Going out on your own and starting your own business is a rewarding adventure, but you’ll immediately miss these 12 key ingredients. Replacing them quickly is your key to success.
Starting your own business is a great dream and adventure for many of you senior engineers, sales staff, marketers, and other corporate types. Years of experience on the ground in functional departments of larger organizations provides experience that can be use in your new business.
However, in your first day in your new office, you’ll quickly find that there at least ten things you left behind that you’ll need to replace, pronto. And we’re not talking about your favorite red Swingline stapler. We’re talking about the 12 key ingredients that you’ll need to make your business a success, shown following and in sections below. How quickly you can replace these determines how long it will take your business to get traction. The challenge is to assemble these before you run out of money!
- A Place to Work
- Your Sales Team
- Toll Free Telephone Number Service
- Cloud based PBX
- Reliable Internet Access
- A Call Center to Sell and Support Customers
- The Team
- Human Contact
- Affordable Health Insurance
- The Accounting Department
- Front Money
- A Boss
1 – A Place to Work
You can meet customers at Chik-Fil-A or Denny’s, or work with your team over coffee at Starbucks. But when it’s time for down and dirty hard-core work, you need a place to work. Your own basement or bedroom may work for a short period, but when it’s time to work with your team, you need a space.
Once it’s time to get some space, you’ll quickly realize how much of a painful and expensive distraction getting office space can really be. At your old office you could complain about the air flow or noise, but looking back, it was really great to have someone else clean up the parking lot, pick up trash, and run internet cables.
2 – Your Sales Team
If you were the engineer, programmer, web designer, creative director, product manager, warehouse manager, or logistics head, you probably never had an idea how sales people win orders. Sales people bring in customer orders that convert to invoices and receivables that fund your paycheck.
Now that you are on your own, you’ll soon find that having a website, rented office space, and a clever business card just won’t bring in orders. You’ll run out of cash very quickly if you don’t sell an order before starting your business, and don’t keep selling while you are delivering your first orders.
Most likely you’ll have to allocate a day or two a week to sell, network, and represent your brand of service. Anything less means that you’ll just be living hand to mouth, and that you’ll have big gaps of time between projects when no money is coming in.
3 – Toll Free Telephone Number Service
At your old office, you picked up the phone and called anywhere you wanted, without concern for cost. Your old company had local phone numbers in markets around the country or the world, and had toll free numbers in the US, Canada, and a couple of other countries.
Now you’re using your cell phone and an old FAX line in your basement or the rented office space, and you don’t have an affordable long distance plan. You also don’t have toll free numbers or local phone numbers that customers can call. What to do?
The most effective approach is to find an excellent VoIP service provider like AVOXI toll free numbers. You can get a US toll fee number, a Canada toll free number, or local telephone numbers in cities around the world for customers to call. And with a soft phone or VoIP phone, you can have outbound toll free calling service as well.
4 – Cloud-Based PBX
Customers called your old business, passed through an IVR, and reached the extension they needed, all automatically. When it’s just you and three others in a rented office, how can you afford a PBX and IVR to receive and direct calls, play pre-recorded messages, record incoming messages, and forward calls to each team member’s cell phone when your team members are out of the office? How do you take a voicemail message from prospective customers after hours?
And how can you afford to get a PBX when you are only expecting to be in your current temporary office space for a short while? If you spend all your money up front, you’ll blow off half your startup money!
Of course the answer is to find a quality VoIP service provider like AVOXI and get a cloud-based virtual PBX set up. It only takes a day or two, and you can have all the extensions you want. Setting up call forwarding and messages is totally easy, and you can manage your virtual PBX from anywhere on the web with it’s simple web interface.
The best part, of course, is that you get the service quickly, and that you only pay a low monthly service fee. You don’t have to buy or setup hardware!
5 – Reliable Internet Access
The home-based cable modem or DSL connection you have in your basement may work well most of the time, but there’s always going to be an outage. Sometimes outages can last for more than a week, particularly those related to extreme weather condition.
Entrepreneurs are increasingly relying on super WiFi and 4G connections such as a new generation lightning fast cell modems from AT&T or Verizon, and Clear-based WiFi mobile hot spots from FreedomPop have become widely available. These are not cheap, but what a blessing it is to be able to immediately set up a mobile connection with enough bandwidth to support connection sharing with others in your small team.
6 – A Call Center to Sell and Support Customers
Yes, who were those twenty people back in the third floor of your old building? That was your inbound support call center that kept customer support questions from being routed to your developers during the day.
Now you are on your own or have a small team, but how can you possibly afford to set up a call center when you don’t even have enough people in your rented office space?
