When Steve called for some small business advice, he laid out a familiar story.
A seasoned professional, Steve started his engineering business after the firm he worked for went under.
With his vast knowledge and experience, he figured it would be a no brainer to go out on his own. Armed with a nice roster of former clients eager to follow him, he put up his shingle a couple of years back.
At first, things were hectic, but seemed to run smoothly. He was doing everything he thought was necessary to run his business by himself, convinced that it would cost too much to hire help.
He got in projects and completed them. He had a steady flow of work, and the money was coming in on a fairly consistent basis. He quickly outgrew the office space he had carved out for himself in the garage, and rented an office in the center of the town near his home.
But as his expenses and his business grew, so did his problems and stress level. Anxious to have enough money to pay his bills and support his family, Steve found himself saying yes to every project that came along, often giving clients un-realistic completion dates, which resulted in spending long nights and weekends on the job. His once eager clients were frustrated and disappointed, and were letting him know about it on a regular basis.
While all of this was going on, a friend of Steve’s introduced him to an angel investor who might be interested in providing some well needed capital. Steve was supposed to be working on a business plan with some financial projections to show him, but he never found the time to do it, and lost out on a promising opportunity.
Steve spent all of his time working feverishly on his clients projects, neglecting to focus on anything else.
Insisting that he could do the books himself, and not wanting to spend the money on a part-time bookkeeper, he got behind in his invoicing, a tax deadline had passed, and his landlord was getting nervous since he was 2 months behind in his rent.
Steve had never developed a business plan. He hadn’t thought through what was required to run and sustain his business over time. He hadn’t developed a marketing strategy, and did very little outreach. He had never done any financial projections to see how much money he would need to run his business, and to help it to grow.
To make matters worse, although he was still quite busy, Steve knew in the back of his mind that when this project was finished, there was no other work lined up…
If Steve’s situation rings a bell, here is some small business advice that may help:
Even if you run a small business, you have to think big!
Big companies have a business plan. They have a marketing strategy. They market their company all year long in different ways. They hire staff, freelancers or outsource tasks that they can’t handle. They have departments to handle production, project management, sales, marketing, finances, HR etc. They take time to review and analyze what’s going on.
The reason larger companies do all of this, is because running a business requires more than just doing the client work. And these “other things” apply, regardless of whether you’re a one man shop, or a multi-national firm.
Now, you may read this and shake your head, and say forget it, you simply don’t have the resources to hire, to outsource to delegate; and you very well may be right. The question is: Can you afford not to?
Just because you don’t have the money to hire a bookkeeper or accountant, engage a project manager, marketing director or sales manager, doesn’t mean your business doesn’t need attention in these areas. Somehow, you have to find a way.
I suggested to Steve that he start somewhere. His hourly rate was about $250 an hour. It was obvious that in order to get things under control, that the first place he needed to look was in the financial dept. With an experienced bookkeeper taking care of the invoicing, paying the bills and keeping the books, he was able to solve three major problems: cash flow, his credit rating and keeping the IRS off his back.
The part-time bookkeeper he eventually hired made about $25 a hour, one tenth of Steve’s hourly rate; allowing him to take on a little less work or to stretch out completion dates so that he had a little more time to do some marketing, and repair some of the client relationships that had been damaged.
We developed a 3 stage plan to get other areas of the business under control. By the end of that year, Steve had made significant headway.
Today, Steve has a successful, profitable practice. He still has a part time bookkeeper who comes in once a week for 1/2 a day. He has one full time engineer, and when things get really busy, another engineer he can call in on a freelance basis. He only takes on select projects to do himself, leaving him time to focus on building the relationships that refer clients to him on a regular basis, and to enjoy some of the additional income he’s now making.
If you’re curious about how “thinking big” can help your business, learn about my LEAD Small Business Leadership Program.
