Are you one of the many budding entrepreneurs out there who has decided to try your hand at starting, building, and running your own business? Have you decided to turn a personal love that, until recently, you've performed as a hobby into a viable stream of income? Or maybe you have a talent, skill, or craft that, on a part-time basis, you've shared with others for a fee but have now decided to make what has been your side gig your main gig. If so, will you please allow me to share one critical piece of advise with you? Whether you're a freelancer doing business in your own name or you've chosen to set up a formal business structure like a corporation or an LLC (Limited Liability Company), there are a lot of things to know that can help you succeed. But over the years, the one simple piece of advise that I've stressed more than any other to many entrepreneurs, especially as they're just starting out has been this: keep expenses low!!! Let me say that again: keep expenses low!!!
As a business owner, there are different ways to finance your business: some take out loans; some take on investors; some bootstrap (they use their own personal funds and reinvest any money the business makes back into the business). While either approach has its own set of pluses and minuses, no matter which approach you take, I stand by my simple piece of advise: keep expenses low!!! People start businesses all the time, and, unfortunately, people go out of business at what has been cited as a faster and higher rate than they go in. I acknowledge that several factors can contribute to why entrepreneurial endeavors fail and that businesses not laden with financial burdens fail as well. My focus here, however, has more to do with what drives your business over, perhaps, what should not so that your business can sustain. Last year, Small Business Trends published an article, "Startup Statistics--The Numbers You Need to Know," and it named four leading causes for small business failures: incompetence; lack of management experience; lack of product or service line experience; and a catch-all category of neglect, fraud, and disaster. Well, I have a fifth category: STRESS!!! Aside from the fact that high expenses can dwarf revenue and leave no room for profit, just the stress of having to generate a certain amount of revenue higher than what may be healthy for the business owner in order to just stay afloat--forget about making a profit--can cause a business to fail. As entrepreneurs, just like investors, we have to know our tolerance for risk, so in that vein, we also have to know what level of expenses we can tolerate as well.
In the early 2000s, I started my first official business, and just as I was starting, an older gentleman, who had been my boss until that time, asked me if I was familiar with the "Sleep-tight Factor." I was not. He proceeded to tell me that when he had previously been in business for himself, he made sure that whatever could potentially cause him to not sleep tight at night, that's what he made his priority. So, since not being able to pay his bills was something that would gravely interfere with being able to sleep well once his head hit his pillow at night, he took on a lot of work--work that he wanted to do and work that he didn't want to do--so that he could pay his bills every month. Now, this was advice that I've held onto over the years, but I will tell you that early on, even with that advice, I had plenty of nights, where I did not sleep tight. Early in my tenure as an entrepreneur, I took on a lot of expenses, and because I did, not only was I stressed about keeping up with those expenses, but the stress was compounded because I often found myself feeling "forced" to take on work that I really didn't want to do but felt I had to in order to pay the bills. So, the stress of the expenses was coupled with the stress of doing things I really didn't want to do, which inevitably took time away from being able to focus on getting and doing the work that I really wanted to do, all because my expenses were so high. Higher-than-healthy expenses--expenses that were higher than what was healthy for me or, in other words, my tolerance--negatively impacted my freedom to be as selective as I had hoped in terms of what type of work I accepted and what type of work I did not accept. Carrying expenses early on that were greater than what I could reasonably sustain by doing, primarily, the work that I really wanted to do, imprisoned me to doing work I didn't really want to do. So, my "Sleep-tight Factor" was not just shot; it was doubly-shot and turned upside down.
Am I saying that in business, you shouldn't have any expenses or that your expenses should be so low that you don't have to bring in any amount of business to be able to pay them? Maybe! Maybe I am saying that, depending upon your expense-tolerance--what's healthy for you to sustain and have peace and be able to sleep well at night. But, realistically speaking, some expenses are very necessary. There are necessary costs and natural risks associated with owning and running a business and to think otherwise can be very naive. But what I am saying is this: be mindful of your expenses because the greater your expenses, the greater their hold may be on you to have to meet them, which may cause you a whole lot of stress and a lot of sleepless nights. Starting and successfully maintaining a business, in and of itself, can be extremely challenging apart from expenses, but there are some challenges we can definitely control, especially those involving expenses. Instead of renting business space, maybe you can run your business from your home; maybe you can use a virtual office; maybe you can reserve a meeting or conference room only on an as-needed basis; and maybe you can meet clients at a cafe or a coffee house or for a walk in the park. Instead of hiring a steady, full-time, in-person administrative or executive assistant, for a whole lot less, maybe you can hire a virtual assistant; maybe you can pay for shared administrative or executive services; or maybe you can personally perform some, or maybe all, of these functions yourself. Point being, there are always ways to control expenses, and, if, by chance, your "Sleep-tight Factor" may be affected negatively by them, then knowing how to keep them low without compromising on the quality of doing business will cut down on stress, give you a greater peace, and will help you sleep better at night when your head hits your pillow. So, again, my humble advice: keep expenses low and sleep tight!!!
Like you, Katrina loves seeing people in healthy relationships (with themselves and others) that they genuinely enjoy and not just simply tolerate. This blog is dedicated to achieving that vision.