What is one of the most important things in the world to most entrepreneurs? Think about it: why do you want to be—or why are you—an entrepreneur or solopreneur? Is it for the money? That factor’s in of course, but if you’re like so many small business owners, money is an elusive commodity (at least for a while.) Okay, if you haven’t guessed it; it’s freedom. The vast majority of small business owners will tell you that freedom is one of the most important things in the world to them—if not THE most important. We give up the drudgery of the eight to five ball and chain in search of glorious freedom. But wait. Eight to five? That’s way less then you’re probably working in your own business! What happened? Where’s the freedom in that!?
If this sounds familiar to you, you’re not alone. Entrepreneurs are some of the hardest-working people out there. So if freedom is such an important part of our happiness, how and why do we fall into the trap of working sixty plus hours a week? The truly curious part is that, in spite of these long hours, many business owners still feel a greater sense of freedom than they would if they worked for someone else. That’s because they are choosing this way of life and they can typically arrange those hours in whatever way they like. They have the freedom to do what they want, when they want—to some degree anyway. They have the freedom to make their own choices and determine the future of their company. Ahhhh, sweet freedom.
But even so, is it enough? Maybe for the first couple of years it is, but beyond that the demanding schedule a business owner takes on will take its toll eventually. And to make matters worse, they do it for little or no monetary compensation. They’ve fallen into the “Freedom Trap,” thinking that working for themselves will allow life without limitations, yet they feel limited in time, money, and happiness.
So what is this freedom seeking, creative, and possibly disillusioned person to do? It begins with proper and realistic planning and continues with the same. Plan, plan, and plan some more. Many of the business owners I speak with jumped into their business knowing how to deliver a product or service, but knowing little to nothing about running a business. You CAN build the perfect business and enjoy your freedom too. Just plan carefully and watch out for these common traps:
Trap #1: It’s All About Me! Oops. You’re a great consultant, designer, or music teacher. But how much money can you make if your skill is the only thing you have to sell? You want to build a business where the sky is the limit, but in this scenario YOU are the limit. If you’re truly seeking freedom and profits, build your company so that you sell something other than your own talent. There are many resources out there on building multiple streams of revenue and taking your business to the next level. For coaches, consultants, and VA’s, I recommend Multiple Steams of Coaching Income by Andrea J. Lee. Consider how you can bring passive revenue streams into your business: Write and sell e-books or other products, audio recordings sell very well—the possibilities are endless. If you’re in Trap #1, it’s a great time to hire a coach; the investment will come back to you quickly. Bring on contract employees who can provide the service and spend your time growing the business. If you haven’t read Michael Gerber’s E-Myth Revisited, now’s the time. Trap #2: I Can Do It All! If you are constantly running to the post office, doing the bookkeeping, answering the phone, and trouble-shooting problems, how are you going to make money? But I can’t afford an employee, you might say. You can’t afford NOT to hire at least a part time contractor. What’s your time worth? $100, $150 per hour? (Don’t undervalue your worth!) Would you pay someone $100 per hour to run errands? No? Well, if you’re running these errands and performing basic administrative tasks, that’s exactly what you’re doing. Here’s a formula to consider: Log your tasks for a week and isolate the things that you should NOT be doing yourself. How many hours does that add up to? Twenty to twenty-five? Now, if you had twenty-five hours more each week to do nothing but market your business, how long would it take you to make an extra $1200 per month? Twp to three months? Then you need about $3600 in savings to hire a part time assistant at $10 per hour. Heck, even if you started with ten hours a week it would make a difference. How can you begin to save a little bit of money to bring on a part time person? This is another investment that will come back to you quickly. I’ve taken many clients down this path, and it’s never failed. The most important thing you have to watch is your commitment to market your company—make sure that’s how you spend these additional hours.
Trap #3. What? Me Plan? Okay. So you don’t think a business plan is important. Well, if you’re not borrowing money perhaps you could do without one for the time being. I personally believe they’re very important because it gives you the framework and guidelines to create success. Also, because it forces you to think through your entire plan in a way that you can’t do by processing it verbally or internally. But, forget about a whole business plan for now if that’s what you want to do. However, a marketing plan and financial projections are critical. After you hire that part time contractor and have 100 hours a month to market your business, what are you going to do? Do you know how? Have you done research on what’s successful for other companies like yours? Do you know how to reach your customer in a multitude of ways? Do you know how much it’s going to cost? A simple marketing plan with measurable goals and a timeline is a must-have power tool that not only builds success but also helps you to explore the viability of your business.
Likewise, financial projections are an important guideline to help you stay on target and plan the future of your company. Without projections too many entrepreneurs fall into the trap of operating at a deficit and thinking that it will change—but they don’t do anything to change it. They simply close their eyes to the consistent loss (even deny it) and pray that the tides will turn. If you stay on top of your projections then you see the need for change in black and white and you’re more likely to take action. It’s like taking your sick child’s temperature to measure if he’s getting better or needs the attention of a doctor. It also brings awareness to the need for a budget and financial planning, an area that too many business owners avoid. For instance, if your projections tell you that you will operate in the red for eighteen months, then you need enough money to support your operating costs PLUS the equivalent of the income you’re currently accustomed to (at the very least) in savings before you launch your business. When you’re putting together your projections, make sure you fully consider the funding you’ll need to build the business and the tools that you’ll require (Web site, equipment upgrades, etc.) Check out your local S.C.O.R.E. offices if you think you need help with projections—it’s free! If you’re already in business and haven’t done this yet, it’s time. Better to know where you’re at so you can make smart choices than to keep working in the dark.