5 Tips for New Business Owners
This post is dedicated to all the dreamers out there who are fantasizing about self-employment. If I could do it, so can you.
First of all, let me take a step back and explain why I’m writing this. Neither of my parents—the people I usually turn to for advice—have ever been business owners, so in 2013 when I decided to quit my full-time job, I had to figure out a bunch of this stuff myself. I hadn’t yet discovered podcasts (did they even exist yet?!) or figured out that Pinterest is an incredible resource for finding bloggers who could have paved the way for me. I was basically a cavewoman taking it one day at a time with no idea what I was doing. Here are 5 things I wish someone had told me before I started my business.
1. Identify Your “Why”
It really doesn’t matter what your “why” is, as long as it motivates and inspires you. Starting a business never really felt like a choice for me but rather what I had to do. I worked full time as a graphic designer for a few companies before starting my business and I wasn’t fulfilled. The work wasn’t creative enough, I wasn’t doing brand identity work, which is my passion, and I hated being on someone else’s schedule. I told myself every day that I didn’t care if I was poor, as long as I made enough money to pay my rent, put food in my belly (even if it was top ramen!) and clothes on my back. I just wanted the freedom to do work I loved, and make enough money to get by. I often remind myself of that mindset when I feel frustrated by a slow month of sales or a client who is difficult to work with. When I remind myself of my WHY I remember how truly fortunate I am and I feel so grateful.
Write down your WHY. Are you unfulfilled by your current work situation like I was? Do you want to work for yourself so that you have more time for yourself or to spend with your kids or husband? Maybe you want to save money to travel but your salary is only covering the necessary expenses. Maybe you want to earn some extra $ to start saving to buy a home. Whatever it may be, keep reminding yourself of your WHY. WRITE DOWN YOUR WHY and keep it somewhere you can see it every day.
2. Just Start
The biggest mistake many people make is waiting for something to be perfect before launching. Whether your offer is a product or service, you just have to get the ball rolling. You might feel like you aren’t ready, and that’s okay. But here’s the thing. Every podcaster I listen to says their first few episodes totally suck, the sound quality is terrible, and so on. Don’t get me started on the first few logos I designed. But guess what those podcasters and I have in common? We just started. And now years later, here we are, masters at our craft.
Are you waiting to start because you don’t have any clients? That is no excuse, my friend! If you’re a photographer, take pictures of your friends for their social media accounts and request that they give you credit / tag you so that other people can discover you. Are you a newly certified lash artist and you need to build up a client base? Do lashes for free on your friends and make sure you get some great photos of your work so you can start to promote your biz on Instagram! (Added bonus, your friends might fall in love with their lashes and come back as paying customers.) Take advantage of any opportunity to practice your skills while simultaneously creating awesome portfolio pieces or content that will attract paying clients.
3. Get Accounting Software
Disclaimer: I am not sponsored or endorsed in any way by Quickbooks. I’m just a happy customer.
When I first started freelancing full time in 2013, no one told me I needed accounting software. This was my system: I had a piece of paper which was eventually transferred to a dry erase board with a list that said “People Who Owe You Money.” I had an Excel spreadsheet where I recorded project names, time spent, client contact info, and a column with a total for the sales for the month. I created each invoice myself using a template I had made in InDesign, with no numbering system, and send the invoices to clients as a PDF email attachment. Maybe that doesn’t sound so bad, and it was actually manageable for me at the time when a REALLY GOOD month of sales was $3000. I also had no overhead then, working at home by myself, so I didn’t have expenses to record. Here’s the problem. That system depended on me being 1. extremely organized and 2. me being good at math. If that sentence makes you uncomfortable, we probably have a lot in common.
Fast forward to today. If I didn’t have Quickbooks, doing my accounting would be a nightmare. I spend anywhere from hundreds to thousands of dollars each month on office rent, software, design resources like fonts and stock photography, subcontractors (my designers and photographers), office supplies, printing, online classes, you name it. Meanwhile, I have thousands of dollars coming in from clients via check, credit card, online payments, and Venmo. Can you imagine if I was still keeping track of all that without a system, not to mention creating invoices, figuring out when invoices were sent, and figuring out which ones are outstanding? It gives me anxiety just thinking about it!
Quickbooks makes it incredibly easy to record everything, I have peace of mind that the math is done perfectly, and nothing slips through the cracks.
This paragraph goes into the specifics of using Quickbooks. If you already have an accounting system, skip ahead to the next section. When I login, I see a dashboard that shows my Invoices, Expenses, Profit and Loss, and Sales. You can adjust these settings to show whatever you want. It keeps track of all my clients’ info. It allows me to create invoices in a matter of seconds, it sends the invoices for me and allows my clients to pay the invoices immediately online. It records my gross income as well as my net income, so I can see how much money I’m actually making at any given time. It flags invoices as soon as they become past due so I can reach out to my clients and send a friendly reminder to get payment to me asap. I actually enjoy doing my own accounting with Quickbooks because I love to see how much money I’m making. I didn’t get into design for the money (that’s not a thing) but seeing my sales and profit is a very motivating factor for me personally.
