As a contractor or business owner, what motivated you to become your own boss? Was it the fact that you got sick and tired of feeling undervalued? Was it the thought that you wanted to make a bigger difference in your community? Whatever your motivation is, if you elect to go at it alone, you are in for an adventure, to say the least.
I went into business for myself at the age of 23. Because I was treated unfairly I quit my job and, rather than going to work for someone else again, I did the very thing most people are scarred to do — I started my own business. That was nearly 13 years ago, and since then I have started several businesses.
I have been some what successful when the mortgage market was good back in 2002-2007 but then I faced some pretty harsh realities when the market crashed just like many other business owners. At that point I was terrified as I had no business plan, no money and just enough guts and craziness to go at starting another business but better this time.
When successful, being your own boss is extremely rewarding. On the other hand, it is very expensive and painful when it’s unsuccessful. I know, I have done both. To make it work you need to go in with eyes wide open knowing what it takes to succeed. Here are some tips to prepare you when you finally take the plunge to be your own boss or as a reality check for you if you are your own boss.
If you are just starting out, you will no longer have the option to take holidays off or even turn off at the end of a long day. This is a 24/7, 365-day per-year gig. The idea of balance, time off, weekends and vacations will become nonsensical luxuries that you will no longer be able to afford until you have built something that is sustainable and is consistently growing. Be prepared to live, breath, eat and sleep your new company. The greats all talk about being obsessed with their business, even when they are off. Maybe that’s why they make it — healthy obsessions. To find out what your healthy obsessions are, make a two-column list. One side is the obsession, the other side is the payoff. Focus on the obsessions with the highest payoff. Set goals and become Obsessed
Here is a link to an article that covers more on this Obsession topic. A True Goal Needs to Become an Obsession
Ninety-three percent of small businesses make less than $250k per year and 57 percent make less than $25,000. Be ready to make less than what your current or former jobs pays. You have to understand that it takes time to grow your business. Heck, It took me five years just to get back to where I was when the market crashed. I thought I would be making more money in three months but it took 10X longer than my conservative calculations. Even when I did finally exceed the income from my previous business I couldn’t use the money. I had to plow my money back into the business to continue my growth. Can you relate as a business owner? I understand the sacrifices one makes to start their own business and that is why I am doing what I can to provide tips to those that seek information to improve their situation.
If your contracting business is modeled on operating at half the margins of the competitors in your field, then you will never make it. Businesses that try to operate with skinny margins will cease to have positive cash flow, and limit their ability to reinvest to steal market share from their competitors. In fact we help our clients buy other businesses creatively to not only grow their revenues, but also to increase market share.
Businesses such as Walmart’s business plans work because they do have margins and they do have volumes while advertising the lowest price. Businesses fail when they are unable to sell their products or services in volumes high enough and at margins fat enough to continue to reinvest and sustain unforeseen events. Top companies like Apple, Google, Caterpillar, Coca-Cola, Starbucks and WholeFoods have both high volumes and high margins. You must have both to succeed. This is a HIGHLY Common mistake we see in the Contracting space that must be addressed and fixed otherwise your business will have a very hard time succeeding.
Here is a good article on margins published by Entreprenuer.com: The 5 Myths of Mastering Profit Margins
As a business owner, remember that the buck always stops with you — and so does the business. When you are done, the business is done. How much staying power do you have? I don’t just mean money, but energy, belief, stamina, and courage. Outside factors aside, most businesses fail because someone quits, not because they run out of money or time. You must build on your own staying power and surround yourself with people who believe in you and your purpose or idea, even more than you do. Surround yourself with mentors, advisors and board members, and force yourself to invest time in new information and personal training so you have the motivation to stick and stay. If you have had problems with several companies, you may be part of the problem.
More than 90 percent of your time as a business owner is most likely spent selling employees, your spouse, customers, investors, lenders and even yourself on your business.When you take on your own business, you must become the consummate evangelist sales master, constantly selling those around you on the business. Your ability to sell will make or break you. Become a master at selling others on your products and services and no one will be able to stop you. Then be sure to TRAIN and get your technicians who are taking and running sales calls, make sure they are equipped to master the sale and even master the art of up selling. That is going to make a profound impact on your revenues and profits (only if margins are setup correctly;-)
If these points haven’t scared you out of becoming the BOSS, you just might be ready.
Here is to your continued success and education.