Starting a New Business? Here’s What They Haven’t Told You (Part 2).
March 3, 2013 | By Vela Wood
Last August, I wrote numbers 1-5 of 10 things that you probably haven’t been told about starting a new business. I foolishly wrote then that numbers 6-10 would come in “a few weeks.” Hopefully you’re okay with “a few months” instead. Nevertheless, here they are:
6) Growth is expensive. Growth usually means more people. Not only does more people mean a higher payroll, but also it means more office space, more desks, more computers, more decor, more copiers, more phones, etc. Before you add another employee, figure out what your current revenue is per employee, and make sure that you can maintain that with the additional resource(s).
7) You will be involved in a lawsuit. You’ll need to sue for something (probably a payment owed to you), or you will be sued for something (hopefully not a payment owed to someone). The worst part of a lawsuit is the anticipation prior to the actual filing. Once it gets filed, you will be greatly disappointed by the pace. It never gets resolved by the end of the episode like it does on Franklin & Bash or Harry’s Law. In fact, there’s a good chance that Harry’s Law will be cancelled before your lawsuit is concluded. (Update: I think Harry’s Law was cancelled last fall. This upsets me).
8) No one else will love your business as much as you do.
9) Banks are impossible to work with. It takes an act of Congress to get a small business loan these days. But a good bank partner is a priceless asset. Build a good relationship with a local bank. Once you get your business going – take out a small loan that you know will be easy for you to repay. This will build a foundation for future loan applications. Also, build good credit for your business by leasing small office equipment and paying on time; same with credit card purchases. After a few years, it will be easy to go and get working capital from your bank partner.
10) You will have to fire someone. This will have your stomach in knots for days, or even weeks. But not everyone is a good fit for your business. You have to do what’s best for your business. You’ll feel much better after you do.