So you want to be an entrepreneur.

Shawnee Love   •  
April 9, 2010

I’ve got one question for you.

How much do you like Ichiban and Kraft Dinner?

Because that is about what you can afford to eat while starting up a business. You see, everything takes longer than you would expect whether registering your business, developing a website and marketing materials, getting your name out there, and of course generating leads and sales. I am not going to wax poetic about all the tasks and things to think about because there are university courses as well as wonderful government programs like the ones provided by Community Futures, that cover the “How to start a business”. I am also an avid fan of Dragon’s Den which I think does a good job of pointing out the flaws in the plans of idealistic entrepreneurs (and I use that phrasing kindly because I think a lot of the ideas showcased are somewhat sketchy, but for one reason or another make good reality TV).

I leave all that advice to the experts, and instead I am talking about expectations of being an entrepreneur. You see, after 16 years of working for entrepreneurs, I thought I knew what it was about. I treated the business’s money like it was my own, I worked long crazy hours, and I dropped what I was doing on a moment’s notice for a new priority. When I decided to go out on my own, I was pretty confident that I wouldn’t have entrepreneurial culture shock.

Much to my surprise, I was wrong. Although I didn’t have such a bad case that it wasn’t curable, I certainly had a case of it. And in the healing process, here is what I have learned.

  1. Don’t be surprised if your employees (if you are fortunate enough to need them) make more than you. After all, to hire the best, you need to pay them and while stock and bonuses tied to performance are great, most employees have commitments like vehicle payments, mortgages, spouses and kids who they need to support. Even though they probably took a pay cut to be part of your new, growing, exciting company, they still need a salary. And what’s more, the law requires it.
  2. If you are a service provider, don’t wait till the end of the project to send out an invoice. Train your customers to expect regular bills, so you get regular cash flow because it is very strange to go from a regular pay cheque to months with no income.
  3. Be disciplined about reviewing your financials monthly. Costs creep up quickly and you can’t manage them if you don’t measure them (thanks to Peter Drucker, management guru for that piece of wisdom.) And on the sales side, if you aren’t meeting your numbers, the sooner you know the better. Now I know why I had to drop everything for a new priority when working for an entrepreneur.
  4. Everything costs more for businesses. Take your friendly neighbourhood bank for example. If you go in to open a personal chequing account, you might be able to get it for free (if you meet the requirements and comply with the fine print). But go in for a business account and you are paying a monthly fee plus transaction fees. And although they don’t sound like much in the beginning, they add up quickly alongside all the other costs. Of course these service providers will argue that business clients get more and are also more work than personal clients which is why the prices are higher. But in a start up situation, I am not so sure. What I think is that these service providers have concluded that businesses can afford it. After all, you can write these expenses off.
  5. And that brings me to the most valuable lesson I have learned. In business, expenses reduce your income, which is good for tax purposes, BUT only if you have enough income to make it worthwhile. No one wants to give more of their hard earned cash to the government. We all want to tuck it nicely away in our mattresses where it will be safe. However, if your revenue is low, then you actually keep more money in your pocket by not spending it in the first place. Remember this in your first months of being in business because few businesses are truly overnight successes.

I know one of my friends reading this is going to say, “But what about all your talk about having to spend money to make it?” I admit, I have said that a lot, but I now temper that statement with ensuring that I only spend when and where I need to in order to drive business and generate sales. Before I make each purchase, I ask myself “How is this expense going to grow Love HR?” And you guessed it, if it isn’t helping me grow my business, I don’t buy it.

Come to think of it, the one thing that hasn’t changed from working for an entrepreneur to being one is that I still treat the business’s money as if it were my own. Fortunately, now it is.