As a small business owner, you wear many hats. Hats of all shapes and sizes depending on the requirements of your day. Have you ever answered the phone and disguised your voice so that you could pretend to be a receptionist and wondered if the caller knew it was you when you transferred the phone (to yourself)?
In this series, I explore lessons learned from my own experience as a small business owner of a law firm. Since closing my practice, I have engaged in fundamental introspection and seek to elaborate on my lessons learned in an effort to encourage others to incorporate best practices and not engage in detrimental behaviors.
In the world of startups and small businesses, your income dictates your outgo (and for many new entrepreneurs, directly correlates with their ego). Where you spend and where you save can mean the difference between making it or closing your doors. How do you know what key areas to spend to maximize your return on investment? Here are some key questions to ponder when strategizing your next expenditure:
Know when to say “No”
Small businesses and startups are targeted by outside and inside sales forces. Lists are easily attainable. For example, when you sign up for a new business line, the phone company will ensure you are at the top of the list for their sales team to attempt to sell you a yellow page ad. Often, these can be the most expensive (yet ineffective) forms of advertising. Linking the business phone service to the cost of high-dollar advertising is an effective way for the phone company to ensure they get their revenue first, before any other creditor is paid. Oftentimes, the inexperienced business owner will pay this bill first to ensure their phones don’t get disconnected and other line items suffer as a result. This vicious cycle can continue indefinitely until the new business has no revenue left for any other advertising purpose.
Seek out cost-effective forms of marketing and advertising
Websites are another way to portray a strong presence in your marketplace and can be built at a fraction of the cost of other marketing mediums. Make sure you own the rights to the domain when the website is built. Surf other websites of competitors to seek out best practices and ask for recommendations of other local professionals. If you are not savvy in the world of internet marketing, don’t try to build the website yourself. Seek assistance, but don’t pay too much or let someone hold your website hostage should you choose another provider to maintain it down the road.
For small business owners, you are connected with your community in multiple ways. Even if you are home-based, you are part of that local economic engine and tax base. You rely on local services and may even provide services to your community. Think about how you define your community- is it your neighborhood? Your city? What do you, your employees and customers care about? When you define this, invest in it. Where I built my practice, college football was all that mattered. I knew not to plan anything on a weekend unless I was actually hosting a football game. Printing out a calendar of upcoming football games allowed a unique opportunity for advertising. However, I needed to include the times and channels for both major teams so as not to alienate future clients. Refrigerator magnets were a great opportunity for this particular form of advertising because it could be prominently placed in a future client’s house for years.
If you are a professional services organization, give back. As a lawyer, we were under an ethical obligation to provide pro bono legal services. I made it a point to represent criminal clients on a regular basis, partly because I really cared (and partly because I could never figure out how to properly fill out the billing forms to submit to the state). Sometimes, however, these charity cases turned into a paying case later when they referred their friends. As a restaurant owner, you may be able to arrange to have a local foodbank pick up extra food at the end of a shift. The possibilities are endless. If you can’t give what you’re selling away, then give of yourself- volunteer. The rewards are priceless.
Don’t grow too big too fast
This new company may be your dream realized, however, if you start hiring everyone and their cousin who needs a job, you will quickly become payroll-poor. Know just how many people you need to run a streamlined company and stick to that number. Payroll is often the largest line item of any company. It can get overwhelming in a hurry if you allow your company to grow too big too fast without the new customers to support the growth. Encourage productivity and a positive work environment.
Don’t be afraid to ask for advice
We are all good at something (my siblings would agree that I was good at being annoying). Based on some combination of work and life experiences, personality, management style, or other factors, we naturally gravitate towards those areas of life where we learn our strengths are. Taking stock of our strengths (and weaknesses) is critical to success. It gives us the confidence to know that although we have to wear many hats, some fit better than others. And those hats that we don’t wear well may need to be worn by someone else. Don’t be afraid to pass on a task to another professional. Although it may not be wise to hire a full-time barista just yet, it may also be unwise to balance your own books. Many small business owners hire a bookkeeper or an accountant (or both) to keep them on track and in compliance. Some even outsource their payroll to ensure compliance with local, state and federal tax laws. Reading trade journals, attending networking events and lunch and learns with the local chamber, popular and successful businesses in your local area and line of business should be a regular part of your job. You never know when you’ll meet your next customer, client, employee, partner or even friend.