5 or 6 Big Things We've Learned About Running a Small Business
As we wrap up the year-end books for 2020, we have had some time to reflect on this past year and all of the things that we've learned. We're heading into our 5th season, and although we still have a lot to learn, we've been able to identify some key cornerstones to operating our business, that would easily translate to just about any small business model. Honestly, it was hard to narrow the list down, but these are 5 practices that have been the biggest difference makers, and that we fully intend to carry with us as we grow.
1. Pick up the freaking phone. For some reason, small businesses, especially in the contracting or home service industry, are really hard to get ahold of. It's the most basic thing, but it's so incredibly important. We knew going into this business that we wanted to always be easy to reach. To be honest, we struggled with this for the first couple of years, as I'm sure most solopreneurs do. It's hard to answer phone calls when you're the guy on the mower. We tried setting a 2-hour max call back time, but with so much time spent out of cell service around the lake, the line kept moving further out until it was 24 hours, and even that was stressful to meet. I don't think we nailed this one down until early this year when we added another person to answer phones and set up a separate landline for the business that we could forward to our cell phones when we were out of the office.
I highly recommend dedicating someone to answer phones and communicate with customers; someone who is not working in the field. We had the opportunity to work with dozens of new people this year, simply because we were the only ones who picked up the phone or bothered to call them back.
Also, pay attention to how your individual customers prefer to communicate. Some want to talk on the phone, some prefer the speed and ease of texting, and others like the flexibility and record keeping of email. Don't assume everyone wants to communicate the way that you like to. Listen for cues, or, even better, just ask them outright.
2. Make it easy to get paid. While we're on the subject of making things easier for your customers, let's talk about getting paid. A lot of small businesses shy away from taking credit cards or online payments because of the extra fees associated with them, or they just don't want to be bothered with it. You know what's expensive and time consuming though? Tracking down receivables.
We will take cash, check, credit card, ACH, Apple Pay, pretty much anything except Bitcoin. And our customers can pay us on site, by mail, over the phone, online, automatic payments -- whatever is easiest and most comfortable for them. It took a little bit more on the front end to set up the systems, but it has saved a ridiculous amount of time and money for us, and it's just a better experience for our customers.
3. Don't try to be and do everything. One of the first big mistakes that we made with the business was accepting any hint of a job offer that came our way. The first year we did everything from demolition to putting in docks to electrical work. It's tempting when you're starting out to assume that you need to chase every dollar waved in front of you. But the truth is, doing things outside of your scope is expensive and takes you away from doing what you were built to do.
For example, every time we took on a new type of job, we had to spend time researching how to do the job and often had to buy new tools or equipment to handle it. We also weren't very good at doing those weird one-off jobs, so they took longer and we very often lost money on them.
That's not to say you shouldn't innovate or add new offerings, but be intentional about them. We have pared our services down to what we absolutely kick ass at, as long as it's in line with who we are and who we serve. Know what you do well, and do that.
4. Close out the books every month. This is a habit I've been in for years. It makes my brain happy to see everything reconciled and wrapped up within the first week of every month. I am shocked to hear how many small businesses wait to do their books until the end of the year. If that's you, STOP IT. You know you should do it every month. Do it every month. Even better, rec your bank accounts weekly (or daily, like a weirdo like me). Quickbooks has an awesome feature that links to your bank and downloads your transactions so that you can clear them as they happen.
When you wait too long to look at your finances, problems and mystery transactions are so much harder to solve. You end up just making adjustments and taking shortcuts to make things match up, instead of really knowing what's going on in the business. Without keeping an eye on your books, you won't see trends, opportunities, or giant holes that are gushing money out of them.
Get in the habit. It's easy when you stay on it, I promise. Next-January-You will thank you.
5. Work on cash as long as possible. We purposely chose a business with a low start-up cost. The first couple of years as business started to ramp up, it was really tempting to upgrade our equipment, vehicles, and tech. We had a lot of offers for business loans and credit cards, but thankfully we also had Dave Ramsey and a couple other great mentors stuck in our ears about staying on cash for as long as possible.
When our season started 3 months late this year due to COVID, we were so grateful that we didn't have any payments we had to make, and we weren't in danger of losing any equipment because we didn't own outright. It just gave us so much peace of mind, and we were able to take our time this past spring, make adjustments, and focus on our family and our community.
6 (bonus) Oh! And Profit First! Ok, any of the books by Mike Michalowicz, but especially this one. Read more about this book and a few of my other favorite books on business and leadership.
What are your do-or-die habits and practices for your business? What do you wish more businesses would do? We'd love to hear from you!