4. Keep Your Overhead Low
I have seen people make this mistake time and again. An eager entrepreneur starts a new business. They hire a team of employees, rent a beautiful office in a trendy neighborhood, and assume that if they build it, clients will come. Unfortunately that is not usually the case, and I have seen those people crash and burn in a matter of months.
Take the opposite approach and keep your overhead low. I’ve chosen 3 areas to focus on.
Your number one focus in the beginning should be building a solid client base, rather than building a solid team. Do as much of the work yourself as you possibly can. For me that includes not just designing projects for clients, but also sales, accounting, managing my social media, content creation (like this blog post), etc. Wear as many hats as you need to so that your business is profitable. I recommend doing this for as long as you can stand it. It takes time to grow a small business. It won’t happen overnight and you have to be patient.
When you reach the point where you are so busy that you absolutely cannot do everything yourself, THEN find people to outsource tasks to. Don’t hire someone full-time or even part-time until you absolutely need that much help. For years I have hired freelance designers to take on projects when my workload is way too much for me to handle. I hire them and pay them by the hour for the work they do, rather than giving them a part time or full time position.
Another way you can keep your overhead low is to minimize the cost of your workspace. I worked from home for 3 years before renting my design studio because I wanted to be absolutely sure my business was bringing in enough profits to pay for the office rent without EVER stressing over it. Did I go crazy sometimes working from home? Sure. Am I glad I did it? Yes!
I realize not everyone has the option to work from home, but you DO have a choice in how much you spend on your space. Really take some time to think about what you need from the space and then decide how much it’s worth to spend. Is foot traffic essential to your business? For a fashion boutique, probably. For a spa? Maybe. For a photographer or graphic designer? Probably not.
Here’s what I mean. I typically meet clients at their place of work because I like to get a feel for their business, so I don’t usually have clients come to me except for a few rare occasions. I really just need a space where I can go to get out of my home, focus on work, have my design setup with two computers, comfy chairs, printers, art supplies, and a mini fridge and microwave so I can eat while I’m there. I could have gone to Little Italy, my favorite neighborhood, and rented a space for around $2,000 a month. Instead, I found a building of creative workshops in a much less glamorous (but safe) neighborhood called Normal Heights. I pay $500 a month for 300 square feet and my space is gorgeous. It fulfills every need I have for an office. Sure, there’s no foot traffic, but for the type of work I do, foot traffic isn’t a factor.
SUBSCRIPTIONS & miscellaneous expenses
Look at all your business expenses and figure out if there’s anything you’re spending money on that you don’t really need. For almost a year I had a subscription with istockphoto.com. I was paying several hundred dollars a month for unlimited downloads of stock photography. It’s a fantastic resource, but when I looked at how many images I was actually downloading each month, I realized I could save money by using free stock photo websites instead (pexels.com, unsplash.com) and occasionally purchasing individual images from istock, but only when I really need them.
5. Save Money Before Your Quit Your Day Job
I learned this one the hard way, and I don’t want you to repeat my mistake. When I left my full time job in 2013 to pursue a freelance career, I had $500 in the bank. I had a handful of clients and I was confident that I could keep myself busy with enough work to pay the bills. And I did, for one whole year. Then in February of 2014, I had a very slow month with practically no sales. I felt hopeless and I remember crying myself to sleep every night for a week because I felt so low. (If I’m being honest, slow months are part of the freelance game and it still occasionally happens to me from time to time, although it’s much less frequent now. And I no longer cry myself to sleep over it!) Anyway back to the story. I didn’t have any savings to fall back on, so I had to go out and get a full time job, fast. I was luckily hired quickly by San Diego Magazine and I worked there for 9 months, while still freelancing every night and weekend so I could continue to grow my client base and eventually go back to doing it full time. While I was working at the magazine, I saved $10,000. I don’t remember where I got that number, but at the time, my rent was about $800, my bills were very small, I didn’t spend much on clothes or food, and I knew that a $10K cushion would be enough to keep me afloat for at least a few slow months. Figure out based on your lifestyle and monthly expenses how much money you need to save for times when you have a month or two or three with no profits. Because I promise you it will happen and you need to be prepared.
Pro Tip: Don’t let your profits define your self-worth. I still struggle with that one, but I’m getting better. When you have a slow month, don’t mope around or feel bad for yourself. As tempting as it may be, don’t binge watch Nurse Jackie on Netflix for 6 days straight (I’ve done that.) Take advantage of the extra time you have and use it to do personal portfolio projects or create content for your social media or blog that will drive traffic to your website.
I hope you found these 5 tips helpful! Do you have any additional tips for new business owners? I would love to hear them! I plan on writing a Part 2 to this blog post in the near future, because I have a lot more advice for business owners. :)
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