The business of Small Business is business. It is not a hobby, a trade or even a profession. A small business needs to be first about the business and secondly about the product or service that you produce.
If you are the best carpenter in the world it does not mean you can run a successful carpentry business. In fact your skill as a carpenter can be a major detriment to running a company. If you are the best carpenter that you employee and want to spend forty hours a week hammering and sawing or whatever it is a great carpenter does then who is doing the planning, marketing, sales, ordering, bookkeeping and managing that is required to run a business.
Great carpenters, engineers, dentists, lawyers and many other tradesmen and professionals have been the best at their job and able to make a lot of money for their company. Because they were better at their job than their employer they just knew that they could start a company and become an instant success. What they forgot was that it takes more than skill in a trade or profession to run a business.
I know a carpenter, John, who started his business and was convinced he could spend all his time installing custom woodwork and because he had no overhead he could only charge an hourly rate that was half what his former employer would charge. His plan was to take five of his former employer's regular customers who knew his work with him when he opened his business.
John started his business and while it was a little slow the first month shortly he was getting regular requests for work. In fact, he was getting too much, more than he could handle. He called in a couple of buddies who he knew were good carpenters and had them cover his overflow. These buddies wanted to be paid at the end of the week but the people he was working for only paid at the end of the month… if then. John was working nights to do the billing and because he was only charging his regular rate while he was doing carpentry he was doing the billing for free. Because he had been a carpenter his entire career paperwork was not his strong suit. He did not know how to prepare and track invoices. The bills were not in the form required by his customers and did not include the information they required. His buddies quit because he had cash flow problems. He fell behind on his own work because he had to take time during the day to talk to his customers to straighten out the bills. He did not have any idea how to do payroll taxes, buy business insurance or any of the hundreds of other details required.
It was not long before the customers were angry. He was exhausted from working days on carpentry days and on paperwork at night. His business failed but not because of his carpentry skills. It failed because of what he did not know.
If you are going to start a business, start with how you will run the BUSINESS not just how you will make the product or perform the service. Do a business plan that details marketing, sales, accounting systems, cash flow, insurance, purchasing, workforce and management systems required. If you cannot build a plan then you are not ready to start a business.
Try and sell that plan to someone without a vested interest as if they were investing their money. If you cannot sell them then it is likely not a good enough plan.
Original content copyright 2010 Thomas Robinson
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