Last Updated on June 28, 2022 by Carolyn
School of Hard Knocks
Table of Contents
It’s hard to believe but I’ve been in business for myself for almost 30 years. Along the way, I’ve learned some very important business lessons that I wish I learned sooner. I hope that by sharing these 9 business lessons with you, I will help you avoid making the same mistakes or perhaps make your business learning curve and life a little easier.
Doing Business with Friends
You’ve probably heard the adage ” I don’t do business with friends”. There is a reason this adage came about. Again and again, you hear of relationships going sour over a business deal. Friends usually trust friends and oftentimes this trust can be misplaced.
Over the years of running my business, I’ve had quite a few uncollected accounts, and unbelievably to me the majority of those bad debts have been with friends. It’s uncomfortable confronting friends about money and so in the past, I’ve avoided the issue and over time the accounts got older and the friendships faded yet those accounts remained unpaid.
The solution to this problem is simple. One can do business with friends but one has to treat friends like any other customer, there is another business adage that sums this up well, ” Business is business”. You can give your friends discounts if you are so inclined but when it comes to payment don’t grant any lenience, give your friends the same terms as your other customers. If your terms are cash on delivery, collect on delivery, your friendship will be better for it.
Don’t Under Estimate Your Value
It’s tempting when first starting out to price yourself and your products cheaply so that you can attract customers. Don’t do it! You’ll attract customers who will nickel and dime you to death. Believe me, you’re better off without them. Focus your energies on attracting quality customers willing to pay you what you’re worth.
Establish your prices by researching competitor’s prices. Compare your services with theirs and create a pricing strategy that allows you to be competitive but not cheap.
Pricing product too cheaply is also a mistake. A loss leader or two is one thing but in general, you need to be profitable. Why be in business if you’re not making money? Create a budget and know what margins you need to succeed. Know how you want to position yourself in the market. Are you going to shoot for low margins with high turnover, or are you looking for higher margins with fewer sales? How much do you need to sell to break even?
You Are Not a Bank
For years I followed the business model I learned when working through the accounting ranks, invoice when services are completed with payment due in 30 days. This worked well enough for most of my clients but there were always those few who wouldn’t pay me until right before their tax returns needed preparing almost a year later! Call me stupid I still prepared their returns. And then there are those mentioned above under “friends” who just don’t make paying me a priority.
My policy now is payment is due when services are rendered. And you know what? I get paid with no fuss. It may be tempting to offer terms to secure work, but working for nothing is worse than no work at all. Aren’t there things you’d rather do than work for free?
Know Your Strengths and Weakenesses
Operating a small business can be daunting, there are so many roles the owner must play, and many of those roles you might not be very good at: website design, accounting, marketing, etc. It’s tempting to try to do all but in reality, you’re better off acknowledging what you’re good at and outsourcing the rest of the work. Someone with expertise in the area you need help will do a better job than you will and most likely get it done quicker, freeing you up to do the things you are GOOD at.
One thing is definite, there are only so many hours in a day, use them wisely!
You can hire freelancers very reasonably at Upwork and Fiverr. Examples of some fees found on Fiverr: Fee for logo design in as little as 12 hours $20.00, fee for setting up a company on Quickbooks, as little as $5.00! Can you afford not to outsource?
Stores and retail operations usually have hours but if you’re a business owner working from home, you don’t have to adhere to hours of operation. You’ll probably find yourself working nights in the beginning as you may still be working a 9-5 job. But as you grow set hours that your clients can contact you otherwise you’ll find yourself discussing some issue with a client as your dinner grows cold on the table or when you should be walking out the door to take your child to dance or karate class.
Along the same line don’t respond to emails after hours. If you happen to be working outside of normal hours, schedule your emails to go out first thing the next morning. Along the same line of thought, don’t return clients’ phone calls after hours: If you don’t want them calling YOU after hours don’t call THEM after hours.
Don’t be afraid to take a vacation, your business will survive without you for a week or two. Just be sure to put an appropriate voicemail on your phone and a vacation responder on your email, and address “emergencies” if they crop up.
Ask Customers for Referrals
Don’t be afraid to ask customers for referrals. And let your customers know you appreciate the referrals by giving them a small gift or discount on their next purchase. It’s a lot easier (and cheaper) to attract referrals from happy customers than brand new clients off of the web or street. Word of mouth is the best advertising and it’s also the cheapest!
Find a Niche
It’s a lot easier to be a specialist and be an expert in a particular area than a jack of all trades. Know what you’re area of expertise is and promote that and don’t take on jobs that you are not qualified for. When you’re looking for help don’t you prefer to hire an expert in what you’re looking help for rather than hiring someone who might just be “familiar” with the field? Most people will also pay more for an expert. Know your strengths.
Schedule and Manage Your Time
With so many tasks on their plate, small business owners often have to juggle what gets done. Scheduling tasks is the only way to ensure work is completed on time. There is nothing worse than a client calling to pick up the work and realizing you haven’t even started on it! When scheduling your time be realistic about how much you can accomplish so you don’t take on more than you can handle.
There are some great software tools available that make organizing deadlines and workflow a breeze. I have chosen to use Click-Up. With it, I can track all of my projects, appointments, and deadlines.
I also block time to answer emails and return phone calls. I discourage phone calls as much as possible as a phone discussion inevitably takes more time than an email reply, and an email leaves a paper trail to follow up on.
Don’t Be Afraid to Admit Failure
Knowing when to quit is important. All too often I see business owners spending good money after bad trying to get a business to fly, to no avail. You need to step back and take an unbiased look at the operation or even better have someone else take a look at it. An idea may be great but if it’s before it’s time or in the wrong place, it can be a hard sell. It’s better to admit defeat than go bankrupt flogging a dead horse.
Learn From My Mistakes
So I’ve shared with you my “9 Business Lessons That I Wish I’d Learned Sooner” do you have any lessons you’ve learned that you’d like to share? Please feel free to share via a comment below.