Way back in 2000 I went off on my own in business. In October I became incorporated, so I count that as when I started my business, although in actuality I started it a few months earlier. If I did it again, what would I change, and what would I not change? Let’s take a look and see:
what I would do Differently:
- I would do the financing differently. When you start up, you need a lot of working capital to get the stuff you need, and carry you through the begining, which will be lean. I went to a start your own business seminar, and they actually recommended you use your credit cards. Don’t do that. It’s high interest debt, and will kill you to keep up with high minimum payments that won’t pay it down. I went to my bank to get an SBA loan, and the banker basically blew off the SBA loan route. What he didn’t tell me is my bank didn’t offer SBA loans.
Instead he told me I needed to take a Home Equity Line of Credit (HELOC). Don’t do that either. If your business fails and you can’t make payments on the HELOC, you get the pain compounded by seeing your house foreclosed. Recently to fund our expansion I went the SBA route. The Small Business Administration has a useful website that can help you find a loan. The terms are much better than you will find on the open market, and the process is fairly straightford. Twenty five years ago it wasn’t possible on the Internet, but today it is. If you are starting out, most lenders will want to see a Business Plan. That brings up the next item: - I would write a business plan. I did attempt to write a business plan, to do so I bought a software package that purported to help you get it done. It asked an ungodly number of questions, and was working its way to a 500 page plan. In most cases you don’t need that kind of detail, you probably can get away with a few pages.
What I would do differently if I was starting again is I would get a couple of books on business plans, and write one more suited for my business. If I had a business plan, it would have shown me up front what I could expect to run into, and I would have been better prepared. The plan would probably be over optimistic, but it still would have given me an idea of funding challenges, legal risks, and other challenges that I would have to overcome. - I would be conservative in hiring and liberal in firing. It is no exaggeration that employees can make or break your business. I used to think that stories I heard from business owners about bad employees were exaggerations – they aren’t. I had very bad experiences with my first hires. For example, I had an employee that consistently lost equipment, faked inspection reports, wrote at a fourth grade level, and lied about being at work. I kept them on for a lot longer than I should have for a number of stupid reasons that aren’t really important. I had other bad experiences, and I really got to feel that I could pick random people off the street and do better. Here’s a few things that you have to take into consideration:
- I was told by a woman that was starting an engineering office in Atlanta for a large company that , “If somebody comes to you looking for a job, you don’t want to hire them.” This is a bit of an exaggeration, but there is a lot of truth to it. Good performers generally will have good jobs, and won’t be looking. You need to find people by networking as much as possible.
- Advertising for a job will overwhelm you with unqualified applicants. I’m not against advertising for a job in general, sometimes it’s the only way. Just be prepared to get snowed with CV’s from people not remotely qualified for what you are advertising for. You will also see a load of people on a downward spiral in their lives, going to lower and lower level of jobs and shorter and shorter periods of unemployment.
- A friend of mine who has owned a business much longer than me has a hypothesis that there is a whole subculture of people that hop from job to job with small businesses because we often times don’t spend the effort needed to screen applicants, and they can get hired quickly without any kind of check of their background and qualifications.
- Don’t be afraid to fire people. One of the reasons I didn’t fire an employee was I was afraid of being sued. Then I realized that that employee was going to get ME sued the way things were going. In more recent years I fired two employees after one day. One went to a job with a more experienced employee, and panicked in front of a potential client, almost costing me a significant project. Another it was clear after about two hours that they lied about having an engineering degree.
What I Did Right When I Started My Business:
- I dump troublesome clients. Bad customers run up my costs, and expose me to risk of lawsuits. For example, when I started out I did third party Code inspections for home builders. Rather than use inspectors from the county or municipality, the home builders could use people like myself. We generally could respond quickly, and if there were issues I could provide engineering recommendations. TA lot of builders felt they were paying me to rubber stamp their shoddy construction. That put me at risk for lawsuits and disciplinary action by the Professional Engineer board. I wouldn’t work for those clients.
One memorable telephone discussion the client was screaming at me becasue I wanted him to add some reinforcing bar to the concrete in a garage slab, and basically threatening me. I told him to do something that isn’t really anatomically possible. While it was regrettable that I got so crude (I should have just hung up on him), but it was a revelation to me – I didn’t have to work with difficult people. I don’t lose my temper anymore, I just just tell them to take their business elsewhere. - I haven’t been afraid to change my business model. In the beginning I did all third party inspections. I didn’t like it at all. There was a low barrier to entry, so there was a lot of competition. It was high liability, and it was physically exhausting – it required a LOT of driving around in heavy traffic. The clients were generally guys that worked out of the back of their pickup trucks, and while I dumped the bad ones, I kept running into some very rude and obnoxious people. Also, homebuilders were notoriously bad at paying their bills. I liened properties every week to try to collect. In 2006, I made the decision to end that line of business.
About the time I quit third party inspections A customer approached me that found me on the Internet. They put up aluminum cladding on buildings, and they needed an engineer to help with their shop drawings. The company was Seco Architectural Products. I had no knowledge of alumimum panels, but I figured we could learn. We did. Now aluminum panels represent about 30% of our work. We do aluminum panel jobs across the Southeast, Northeast, and Midwest. We got a call from somebody that was looking to build a house in Atlanta. It was from from shipping containers on Gartrell Road. I built with containers in Central Asia (Uzbekistan) when the Air Force Reserves called me up. So I figured it couldn’t be too hard (it was actually pretty hard). Shipping container buildings represent about 45% of our work now. - I maintained a website. Back when I started the company, my website was basically a joke. In 2000 not too many people maintained a website, but I bought my domain name and put up a quick and dirty website. I updated it over the years, and in 2008, I noticed peope were actually finding me through my website, so I redid the entire thing. It was in the middle of the Great Recession, and about a year after redoing my website I did an analysis. 85% of my clients had come to me through that website. In short, it saved my business.
- I have maintained a marketing plan. I started doing marketing plans shortly after I started my business. It forces me to look at what I am doing and what I need to change. Most of these plans are only a couple pages long, but they force a sit down and figuring out what works and what doesn’t. The marketing plan led me to drop Third Party Inspections, got the website going, and got us into more prophitable work.
