10 Lessons I Learned in My First 10 Years in Business
Last week, The Outsourcing Company turned 10 years old. We’re doing really well, now but we’ve made every mistake in the book. These are the 10 most valuable lessons I learned in the last 10 years.
#1: Always Do the Right Thing
There will be times when you’ll have to choose between making money or doing the right thing. Sometimes you can get a new client by stretching the truth (like referring to yourself as “we” instead of “I” when you’re the only person in your company). Sometimes you can make a few bucks by selling someone something they don’t need. Sometimes you might decide not to refund a customer because you think they’re wrong and you’re right.
Here’s what I learned: always do what’s best for your client. Your reputation is the most important thing you have. Two years ago, one of our clients got sued by one of their customers and it put them in a very difficult financial situation. They had an outstanding invoice with us and I decided to void it because I didn’t want to take their money. Last year, they introduced us to our biggest client yet and then they referred another three clients to us.
Always do the right thing; it pays off.
#2: Be Truly Unique
This is what my marketing professors taught me: “analyze your competitors and do what they’re doing, but better”. This is BS. Here’s the truth: you don’t win by blending in; you win by sticking out. But the problem is that sticking out is risky and most people care more about not losing than they do about winning. That’s why most companies are plain boring. They’re not memorable.
Take some risks. Dare to be a little crazy. Here are some examples of companies who took a chance and got a lot of people talking about them:
- Voodoo Doughnut is a donut shop in Portland, OR that makes the weirdest donuts you’ll ever see. Whether it’s 2am or 2pm, there’s always a really long line of people waiting to buy donuts.
- The software industry had a very simple business model: when you wanted a program, you had to buy a license. Google changed this by giving away a lot of phenomenal products (email, calendars, Google Docs and even a free phone number with unlimited calls within the US). Google makes their money showing ads to their users.
- In a world where eCommerce websites have hundreds of products, Woot sells only one product a day and they’re one of the most popular websites in the world.
- Jones Soda allows you to put your pictures in their bottles. They make great gifts.
- Toms Shoes gives a child in need a pair of shoes for every pair you buy. They have 1.5 million Fans on Facebook and they’re one of the fastest-growing companies in the US.
#3: Narrow Your Focus
Who’s your ideal client? If the answer is “whoever can afford me”, you’re in trouble. I’m going to tell you something you’re not going to believe, but bare with me for a second: to be more successful you need to target fewer people and offer them fewer options. Most entrepreneurs are concerned with leaving opportunities on the table, but the exact opposite happens.
Let me give you an example: I own a social media agency. If someone told me “I’m a sales consultant. Are you interested in my services?” my answer would be “no”. But if someone said “I help social media agencies shorten their sales cycle and increase their average sale. Are you interested?” I’ll be thrilled to hear more. Narrowing your focus helps to make your offer more relevant, personalize your marketing pitch, increase your perceived value, eliminate competitors who aren’t as focused, and charge more for your products or services.
Another reason to narrow your focus is referrals. If someone told me “I’m a business consultant” I wouldn’t even know whom I should refer to them (plus, there are a million business consultants out there anyway). But if someone told me “I help companies go from $1M in sales to $5M” I know a lot of people I can refer to them that meet that criteria. Make it easy for people to refer business to you by defining your target market and product offering.
#4: Have Candid Conversations with Your Employees
Running a business is hard. Conflicts arise, people don’t get along and some folks work harder than others. You don’t help anybody by avoiding difficult conversations. You need to speak up, say what you really think. And you need to encourage your employees to do the same. Encourage your employees to give you feedback and tell you what you could be doing better. Repeat this until it actually starts happening. It’s very hard for a lot of people to call out their bosses when they think they’re wrong, but it’s important that they do so.
Make it clear that you’re never looking for anyone to blame; everyone is working together to solve a problem. Don’t beat around the bush; say it like it is. This is the best way to avoid office politics and drama.
#5: Have Realistic Expectations
It seems like every day there’s a new “get rich quick” scheme and a new multi-level marketing (MLM) company formed. You know the pitch: “Make a lot of money working from home. It’s really easy!” BS. Running a business is much, much harder than having a job. You work more hours, you have a lot more responsibilities (including feeding other families) and you’ll spend a lot of time doing things you don’t like. On the plus side, you’ll be building something that belongs to you and you’ll have a lot more flexibility than you would working for someone else.
