First Year Running a Small Business – 10 Things We Learned
The first year running a small business as a family didn’t go quite as we expected. Some parts were way easier than we thought they’d be, and some way harder. Overall, it was a success, and a lot of that success was due to a few factors that we realize were instrumental in getting through that lean first year. Here are 10 things we learned in the first year of being small business owners.
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First Year Running a Small Business – 10 Things We Learned
Having our own family business has been a long-term goal. When the opportunity presented itself to start a cabinet refacing business in our local area, we decided not to wait any longer. Now, in year two, we’re looking back on everything we learned during the first year. We’re still in the beginning stages of being new business owners, but we’re thankful for SO MUCH that we’ve learned already!
Here are 10 things that helped immeasurably as we got started on this new business venture.
1. Start when your living expenses are low
New businesses are risky. We’ve heard enough 40, 50, and 60-year-olds say that they wish they could start a business, but they just have too many expenses and responsibilities. When we were contemplating getting started, we already had two (almost three) kids and a house, and we knew we’d probably never have less responsibilities or expenses than we already had. Thankfully, we’d been living below our means since we were first married and knew how to get by on very little.
Being able to survive on a small amount of income per month, not spend money on eating out or entertainment, and fix almost everything that broke around the house was a huge part of what allowed us to get by during that first year when money was tight.
If you’re contemplating a new venture, don’t wait while your living expenses, insurance, and comfort level continue to grow.
2. Save up enough to live on for awhile
More than just being able to live on a little, what really saved us from a ton of stress during that first year was saving up enough money ahead of time to live on for quite awhile, even if we didn’t make much money during the first year of business. Before Garrett quit his full-time job, we knew we had at least a few jobs lined up along with enough cash to live on even if there were no jobs at all for a few months.
Most startup businesses are not profitable during the first year or two. If you still have a family to feed, save up before doing anything too reckless. It will take off so much stress in the long run!
3. Don’t go into debt
Everyone has a different opinion on debt. But for us, we knew we did not want to go into debt for this business. If it didn’t work, having a whole bunch of debt would have been a huge burden to our family, possibly for years to come. So business loans and business credit cards were out of the question – we needed something where the initial investment would be low.
Obviously, every businesses is different, and many require going into debt, but part of our business plan was choosing a type of business that didn’t require significant start-up costs. The success rate for small businesses is just not that high – not that we were expecting to fail – but the potential risks were not worth burying our family in debt.
Because of this decision, the first year was extra hard work. We bought the tools and supplies we needed to get by and do a quality job for our clients, but it was nothing fancy. After the cash flow started picking up (which took around 12-18 months) we were able to start purchasing better tools and equipment. We’re still using an old truck and working out of a small shop, but it’s been the best way to keep the stress level low and not bite off more than we can chew.
4. You have to be motivated
When you’re working for an employer, you pretty much get paid no matter what.
When you’re working for yourself, you get paid if you work hard. And you don’t get paid if you don’t.
You have to be self-motivated in order to run your own business.
Running a small business is something we’ve wanted to do for a long time, and providing for our family is something that Garrett doesn’t take lightly. It’s meant working early and working late and often working on Saturdays. And as a family business, it’s meant that the whole family needs to be on board!
Thankfully, it also has its benefits when it comes to family life (see #6).
5. It takes more time than you think
The first year, we put in about 2-3x as much time as a full time job and made about the same amount of money. We learned that if you want to work from 9-5 Monday through Friday, you will not like being a first-time business owner. Be prepared for early mornings and late nights to make it work.
Fortunately…
6. The flexibility is worth it
Even though it takes a lot of time, the good news is that the flexibility of having our own business has been worth it. Not every day is flexible, of course. But managing our own schedule means that if Garrett needs to make an appointment or even just take a few hours off for a family activity, he can. …and then, after the kids go to sleep, go back and work until 10pm to finish everything up.
7. It brings the family together
One of our main motivators for starting a business in the first place was to have something that our family could do together, rather than Garrett working for another company that didn’t have anything to do with the rest of the family. We wanted a kind of business that was hands-on and that the kids could even possibly become involved in as they get older.
Although Garrett does 90% of the work while I keep the household running, having a common goal of providing for our family through the business has been a great way to bring us together even more. There’s always something to talk about, marketing strategies to go over, and new goals to work on.
Before the Industrial Revolution, it was common for families to work together. Now, it’s rare. For most of the country, each morning, family members all go off in their own directions and have little to do with each other’s daily lives. One of our goals was to bring the value structure back to the home and family by making our home and family the nucleus for living and employment. The nature of the business is still away from home for much of the week, but the common interest of running a successful family business has created a big goal that all of us can be a part of together.
8. Start marketing before you need marketing
We knew having a good marketing plan was important, but in the early days of starting the business, we didn’t quite realize how important it was to start reaching out to our target market way before we needed those potential customers.
We found out that having a good marketing strategy, doing adequate market research, and figuring out how to reach our target audience was imperative to do sooner than later.
As new entrepreneurs who didn’t want to go into debt, we waited a few months before investing in building a quality website with a trusted marketing company. Before building the website, we were really only able to reach people we knew. Once we hit the wall on our circle of friends and acquaintances, the decision to invest in a really well-built website and get expert marketing advice from the company we chose definitely jumpstarted the ability to reach a wider customer base.
Looking back, building a website should probably have been one of the first things we did to help get a better flow of target customers from the get-go and have a place to direct people to find more information.
Simply building a website doesn’t necessarily attract web visitors, but it’s a good first step. Marketing is its own whole world, so making a plan with someone who knows what they’re doing is one of the best investments you can make for your business. At least, that’s what we found!
9. Get a good accountant
When it comes to small businesses, taxes are way more complicated than simply being a W-4 employee. Finding a really competent accountant has cost us a little more each spring. However, it’s more than paid off because of the knowledge he’s given us, which has led to more of our tax money back.
Ask around to see who businesses owners near you are using for accounting, and don’t be afraid to pay a little more for someone who really knows what they’re doing.
10. Push through and figure it out
There were SO many frustrations during our first year of being small business owners that now – halfway through our second year – don’t even exist. From figuring out how to use Quickbooks to choosing the best legal structure to streamlining client quotes to setting up social media platforms – the first year of running a small business had more than its fair share of confusion and difficulties.
Possibly the biggest challenge was just pushing through each difficulty, problem solving, and keeping an open mind to possible solutions. If running a business was nothing but easy and lucrative, everyone would do it. It’s not supposed to be easy – especially the first year – but we’re learning that dedication and hard work pays off!
Is Owning Your Own Business Worth It?
Having our own business has been a lot more time and effort than working for someone else was. However, it’s also given us a ton more freedom! From allowing more flexible family time to increasing earning potential, we vote that so far, owning a business is worth it!