Here’s where technology can help. You can set up a virtual call center that lets you outsource help desk support jobs to professionals who work remotely. For a very modest cost, you can assemble a small team to provide support coverage for your customers, and only pay for your virtual call center as a pay as you go service. There’s no equipment in your rented office space, everything is done in the cloud so that you can manage the whole process from anywhere.
7 – The Team
There’s a great advantage to having a team, and you don’t feel it until you’re all alone in your new rented office. Should I call on customers now, or work on the new website project? Should I be checking the money, or is it time to set up a Git server for development we’ll be doing?
The advantages of having a team is that you have to divide up the work. You have the chance to focus on those things you do well.
By yourself, there are 48 things you need to manage. You cannot take time to do any of these effectively. If you add just three team members, your list is reduced to a more manageable 12 items.
The other advantage of a team is that a team can find better methods and smarter priorities. If you listen, you will often find a team member who can suggest a better, faster, cheaper way to do most anything. The team that works together can move as fast as the best idea allows them.
With a few team members, there will be a lot of good ideas, so getting a team together is a huge advantage.
8 – Human Contact
If you like to do a lot of the work yourself, you may be the loneliest and least successful entrepreneur ever.
If you have a team to manage, you’ll be OK.
But if you don’t have a team and don’t get out much, you may find yourself at the local Starbuck’s, Denny’s, Waffle House, Chick-Fil-A, or Barnes and Noble bookstore, conversing with the person at the register.
Let that serve as your sign that you should be collecting a team of helpers, and that you should be out meeting with customers to find new opportunities for your team.
9 – Affordable Health Insurance
At your “big old” company, the HR department had a full suite of health coverage, disability insurance, dental coverage, optional vision care, and term life insurance.
On your own, you probably were depending on high-deductible (catastrophic coverage only) health insurance that you paid from $400 to $1000 per month.
Ignoring the politics, entrepreneurs in the United States are getting their private health insurance cancelled. Nearly all private insurance plans will be cancelled by 1 January 2014 because HHS wrote regulations that make almost all current high-deductible policies “non-compliant”.
In most cases, insurance companies in the US are forbidden by regulation from selling you the same coverage in 2014 that you had in 2013. They are only permitted by law to offer you “compliant” plans that have a lot more coverage, higher deductibles, and higher costs than you had before. No good options here – you’re going to pay a ton of money for high-deductible insurance.
10 – The Accounting Department
It won’t take you long to find out that you will lose up to a day a week being your own bookkeeper, budgeter, and planner. You have to watch the money carefully, to make sure you don’t run out before you get paid.
And it’s not just now and then, it’s every week.
You can get a bookkeeper to post receipts, pay bills, and gather expense reports. However, you really need to track your own actual and forecast income and expenses, and prepare your own cash balance forecast. Your forecasts on income should include projected collections from all your projects or sales campaigns.
This will seem strange if you were an engineer or inside sales person in your previous life, but it’s a win or lose issue. You cannot let this go undone without killing your business.
11 – Front Money
You’ll quickly find out that you don’t have enough money. $100K seemed like a lot at the beginning, but $300K would have been much better.
When you have team members to pay, invoices for tools and services to pay, and you need to have enough money to front the next project, you’ll realize how valuable working capital is. We’re not talking about anything fancy, just cash in the bank that you need to float your business.
In your old business, some corporate CFO had capital budgets and operating budgets planned out for all the divisions, and lots of money in the bank to front all the operations needed. Even if customers “paid slow”, you still got a paycheck.
When you are on your own, there’s not big bank account, and almost all your customers “pay slow”. While you are burning through your first $100K of startup money, you don’t care. But when you are down to your last $10K, things start to get very, very worrisome.
So there’s no solution here except to either 1) start with three times the startup money you imagine you might need, or 2) go get some funding. Crowdsourcing and angel investors are sometimes good options, and adding more debt to your credit card is usually not a good long-term solution.
12 – The Scheduling Discipline of Having a Boss
Being your own boss. What a wonderful concept. Except that, even for the most highly motivated entrepreneurs, there needs to be someone to whom you are accountable. If not, you will be tempted to make less than best scheduling and prioritization decisions.
You’ll find that keeping promises made to customers provides some very good schedule and priority discipline, but this only works well if you set realistic deadlines and make only achievable promises.
Often, it takes time in service to understand how long tasks take to finish. If you start on day 1 to collect job or product data, it will still take a year or two before you have the kind of industrial engineering data you need to make accurate quotes and set realistic deadlines.
So the boss you used to have – what was his benefit? Perhaps it was the 20 years of industry experience, not just in meeting people and remembering names, but his ability to accurately estimate project duration and level of effort required. Ah, that’s it. The old boss knew how to do things quickly and efficiently. He got his job by making and keeping promises based on experience-based plans.