Is it worth starting a business? Well, I’ve started seven and I sold four. For me there’s no other choice. I was a terrible employee. I had three jobs in my life: The first one was at a restaurant. I didn’t like it and quit on my second day. The second job was as a ski instructor, so it wasn’t really a job. My third job was working for my dad. He’s been in business for 34 years and to this date I’m the only person he’s ever fired, so I guess I wasn’t born to work for someone else.
#6: It’s Always a Work in Progress
If you think that if you work hard enough one day your business will be “just perfect”, I have bad news for you: your business will never be what you want it to be. You’ll always have ideas to make it better. This is normal. The more you grow and the smarter you become, the more ideas you’ll have. Think of your business as a work in progress: it’s never finished and it can always be improved.
#7: Meet People in Person and Pick Up the Phone
I love email, Facebook and Twitter, but successful people are really busy and the best way to get through to them is by using less-crowded channels, like telephone and in-person meetings. It’s your choice: you can be just another email in someone’s inbox or you can actually pick up the phone and call them. Take them out for lunch and get to know them.
#8: Hire the Best and Delegate
The biggest mistake I made with my businesses was hiring the cheapest people I could find. Here’s the problem with this: they don’t know what they’re doing so you have to spend a lot of time training them and fixing their mistakes, which is pulling you away from running the business. In the end, this ends up costing you a lot more.
Put some money aside assuming that even the best employees take a few months to pay for themselves. Write great job descriptions. Spend some money posting the job to Craigslist, LinkedIn and Monster.com. Interview at least 15 applicants; don’t just hire a friend because you like them. Don’t just believe everything people say during interviews; make them prove it to you. A lot of people can talk the talk, but they can’t walk the walk. Always have a trial period; if it doesn’t work after that just part ways. And make sure your employees have very clear goals and know what’s expected from them. If an employee doesn’t perform, it’s ultimately your fault: you either hired the wrong person or you didn’t give them the tools to succeed.
Once you’ve hired the best, explain to them what they’re supposed to accomplish and get out of their way. Don’t micromanage people. Your employees will do things differently and you have to accept this fact. I lost count of how many entrepreneurs have told me, “if I could just clone myself…” This is a very dangerous thought. You can’t be cloned. As long as your employees reach their goals, let them do it their own way.
#9: Pivot Your Business Model (A Lot)
Don’t think for a second that you know what your business model is going to be; you have no idea. You might think that people want green squares, but the market will show you that they want red circles. You think your target audience is VPs of sales and you’ll find out that HR managers are more interested in your products. Your initial pricing structure will need some tweaking. Your entire business model will change (several times) over the first few years as you figure out where you fit in the market.
Don’t resist change. Change is great. Listen to the market and adapt to what they want.
#10: Understand What Work-Life Balance Really Is
I used to think that a balanced day was one during which I worked eight hours a day, exercised, hung out with friends and spent time with my wife. I then realized that I never had a “balanced day” and I understood what work-life balance really is: sometimes you work your ass off for two months and then you’re just so exhausted that you need to take a week off. You have to learn to listen to yourself: when you’re tired, rest. When you’re feeling out of shape, exercise. When you’re inspired, do creative work. When your brain is off but you have energy, do monkey work. In the end, it all balances out. That’s what work-life balance really is.
BONUS TIP: Ask for Help
I’m always shocked by how many entrepreneurs don’t have mentors. Not having a mentor is the result of laziness or lack of confidence (i.e. you don’t think successful people will want to help you). I’ve found that successful people love helping others; they’re just not asked often enough. I suggest getting at least two mentors: one who’s a veteran in your industry and understands the problems you’re facing, and one that has a skill you don’t (for example, I’m really good at marketing, but I suck at finances). Sometimes this roll can be filled by a consultant or a partner with complementary skills; just make sure you don’t try to do everything alone. It’s way too hard and you don’t get more credit for not asking for help.
What Have You Learned In Your Business?
What are the most important lessons you’ve learned in YOUR business?
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