Lessons From My First Year in Business.

In Essays, Self Improvement

This was originally written in November 2015, and I had been in business slightly longer than a year. I’m a partner at a design and technology studio called Whisper & Company, and a Microsoft Dynamics implementation provider called Votiva.

My day to day work revolves around the design side of things at Whisper & Company, and I enjoy it tremendously.

I must say that I have never considered myself a businessman and that before starting these businesses I was simply a freelance web designer, and it didn’t really cross my mind to start my own studio for quite a while.

Once I had saved up a small pot of money in the bank, I thought to myself that starting a studio was exactly what I wanted to do, because I thought to myself that I could run a much better agency that the ones I used to work at.

I met my business partner by a chance encounter, and while I’ll talk about him a little later on, I initially just took him out to lunch a couple of times to ask for advice on how to proceed, and eventually he asked me if we wanted to work together.

He also convinced me to reduce the startup capital from something in the tens of thousands of dollars to only three hundred dollars.

Yes, you read that right. Three hundred bucks.

Now fast forward a year, and between the two companies we’ve had solid revenue, and we’ve also managed to keep it from becoming a beast of a business that requires long days of gruelling work that we don’t enjoy.

So we’ve had a fantastic year, and I’m really excited about my second year in the world of business, but today I want to reflect on the lessons that I’ve learned during the past year.

You Don’t Need Half Of What You Think You Need.

In my initial plans for opening Whisper & Company, my budget called for around $20,000 to $30,000 dollars. This included things like:

  • A deposit for an office
  • Furniture
  • Computers
  • Office rent for three months
  • One developer’s salary for three months.
  • One designer’s salary for three months.
  • Miscellaneous software expenses
  • A dedicated server
  • Business setup expenses

Now in that list, there is nothing that seems out of the ordinary for starting a technology company. However, when you really think about it, none of this stuff is actually necessary to being.

What do you really need to start a business? Well, for us, the answer to that question was simply starting to say that we were now an agency.

I remember having this very strange feeling that from one day to the next I went from saying “I’m a web designer.”, to “I’m the Creative Director of a digital agency.”

It felt ridiculous in the first month or so, as we didn’t have anything, but as we grew from strength to strength, it began to feel more and more natural.

So we set our startup capital to $300. Our expenses were as follows:

  • A $35 lunch for two people for our first official company meeting.
  • $10 a month for a server (I simply rented an existing personal server I already had back to the company)
  • $14 for business cards.
  • $35 for two domain names for a year

We finalised the name and the logo (by writing it on the back of a newspaper, of all things) in that first meeting, and then I went ahead and created a digital version u Photoshop. I then designed a short, effective landing page that described our service offerings.

And that was it.

When we met people, we could now say that we were a digital agency, and we could give them our business cards and they could check us out online. We were set, and the initial startup cost was $94.

We spent some more of the remaining $206 capital and then we had our first revenue stream which meant that we were in the green from the first month, which was a great feeling.

I’m extremely glad that we took this approach, as I am sure that had I done this on my own, or with a different business partner, and gone ahead with the traditional startup model, I may well have gone broke within three months.

So the lesson that I learnt here is to always think about exactly what is required to accomplish something, and often it’s far less than we think, and the way to do this is to strip things down to their core essence and make sure that you do just that.

Sales are key.

Just like humans need to air to survive, businesses need cash. It doesn’t really matter where the cash comes from, but without it, a business will quickly wither and die.

Generally speaking, the best way for a business to continue breathing is to make sales. That means that you need to convince other people that it is a good idea to hand you over money in return for something, normally a product or service.

So why would anyone ever want to give you money? That’s not what people generally do, especially in the business world. Well, it’s because they have come to the decision that by handing over money to you, they add more value to themselves or their business.

So giving you or your business money is the best option for them, otherwise, they wouldn’t do it.

Let’s imagine that you’re selling premium organic sausages, you need to be able to convince a potential buyer that the fantastic feeling they will have when they cook and eat the sausages far exceeds the price premium that you charge for the goods. If they believe you, they will buy, if they don’t, they won’t.

It’s really that simple, it’s about adding value to other people or organisations. If you can consistently do that, you’re own the way to being able to sell.

Of course, reaching out to potential customers is just as important as having an awesome product or service to offer. After all, if you keep your fantastic premium organic sausages locked up in the fridge at home and don’t tell anyone about them, you’re hardly going to build a successful sausage company!

So what it really comes down to, is being able to inform people (customers) about the value of your offering, which could be a product or service, and make them want it. The product or service doesn’t even have to exist yet, but you just need to be able to create the craving for it.

So going back to my original point about sales for business being like air for humans, it’s clear that sales should be the number one focus.

After all, if you couldn’t find any air to breathe, that would immediately become your priority over whatever you might be doing. I’ve discovered that the same thing applies to sales and business.

In the last year, we’ve had a few dry spells where we didn’t have any sales because we focused too much on other things, including delivering our services to customers. While that might sound strange because of course we should be concentrating on providing awesome value via our services to customers, it is true. The servicing of customers is only second to customer acquisition.

Of course, being able to make your current customers really happy is a great way to drive sales because of the value of recommendations, but that’s an entirely different story.

So the first lesson learnt here was that it’s extremely important to create what is called a “sales pipeline” with different stages, starting from something along the lines of “interested prospect” all the way to “Contract Signed”. The in-between stages depend on your particular business. The key is to keep this sales pipeline nice and busy and move potential customers along the pipeline towards a successful close. This applies more to service based companies, if you’re selling a product, then this might not apply.

