I’ve been running my own businesses since 2004 and we have successfully grown Treehouse to 50+ employees and over $3,000,000 in yearly revenue. I’ve done a lot of things wrong and a couple things right, so I thought it’d be useful to share some lessons I’ve learned. Here are 5 tips to starting a successful business.
#1 – Build your network by launching a conference
Almost everything good that happens in business is because of relationships with people. It may appear that the best business gets the big deal or the press covers the most innovative startups, but it’s just not true. Big deals, press coverage, partnerships and investment all happen because two people like each other.
One powerful way to build relationships in your niche is by starting your own conference. For example, if you’re an accountant for small businesses, you should run a 1-day conference with topics like “How to become a Balance Sheet pro”, “Understanding your P&L statement”, etc.
Here’s why running a conference for your potential customers is a great idea …
- It places you and your company in the middle of the conversation. People will assume that because you’re running a conference, that you are knowledgable.
- You’ll become friends with the expert speakers you invite, thus making your network deeper and more valuable.
- If you host the event, the attendees will mentally place you and your company on the same authority level as your speakers.
- It advertises your company in a subtle, but powerful way
If you decide to go this route, follow these simple tips:
- Charge just enough money for tickets to demonstrate that the conference has value and to encourage people to not skip it on the day. Usually something like $100 is right.
- Don’t try to make a profit. Get sponsors to cover the costs of the venue, travel/hotel/fee costs for the speakers.
- Stick to a 1-day show for the first event
- Meet as many people as you can
- Allocate a budget to pay for a business-class flight and a speaking fee. This will help in securing one or two big-name speakers.
#2 – Learn simple accounting
You need to understand four simple accounting reports, even if you have a bookeeper and/or accountant:
- Balance Sheet
- Cashflow Statement
- Profit and Loss (P&L)
- Cashflow Forecast
The danger is that these things seem like a distraction when you first start a company. The temptation is to ignore them and assume that if you have enough cash in the bank, that you are OK.
Please do not do this. When I sold a company in 2011, I was badly stung on the selling price because I had not fully understood our Balance Sheet. Trust me, it’s worth spending a bit of time learning these basic reports. A good book is Understanding Business Accounting for Dummies. You can also take our Introduction to Accounting class on Treehouse.
We use QuickBooks Online and I have it automatically email me these reports every Sunday. I take time to read through them, understand them and act accordingly.
#3 – Don’t over-plan or over-think
A huge temptation is to spend a huge amount of time organizing and planning to launch your business. The trouble with this is that it can paralyze you and keep you from actually doing anything.
I’m a big fan of what I call ‘Naive Optimism’. If you have an idea that you can’t stop thinking about, you should move forward before you start to realize how hard it’s going to be to implement. Just look at any exciting business from Zappos to Car2Go – if the founders would’ve known the insane amount of hard work and pain they would have to go through, they never would’ve started.
Of course you should do basic cashflow planning to make sure you protect your loved ones in case the business fails, but that’s all that’s necessary to get going.
#4 – Don’t work too much
There’s massive pressure to work seven days a week when you start a business. Successful business owners get up early to work and stay in the office late, right? Your competitors are working overtime, so you have to as well.
It’s just not true. We work a 4-day week and we’ve been doing it since 2006. The key is to work smarter, not longer.
If you run a service-based business and can’t work a 4-day week, then there are plenty of ways you can force yourself and your team to be more productive so you don’t need to work overtime. Here are some tips for being more productive …
- Don’t check email first. Finish at least three items on your todo list before you do email every day
- Make a list of priorities for the day and don’t get distracted. If you find yourself going down rabbit holes, stop yourself and go back to your list. Once you finish your list, pat yourself on the back and stop working
- Remember that no matter how hard you work, there will always be more to do. Working 60 hours a week won’t mean you get all your work done.
- Imagine that you’ve got a year left to live. Then start creating the work-life balance that matches those priorities. Usually spending more time emailing isn’t going to be on that list.
#5 – Create a Road Map
As soon as you launch your business, you’ll immediately be distracted by 100 different things. Most of them aren’t important so it’s vital to keep focused on what will move you towards profitability.
I’d recommend using a Gantt Chart tool like Team Gantt (we’re not getting any financial benefit for linking to them – I just like the tool). The idea is to lay out all the important things you need to do, aka your “Road Map”, estimate timelines and then look at the big picture.
As you progress, you update the % complete on each project and you can see if you’re on time and progressing. If you get distracted by stuff that’s not on your Road Map, you’ll start falling behind and it’ll be easy to spot.
Have a plan and stick to it.
Share your tips!
If you have any tips you’d like to share on starting a business, please share in the comments. Thanks!
[Editor’s note: If you’d like to learn more about starting your own business, please check out our How to Start a Business class.]