SASSY September Business Forum
Question: After several years of working in the corporate industry, I have decided that I want to take my career to the next level by opening up my own business. My biggest concern is taking the financial risk of owning my own company and it not succeeding. What are some tips that you can give me to help lessen my risks?
Melinda Pierce's Answer: Congratulations on taking the leap! Owning a business is challenging, but rewarding.
And yes, it’s a good idea to be concerned about risk. But, remember that the idea is to minimize unnecessary risk, not the kind of risk that you actually need to take if you’re going to be successful. After all, you won’t be successful by playing it safe all the time.
The rewards? They’re not just financial but you need to start with finances. And it’s good that you’re thinking about them now.
Plenty of people jump into a new business without fully planning. That planning starts with finding an accountant you trust who can help set up your legal corporation, a bookkeeping system and assist you in filing all of your taxes.
It’s also critical to manage your cash flow closely and pay bills on time right from the beginning. You need to make time for this part of the business weekly no matter how busy you are serving clients. Managing accounts payable and receivable should be a regular part of your work week.
And if possible, you should either start the company with cash reserves on hand, or quickly establish a reserve that will help to get you through the typical ebb and flow of receivables and payables. A good reserve can make all the difference in the world when it comes to cash flow.
As for your long term financial stability and health, just make sure that your company is always in demand. From a marketing perspective, that means you must know exactly where your company fits into the competitive landscape. You must know precisely what makes your service or product different that people will want it and are willing to pay for it.
Finally, treat your clients well. Early on in my career, I learned from a gentleman whom I truly admire, that you should always do what is right for them no matter the cost. It’s something that I never forgot and it’s a philosophy that everyone in my company embraces today. When you work with people who think and act this way on a daily basis, you can’t go wrong.
Melinda Pierce’s background includes not-for-profit healthcare marketing, public relations and sales plus many years of work on local and statewide not-for-profit boards. She is a graduate of Ivy Tech College, Indiana University and The University of Notre Dame.
Melinda and her husband Lou started Big Idea Company 13 years ago. Big Idea provides public relations and integrated marketing services for academic, medical specialty and not-for-profit niches throughout the region. Over the years, the company has received 10 Emmy nominations and three Emmy awards for work done, writing and producing fundraising films and television campaigns.
Thom Villing's Answer: Unfortunately, unless you are independently wealthy, risk is a major part of the equation in starting a business. If you don’t have a high tolerance for risk, I don’t recommend going down that road. Even a moderately successful start-up will have periodic moments of anxiety and it could make you miserable.
My wife and I were 33 years old with a couple of very young children when we started our business in the middle of a recession. I guess you could say we weren’t smart enough to know better. Although there were a number of those moments of high anxiety I alluded to, there were also many moments of great satisfaction. Still are. Being an entrepreneur can be tremendously fulfilling, but it’s not for everyone.
I guess I would say the best ways to lessen the risks of starting a business would include the following:
1. Make sure your business is one that you know and understand, including the current marketing and competitive environment. And never stop being a student of your chosen profession.
2. Have a solid business plan.
3. Quickly develop a strong support group including trusted relationships with bankers, attorneys and accountants – as well as a dependable base of friends and business associates.
4. Hire smart, hard-working people who complement your own skill sets rather than duplicate them.
5. Never assume that the world thinks the same way you do. We are all influenced by our own life experiences and those are often vastly different that those of the people with whom we may be doing business.
6. Do not fall prey to the notion that “If you build it, they will come.” That may have worked in Field of Dreams, but it seldom works in the real world of business. I know this may seem a bit self-serving from someone who provides marketing services, but I have seen way too many examples of entrepreneurs believing the world was going to beat a path to their door step, only to see their business fail for lack of people knowing what products or services they offer and the value those products or services could provide.
Going back to some of what I said previously, I believe it is also important to be somewhat fearless. The willingness to take action usually trumps inaction. That’s not to say one should be reckless in the decision-making process, but over-analyzing specific situations inevitably leads to inaction. As the expression goes, “nothing ventured, nothing gained.”
Thom Villing is president and co-founder of Villing & Company, a South Bend-based marketing communications firm established in 1982. Prior to starting the agency, he was vice president/creative director at Markmakers, Inc. Villing & Company works with a wide range of clients throughout the Great Lakes area with extensive experience in financial, healthcare, transportation products, food and food service and professional services marketing. The agency is also very active in supporting social service, arts and other not for profit organizations in the community.