The second lesson is that one should always place sales activity as a top priority. If you have the sales, you will have the cash, and then you can do all the cool stuff that comes with operating a business, like designing an awesome office, generous staff parties, redesigning your website, and paying yourself a dividend.

Let me end this section with a shameless plug, as otherwise you’ll call me a hypocrite!

If you, or anyone you know, is ever in need of an awesome digital design team for brand development, website design, and software development, you should probably give Whisper & Company a call, we’re awesome.

Only doing high-value work

Another lesson that I quickly learnt was the importance of doing only high-value work. I estimate that had I simply not done 30% to 50% of things I had done in the last year, none of the results would have changed.

Of course, the trick is knowing which work is valuable and which is not, and that is definitely an acquired skill, and it is far too easy to use hindsight to look back and cherry pick what work you should have focused on.

So how do we go about trying to understand if our activities are high value or not? Well, a good starting point is understanding if your activity is creating any kind of value at all. I know this sounds strange, but I’ve seen it with my own eyes how people waste the huge amount of time, effort, and money, on activities that simply add no value to themselves or others, and I’m not even talking about business here, but simply life.

So, take regular pauses each day and ask yourself, I am creating value? For who am I creating value? So right now, for instance, as I am writing this, I feel that I am creating value for both myself (this is something I can be sure about), and hopefully for anyone reading this in the future.

I am completing the following objectives:

  • I am getting closer to my daily word count of 2000 words.
  • I am distilling many of the thoughts that I have had over the last year into a clear, concise format.
  • This will eventually become another essay to publish, and it may add value to someone, somewhere, sometime, but I can’t be sure about that.

An example of a low-value activity is obsessing over my website statistics every day as if that was the most important factor. In fact, I thought that it might become such an issue that I actually remove Google Analytics from this website because already thought I was checking it too often, and the problem was going to only get worse.

Examples of low-value activities that I’ve done in the last year include chasing up very weak sales leads, spending too much time trying to hire the perfect designer (he, or she, simply doesn’t exist), and trying to create a company brand book (we don’t need one, I manage the brand, and I’ve got a very clear vision of it).

Do Things When They are needed.

When starting a business, it can be easy to fall into the trap of thinking that you need all your process set up and ready to go before you can really “start”.

As mentioned above, we started really, really lean, and that helped up tremendously in our first year because it has allowed us to concentrate only on the things that truly matter.

Of course, this does mean that you won’t have the systems and process in place that will take care of things for you, but in a way, I think that this is good.

Why do I think it’s good? Because it means that you are not setting up processes based on what you think you know, but what you actually know, and that is an important difference.

Let me give you a few examples of this from ourselves:

  • We didn’t write our first contract until we had our first client.
  • We didn’t create our first design brief template until we had our first branding job.
  • We didn’t have actual cloud servers before we had a client that needed servers.
  • We didn’t hire our first staff until we ran into technical and design challenges that we just couldn’t overcome by ourselves.
  • And so on…

These examples make this philosophy of starting lean, both in terms of money, and also in terms of effort, very clear. This links up very closely to the above section “You Don’t Need Half Of What You Think You Need.”

Design Design Design!

How you present something, is often just as important as what you present.

Perhaps this is a sad fact of life, that we’re so shallow that we get distracted by the wrapping and ignore the actual contents, but I think one can also take a positive spin on this.

The perceived quality of something will always be at, or below, the quality of the presentation of that something.

So design now, in the worst case, becomes a barrier that can block the perception of high quality, and in the best case allows the true quality to shine forwards.

That’s why we made sure to be design focussed from the very beginning because it’s so absolutely crucial to be perceived well.

For instance, when I see a company with a terrible website, that tells me so much about that company without even having to do any investigation.

I can infer the following, and probably be right about it most of the time:

  • This company doesn’t care about the details and has little pride in their public-facing image.
  • They have shoddy decision-making process or high levels of bureaucracy.
  • There is probably some level of disorganisation.
  • They are not keeping up with the times.

Perhaps this may be considered harsh, but in my experience, this is often true.

Different Hats

When you own and operate a business, you wear multiple hats. By this, I mean that you will have different roles, with different responsibilities and viewpoints, and I have found that the best way to manage them is to literally think of them as different hats, and only wear one hat a time.

At different times, I wear the following hats:

  • Shareholder
  • Member of the Board of Directors
  • Creative Director (staff)
  • Client (I have a personal project that uses company resources)

Each of these hats has different responsibilities, and different definitions of success and all of this needs to be reconciled so there is a good balance between what the company wants and needs as an organisation, and what I need as a simple human being!

To give a simple example, I would love as a staff member to get as a large a salary as possible, and work only 10 hours a week, but obviously, my role as a Shareholder and a Member of the Board of Directors prevents that from happening.

Know That You Don’t Know

One of the most important lessons that I’ve learnt, which really transfers to the other areas of my life is the fact that I know that I don’t know a lot of things, and I’m fine with that.

Business is a great way to learn these types of lessons, because it’s generally underpinned by an economic equation (i.e. revenue vs expense), and making assumptions based on things you don’t know will eventually turn this model against you.

So what I have done in the last year, is stopped making assumptions about who will do what, how long I think things will take, and many other things.

Conclusion

So it’s been a great first year in business, and I think the lessons I’ve learnt have been as valuable, if not even more valuable, that the money we’ve made.

There are a few other lessons I’ve learnt, but I will keep those aside for another day, and another essay, as I feel they deserve a more in-depth treatment.

As always, thanks for reading.