I started my first small business when I was 23 years old. I'd been working for an electric sign company in Utah, intending to enroll in school and finish my college degree.
My boss suggested that I learn the sign business instead and move to Idaho to start a company of my own.
I started with $1,000 in savings, a 32-foot extension ladder and an old pickup truck. Three years later, when I sold the company, I was manufacturing and installing signs as well as servicing them and averaging $3 million in revenue.
Here are five principles I learned along the way:
1. Take a Leap of Faith, But Look Before You Leap
It takes courage to leave the nine-to-five safety net and launch a small business. At some point, you just have to hold your breath and take the plunge.
It can't hurt, however, to take a few swimming lessons first.
Get your personal credit and finances in as good as shape as you can. Strong personal credit scores improve your credibility in the eyes of lenders and suppliers. Weak or nonexistent ones lessen your chances of finding financing and create never-ending cash flow problems.
I learned this the hard way. I'd always been taught to avoid debt and pay cash for everything, and I paid the price as I was turned down for loan after loan.
The internet is a gold mine of educational tools and small business resources. Use it.
2. Build One Piece at a Time
Don't get ahead of yourself as you build your small business--build one piece at a time and only move on when it's rock solid.
When I started my servicing business, it was just me. I made sure it was profitable before I hired someone to replace me so I could focus on learning installation. I made sure my installation business was profitable before I added manufacturing, and repeated the process as my company grew.
Mastering each stage of your business as it grows and transforms will allow you to see all the moving parts no matter how busy you get. You'll have an advantage over those who only see the big picture.
Systematically establishing your business from the ground up will lead to bigger opportunities down the road. Early on, I fixed a single sign for a tire company that eventually led to a quarter-million dollar contract.
If I hadn't done that one simple job, I'd have missed a much more lucrative one later.
3. Build Relationships With Vendors and Suppliers
The best financing I had at the beginning was with my vendors and suppliers.
It took time and work to build relationships of trust, but once those ties were established, I was given favorable terms that saved me from disasters like missing payroll or having to turn down jobs.
Vendors and suppliers are invested in your success in a way that banks aren't. Cultivate those ties and make your payments early, and they'll be there in your hour of need.
4. Out-hustle and Undercut the Competition
Contracts and customers won't come to you--you have to go to them. You have to hunt them with the tenacity, loyalty and patience of a good bird dog.
I found work by driving around at night looking for burned-out signs that I estimated I could reach with my ladder.
I knew from previous experience that sign companies charge around $90 an hour to service a sign, so I'd call the owner of the burned-out sign the next day and offer my services for $45 an hour.
I could afford to do this because I had no overhead, and it brought in a lot of work. It was a successful strategy for two reasons:
- No one dislikes saving money.
- I charged $45, but I did a $90 job.
5. Learn to Sell
Selling didn't come naturally to me.
I read book after book about it, but to really learn it, I had to get on the phone and start dialing. I'd get so nervous that I'd have sweat rings extending to my waist by the time I hung up the phone.
I viewed making these calls as sheer practice. It didn't matter if I fumbled for words, lost my train of thought, or came across as an amateur, because I was an amateur.
It's always in your best interest to face your fears and get through the learning curves of running a small business as fast as possible.
Your fears might be different than mine. Maybe you dread crunching numbers or thinking about credit and financing.
Whatever they are, the only way forward is through. The confidence you'll gain from simply putting your head down and charging like a bull is priceless.