obviously. For web design, we already have the equipment and we work from home, so our overhead is basically zero unless you count electricity and internet costs.
Once you know those figures, try to build up a savings account of 6 to 12 months worth of cash. If you have great credit, you might be able to take out a business start-up loan or get capital from investors, but either typically requires a business plan and some of your own money invested. More on that in a bit.
Things will get tough, and if you’re not an overnight success you need to know you can keep paying the bills. If things get tough, you may have to look for work again or sell off things you can do without. You may need to cancel services you subscribe to, stop eating out, and coupon with intensity!
2. Know thyself.
You can find thousands of sites out there that tell you how to make a business plan. You’ll find community colleges often offer free seminars on how to make an impressive business plan for loans or investors. But before you start downloading a Word template and considering your legal structure, you need to know your business. Here’s a brief outline of items you should consider and know the answer to before you begin your formal business plan:
- What is my product or service?
- Is there a demand for it?
- Who else is doing this in this area? (Who’s the competition?)
- What does the competition do well? What can I do better?
- What does it cost to make my product or perform my service?
- Can I price competitively and still be profitable?
- Can I compete with their quality?
- Will I need to hire a staff?
- What are the laws regulating the industry of my business?
- What can I do myself, and what do I need to “outsource” to another business?
Once you have a rough idea of the answer to these questions and you can picture your business launching in the most ideal way possible, you can begin to plot a route to that success. You may not be able to predict every bump and obstacle, but it’s good to at least know what direction to head. Then you can begin filling out whatever business plan template you prefer, or build one from scratch. The key to any good business plan is being able to answer the questions “Why should I care about your business?” and “How will your business make money?”
Even if you’re self-funding and don’t need a business loan or investors, you should bother with a business plan to help guide you and keep you focused. As a project manager, I learned that projects tend to creep in scope and when that happens you need more time and more resources, something a budding entrepreneur often can’t spare.
3. Hustle. Don’t ever stop hustling.
The easiest thing to do once you have a plan and know how you’re going to get rolling, especially with that 6 or 12 month cushion of savings or capital, is to take a few well-deserved days off. That’s fine, actually. Get your head right before you get going. But don’t take more than three days, unless you have a commitment or obligation that delays you further. Get going – get moving. Take steps everyday to get where you’re going. Just because you work for yourself now doesn’t mean you aren’t working full-time anymore. Use every available moment during whatever time you call “work hours” to get things done. If you sit on the couch because you don’t have work to do right that second, consider what you could be doing to reach success in that moment. Do work, then do some more. Not busy work, but effective work.
Also, there’s no shame in side gigs. Do mystery shops, mow lawns, babysit people’s kids, sell things on eBay and Craigslist, sell yourself on Mechanical Turk by Amazon or Fiverr, or get creative. Nothing wrong with a few alternative revenue streams.
4. Shout it from the rooftops.
Once you’ve taken care of hustling to make yourself ready to do business, it’s time to open. If you want to make money, you are going to need advertising. Break out of the traditional mindset of paying someone to advertise for you, but don’t abandon it completely. When I say advertisement, I mean letting people know your business exists. There are ways to do that besides paying for a billboard, newspaper ad, TV time, and radio. You can try your hand at Facebook ads, but it’s hit or miss. We ran ads for a week on Facebook and saw increased reach to our Facebook page, but conversion rates were negligible because we didn’t have much for people to engage with at the time besides contacting us through email or phone.
Depending on your business, your location could be a great way to get business, but if you’re not located somewhere popular you’ve got to give people a reason to go off the beaten path to try someone / something new. Try these methods to land some clientele:
- Get social – tell all your friends, family, and contacts that you’ve started a new business and when the need arises, you’d love for them to remember you.
- Get charitable – if you can donate products or services to a non-profit (or discount them heavily for new customers), then you’ll have items for a portfolio or people who have sampled your product that might turn into customers themselves, and who might tell their friends about it. The onus is on you to make sure what you do is quality enough to earn those referrals.
- Get resourceful – bulletin boards, both digital and physical, are great places to advertise – especially if you can either provide a tear-off section of the flyer or leave a business card holder behind. Always make sure there’s an obvious way to contact you and a call to action – even though people know what to do with a business card, a call to action is a psychological trigger to follow-up.
