According to Forbes Magazine, only one-third of all small businesses survive four years. The Small Business Administration cites better odds: up to fifty percent make it to year five. Starting and sustaining a new business is not for the faint of heart. Most businesses are born as the result of an “entrepreneurial seizure,” which Michael Gerber, the author of E-Myth Revisited, defines as “the moment the entrepreneur decides it would be great to start his or her own business.” However, many new business owners—despite having the entrepreneurial seizure—are not prepared for the demands of a business: cash flow, employee relations issues, regulations, organization, or technology, to name a few.
As we have navigated these somewhat turbulent waters over the past three plus years, four things we have learned stand out above the others. We would like to share them with you.
1. Think bigger than you expect.
This is a difficult concept for new business owners. Do you hire/rent/plan for what might happen over the next six months, the next year, or the next decade? Planning too far in the future can lead to over-buying and over-extension, but failing to consider growth—including unexpected growth—leads to additional logistical problems, which was our issue. We began our firm with two attorneys and one staff, and have grown to nine attorneys and five staff over three years. Don’t get us wrong: as the expression goes, these are good problems to have. But they are problems that still must be solved.
The lesson: Consider the possibility that your business may expand more quickly than you thought.
2. If you can keep someone busy half the time, you’ll keep them busy full time.
Knowing when to hire new employees is one of the most difficult decisions businesses face. Wait too long to hire and you find yourself too busy; hire too early and you may be paying someone to stand around. Both are expensive pitfalls.
Thankfully, a friend told us the “half-time rule.” If you can keep an employee busy for one-half the time, it’s time to hire. If you aim to grow your business, you need to set aside time for marketing, planning, and other strategic thinking. You can’t do that if you’re working in the business full-time because you won’t have time to work on the business. Hiring at “half-time” means the new employee will have immediate work available, but you’ll have time for proper orientation of the new employee. And you will very quickly find new assignments for the employee, such that within a short-time, he or she will be full-time busy as well.
For us, applying this rule has ensured we consistently deliver the client service we want, while we work on the continued growth of the firm.
The lesson: Hire when you can keep an employee busy half the time..
3. Focus your work on what you’re passionate about (your “sweet spot”).
While this seems obvious, ask any new business person what they number one concern is and they’ll likely tell you the same thing: will I have enough work? That leads to the thought, “If I expand the types of work I do, I’ll have more work.” While that can be true in the short-term, it creates problems in the long-term. Why? Because the world is specialized. Customers look for
a service/product provider that can solve their immediate, discrete issue. Focusing on work that you do well and in which you may have a competitive advantage means you’ll do a great job.
The best way to use our unique talents and backgrounds meant focusing on three core areas: family law, employee benefits/executive compensation, and business litigation. While it meant not taking work at times, three years in, we’re certain it was the right decision.
The lesson: Focus on what you’re good at, and build your reputation and products/services around those core concepts..
4. Remember that it’s not about you.
When you’re in the middle of staring at profit and loss statements and worrying about bringing more business in the door, it’s easy to become myopic and think your business is only about you. It’s not. Your business is about helping a customer fix a leaky roof, planning for their children’s college education, getting through a divorce and custody battle, or building a new building. In other words, it’s about giving: giving your time and experience to someone to solve their problem.
The lesson: The extent to which you help others solve their problems is in direct proportion to how successful your business will be..
Matt Marcellino and Bryan Tyson are members of Marcellino & Tyson, PLLC, a law firm assisting clients in Family Law, Employee Benefits/Executive Compensation, and Business Litigation.
The purpose of Marcellino & Tyson’s blog and information postings is to provide news, general information and a general understanding of the law. All content is for informational purposes only and is not legal advice. In addition, reading our informational news does not establish an attorney-client relationship. If you are seeking legal advice, we encourage you to contact an attorney to evaluate your needs.