When I started my business with two other partners at age 24, I was a great consultant -- but a mediocre business owner. Like many others who start their own businesses to do what they love, I was completely focused on executing the work, and I had a lot to learn about running the business itself.
Over the past few years, I've run into more than a few surprises while running the business with partners, and I've learned a number of lessons about what it takes to run a successful new business:
- Cash flow is, and always will be, king. When you're used to having your paycheck deposited directly into your bank account every two weeks, dealing with the cash flow of your own business can be a bit of a shock. If you work with clients, invoices will be paid late (it's not a matter of if, but when), and even highly profitable businesses can become strapped for cash at times—especially early on. Every entrepreneur should have a personal emergency fund in place in order to keep a cool head before business cash reserves build up.
- Your business needs a long-term vision to thrive. When we started our business, we had no vision beyond the next year or so, which led to fear and stupid, short-term decisions. You can't predict exactly where your business will be in the long term, but at least make sure you discuss the vision with your business partners so that you're all working toward a common goal.
- Fear and lack of focus are your worst enemies. It took us nearly two years to realize how much fear was driving our business decisions. We were taking on design projects that were distracting from our larger focus, simply because we were afraid that if we turned them down, the next big opportunity might not come along. Once we finally got over this fear and started turning away the design work to focus on our bigger vision, our business really started to take off.
- Create HR policies early on. We were essentially clueless when we hired our first employee four months into starting up. We thought we were creating a laid-back culture by avoiding a set number of vacation days or other policies for our staff. But the truth is, defined vacation days give employees a guiding framework that can reduce the stress of trying to decide what is too much or too little vacation time. When we finally met with an HR consultant, we realized that our lack of policies could leave our company vulnerable to legal gray areas.
- Invest in a good business lawyer. Our clients hire us to be the expert in our area, so why shouldn't we seek outside help in areas that aren't our expertise? We started our business with a $3,000 personal investment, and all of it went toward having a lawyer draft up our business contracts. My only regret is that we didn't spend more to have the lawyer review everything at the start of the business. Make sure you're protected for both worst and best case scenarios.
Allie Siarto is the co-founder of Loudpixel, a social analytics company focused on social media monitoring, insights, measurement and infographics. She also runs a project called Entretrip, a co-traveling for location independent entrepreneurs.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.