- Get involved locally – join your chamber of commerce. Often times, chamber businesses support other chamber businesses, and it’s a great way to get introduced to new clients and let the community know about your opening. Membership also usually involves being listed in some sort of print and/or online directory of local businesses, inclusion in the welcome packet for new people who move-in to the community, and community resources for building your business. They sometimes even offer insight into grants and education on small business legal structure and tax preparation.
Your marketing plan, no matter what your strategy is, should always answer the question “Why should I give you my money?”
5. CYA – it’s not just for employees.
“Cover your ass” is a mantra that I learned from one of my first employers, who wanted to make sure we were diligent in our documentation of everything that occurred out of the ordinary, and our following of procedures to the letter in all situations. And when your ass is covered, it’s pretty hard for something to come up and bite it.
For the entrepreneur that means documenting every single transaction, between you and customers and you and other businesses. You should be aware of how much tax to charge customers and how much you owe in payroll taxes and personal income tax. If that’s a little complicated, then definitely safe the headache and budget for a Certified Public Accountant (CPA). Get a recommendation from someone else you know who already runs a business.
If you are a freelancer or provide a service, it’s a good idea to have your own set of forms that you fill out for each project for each client, and either in digital or hard copy have a file folder just for that client’s forms and other information like invoices, proposals, and contracts. For us, we like to know certain things about a project before we begin so we can build requirements. The client looks at those requirements, and then signs off on them so that we’re on the same page about what we’re doing and about how much it should cost them and about how long it should take. It’s not a contract, just something to reference when a client wants to change the scope of the project. It makes it easier to say “OK, but since that adds to the scope of this project it’s going to take more work and cost more money.”
You may not be able to afford a legal service on retainer, but it’s a good idea to have legal counsel to proof any contracts you re-use, and to review any contracts that are specific to individual projects. You should also get advice on any laws specific to your business and be sure to follow them. A lawsuit is much more expensive than doing your legal homework at the start.
6. Veni, vidi, uh…
Once you setup shop, scream that you’re open, and have your ass covered, you probably expected people to bust down your door to hand over their money, right? Maybe that happens, but more often than not the first little while of being an entrepreneur is sitting on your thumbs waiting on someone to engage your services or make a sale. It can be seriously disheartening. Let’s not sugar coat it: this is the part of being an entrepreneur that sucks.
You’ll sit up at night worrying about being a failure, having to sell all your stuff to keep your doors open, going deep into debt, and having your investors hate you / your friends mocking you for being a loser. This is normal.
When things are slow, you have to think of what you can be doing to make yourself a success. Take networking opportunities. Attend local business owner functions. Read up on trade publications for your industry. Stay relevant. Produce things – if you’re a freelancer this means creating assets or copy or whatever you do for fictitious clients (or make something universally usable) and release it for free. If you’re a store owner or you make products, you may need to have a grand opening event or advertise a discount on a new item or hold a contest (remember: never stop hustling).
Above all else, keep a level head. It helps if you have a mentor or a friend or a spouse or partner with whom you can sit down and talk things over, at any stage of your business. Complain, express your fears, share your joys and successes. Being self-employed can be just as rewarding as it is stressful, and it’s a balancing act of mental health for normal people, much less people who already struggle with mental health issues. Take care of yourself, and if you find yourself in a bad place, talk to someone.
7. Your boss is an asshole.
If one of your reasons for wanting to be self employed is that you’ve never been happy working for anyone else, you might consider that you’ll be harder on yourself than any of your former bosses ever were. I often joke that I have a hostile work environment and that my boss is always riding my ass, or that I’m terrified he’ll find out I’m sleeping with his wife. These are good for a chuckle, but the truth is when you work for yourself you can never get away from your boss. It’s not the same kind of pressure where you’re afraid of acting unprofessional in front of them, but you do second guess yourself and your work. You do feel bad about being lazy once in a while because you know you could be working harder to finish that project or driving sales or promoting your business or demolishing the competition.
