In last November's column I wrote about starting a business. Continuing on that theme I will give you a few ideas of what is necessary to start your business off and keep it operating on the right track.
Generally the basic motivation that causes people to start their own business is to control their own destiny, have more freedom and make more money. Most working people have this idea stuck in the back of their mind; usually it is a life-changing event, such as the loss of a job, which puts the idea into play. Whatever your reason is for starting it, the first year of operating a business is perhaps the most critical. In that time you will understand that all of the “back office” work that was previously handled by some department in your previous job, now becomes your responsibility. The simple fact is that you are now the “front” and “back” office of the business, and while the total value of the goods and/or service you provide might be a fraction of your former employer, you still have many of the same requirements and processes to keep the business operating and profitable.
There are several studies citing statistics related to business start-up failure rates that go as high as 90 percent of businesses fail within the first four years, however the latest statistics from the Small Business Administration (SBA) show that "two-thirds of new employer establishments survive at least two years, and 44 percent survive at least four years."
Rather than write about the obvious requirements for operating your business, such as having the proper business licenses, insurance, tax, financial processes, business plan, etc., I want to focus on a few of the perhaps more obvious, but rarely discussed rules of running a business.
Falling in love with your customer
I don''t mean this in the biblical sense, but it is a very common mistake made by people who venture out on their own, particularly with some type of consulting or service type business. The way it starts is that an employee leaves his or her employer (for whatever reason) and ultimately ends up in some sort of outside contractor relationship with that former company, usually performing the same type of work he did when employed there. The familiar case is the engineer working at a station is laid-off due to a reduction in workforce, but is brought back a contract engineer.
While having a key customer that can provide a steady stream of revenue is a great way to start your business, you want to make sure you are marketing, actively going after and securing other potential opportunities right away. Never sign any contracts or agreements that limit your ability to work with person or company.
Falling in love with technology
This is not about having all the latest toys it is all about your mindset when it comes to building a business. It is about chasing opportunity, not chasing technology. Confused? Let me explain as it is a particularly interesting trait we see with people in the broadcast engineering business as well as those in other technology sectors. I''ve been involved with the engineering side of the broadcast and wireless industries directly and indirectly for the past 35 years or so and in that time had the opportunity to meet many very interesting, intelligent and successful people. People in technology related business basically fall into one of two categories: Those who make it their life''s work to know everything about the latest cutting-edge technologies or standards and to make sure that everyone they come into contact with knows they have this above-average, almost super-human understanding of all things technical. Then there are the rest of us who have a good understanding (perhaps even some expertise) about certain core technologies, but are more interested in figuring out ways to turn the knowledge into an opportunity.
There is nothing wrong with having the ultimate knowledge of emerging technologies, especially if you live or work in the Silicon Valley or inside the 495 beltway in Massachusetts, but in general that knowledge doesn''t translate well into money-making opportunities. My advice, emerging technologies unveiled today will probably not be available for an end-user for five or more years down the road. Rather than becoming an expert on the latest creation, understand how it will impact your customers and position yourself (and your business) to deliver it when available.
Be in it to win it
Business isn''t just about delivering services, goods or having a particular expertise; it is about playing “smart”. It is knowing your customers and their specific needs. It is about knowing your competition; it is knowing how to price fairly. It is about providing a superior level of service. It is about building relationships outside the business framework. It is about networking and building future business, but at the end of the day it is about making a profit. Always keep this in mind when pursuing new business. We live in an economy where everything is expected to be discounted. Do not fall into that trap, especially if you are providing a service. Cutting your rate just to get the business never works. Build a reputation for quality of work, responsiveness and customer service as opposed to the cheap guy.