Corollary to “Never stop hustling,”: take time to breathe. You’re only human, you do the best you can and sometimes you need a break. Set up some guidelines for yourself and treat them as flexible but not arbitrary. Get up at the same time every day, have business hours (even if your particular business isn’t a physical location), and only check email or answer the phone or work on projects during those hours. After hours, have a ritual that helps you disconnect and “come home from work.” Don’t let that asshole boss of yours keep you late or make you work when you’re too sick. Spend time with your family while not thinking about work. Get back to it tomorrow.
8. Never give up – never surrender.
There’s a thousand motivational clichés that essentially endorse losing battles but winning wars, and other sentiments about failing a bunch until you win. Business is sort of like that. You might be immediately successful, but probably not. Most people aren’t. And those who are, it doesn’t last forever. It comes and goes with tides of the economy, supply and demand, your reputation, the weather, politics, and acts of God. Sometimes you’ll make mistakes and sometimes the problems will be completely unforeseeable and uncontrollable.
Here’s where I’m at now – we’re going to run out of savings in the near future. I had to explain to my wife that it won’t hurt my ego if I have to go get a job again if we don’t get more client work soon. I want to keep a roof over our heads. I also don’t want to have to go back to a job. But even if I do, it’s not a declaration of failure. I don’t feel like we failed. We got some clients, did some work, made some money, and that’s a success. It’s not a roaring success, and we’re not “set up” for the future. But it’s a success. Just getting out of the starting gate and going a distance means you raced at all, and that’s something to be proud about.
PLUS since we’re still alive, not homeless, and not in jail – that means we can keep the business open even while I worked a job. If yours is a business where you can’t work another job and stay open, then take heart – it still means you can try again some day.
We’re OK for now, by the way – but the reality of working for yourself is a back-of-the-mind fear that the money could dry up. It should motivate you, not paralyze you.
9. No ragrets. [sic]
You will learn something from every single project or product you have. You’ll learn how to do things better, how to behave better, how to correct and prevent mistakes better. When something goes wrong, take time to validate your feelings, and then improve your business.
This applies equally to business opportunities – when one comes along and you evaluate it and decide it’s good for your business, but then it doesn’t work out – learn from it. Figure out what you liked about the deal, where it went awry, and the next time an opportunity comes up, make sure to protect yourself from repeating history.
Fear is basically a problem of the unprepared and uncertain entrepreneur. Fear comes from not learning and not improving when you experience a critical failure or crisis, or from a new potential crisis or failure. You can alleviate most entrepreneurial fears with education and preparedness. This comes in part from experience, and part from being involved in your industry. Others have tread the path you’re on before you, and you can benefit from their experience. If you can afford it, go to trade shows and conferences. Read online forums for your particular industry, join Facebook groups, and soak in the advice and stories.
Above all else, take some reasonable chances. Success is great, but failure is a better teacher.
10. Don’t let some asshole on the internet tell you how to run your business.
This may seem counter-intuitive, but trust me – there are lots of assholes on the internet who think they can formulate a one-size-fits-all approach to entrepreneurship and break it down into a cute little top-ten article as click bait for their crappy blog that no one reads and that they haven’t updated in a year. They don’t know you, your business, or your circumstances. The only person who really and truly knows your business is you. You’ve got to analyze decisions with your brain and follow your gut about what’s best for your business. Take advice, certainly. But don’t take all these how-to articles as gospel. There’s no magic key to the success, uh, chest? Is that a thing? The Success Chest? And you can’t pick the lock either. No Sir, you’ve got to pry that bitch open with your Hard Work and Smart Choices Crowbar.
This metaphor has gone awry.
Mostly I wrote this post because I still lie awake at night worrying about the future. I panic that I’ll fail. And every other entrepreneurship article I found out there was full of warm and fuzzy feelings and motivational speaker pep talks that made it sound like you could be a raging success rolling in the money if you said and did the right things just the way they did them. I just wanted to share the basics of how to get started and let you know that your crappy new business is probably doing alright, and to hang in there.
Bonus Advice: Don’t Be Amy’s Baking Company
Just. Just seriously. Don’t be like these guys. Never ever use the word “haters” unironically.