8 Things I Wish I Knew When Starting My First Business By NEIL PATEL

8 Things I Wish I Knew When Starting My First Business

by NEIL PATEl

I have  started a handful of companies and every time I start another one, I always learn something new. If you are a new entrepreneur you are going to make a lot of mistakes, but hopefully you won’t make the big mistakes I made.

Don’t pick a stupid company name

My first two companies were called Advice Monkey and Advantage Consulting Services. The first company was a job board, but because “advice” was in the name people thought it was a career advice site and not a job board. And the name of my second company was so long that people couldn’t remember it.

The reasoning behind me picking those 2 names were that they started with an “A”. This way when someone listed out my company with all of my competitors, I was usually at the top of the list. Although the concept of being at the top of a list is a good thing, it shouldn’t be the main reason for picking a company name.

Whatever you do, make sure you put thought into picking your company name. And for some reason if you happen to pick a stupid company name, stick with it and don’t change it later on. If you happen to change your company name, you will lose the brand value that you have built up over the years.

Don’t hire a lawyer, hire a law firm

Not only is it important to hire a good lawyer, but you also want to hire a good law firm. Lawyers specialize in different types of law, such as corporate, tax, or litigation. When I hired my first lawyer, he was a one-man show and tried to do everything that I needed. He did a decent job, but he didn’t do a great job because he didn’t specialize in everything I was asking for.

After realizing that my current lawyer wasn’t too good, I decided to contact one of the biggest law firms, thinking that they could solve all my problems. But, I was too small of a client so my work wasn’t given priority, they charged me for every little thing, and the quality of their work sucked.

Sooner or later I found the perfect lawyer, Bill Bromfield, from Fenwick. He always goes out of his way to make sure I am protected, he doesn’t nickel and dime me for every little thing, and if he can’t do something I need, he recommends someone who can.

When looking for a lawyer, don’t just look for a really big law firm; look for a lawyer who will take care of you. Ideally if they work in a decent size law firm, that’s great because someone there will be able to solve your problems.

Hiring doesn’t solve all of your problems

There are four big mistakes I made when I hired people:

1.      Just because someone did really well in their last job, it doesn’t mean they are going to do well in your company. For example, if they were a rock star sales person that worked for your competitor, it doesn’t mean they will be a rock star sales person for your company.

2.    Hiring more employees is a lazy mans way of solving a problem. If you want to increase your sales, try to do it yourself before you hire someone. Yes in the long run you should hire employees if you want to grow your business, but if you don’t know what problems these employees will run in to, you will have a tough time managing them.

3.    There are a lot more costs to an employee other than their salary. Office space, insurance, computers, and other expenses add up. The biggest of those expenses are probably management expenses to manage your employees.

4.    Having virtual employees sounds great at first, but some people aren’t too efficient when they are virtual. If you have any virtual employees consider using efficiency tracking solutions like Rescue Time to see how your employees spend their time.

Slow and steady doesn’t win the race

You will love your first company like it was your own baby. You’ll want everything to be perfect and you will probably over think things. Don’t worry, this is a common way most first time entrepreneurs feel; I know I felt this way with Advice Monkey. But, when you see your first company as your baby, you start thinking with your emotions instead of using logic, which causes things move really slow.

Things don’t have to be perfect! Whatever you have now will improve over time, so get out there and do whatever it takes to make money. Because if you don’t someone else will.

Networking is the key to success

I didn’t know what I was doing with my first few companies. I didn’t have too many people that I could get advice from and I ended up winging a lot of things. After being in business for a few years you learn a few things, but you never stop making mistakes. Instead you end up making new mistakes.

If you want to be successful, you have to network. By going to conferences or local business networking events, you will learn a lot from other people. Plus if you are uncertain about specific things, you can always ask others for advice.

On the other hand if you don’t go to industry networking events, whom will you ask advice from? The best person to ask advice from is someone in your industry or your competition. Trust me, you will be amazed on how friendly your competition can be and what they are willing to share.

No one is god

When I started my first business a lot of people gave me advice because it was my first time around the block. Every time someone gave me advice I followed it because they were more successful than I was. But instead of this helping me, it caused me to run around in circles and make more mistakes.

I am not saying that you shouldn’t listen to people,  but don’t take people’s word for everything. Do your own homework and make sure the advice people are giving you is right for your business.

Remember no one is god. I don’t care if they sold a company for a billion dollars, they probably don’t know your business as well as you.

Have a business partner

When you have to make all the decisions in your company by yourself, you are more likely to make mistakes. Although I had a business partner with my first business, he wasn’t active so I had to make all of the decisions myself.

Luckily I found a business partner, with the help of my sister, and we have worked together for over 6 years. The cool part about having a good business partner is that they can bring something to the table that you don’t have.

For example, my business partner is great at managing employees, coming up with our corporate strategy, and talking to investors. I on the other hand am good at sales and marketing.

It is never an easy thing to find a great business partner, so don’t rush it. Make sure you get to know the person before you go into business with them. You should also expect to get into arguments and heated discussions, so you better be prepared to deal with him or her.

Don’t be afraid of the unknown

Advice Monkey didn’t accept payments online because I didn’t know how to and I was afraid of all the problems that it could cause. I know that sounds stupid, but as a 16 year old and I didn’t know better.

My fear of accepting payments online was one of the biggest reasons my business failed. Instead of being afraid of it, I should have done research on accepting credit card payments and the implications of charge backs.

If you are afraid of something that you aren’t too familiar with, suck it up and deal with it. The worse that can happen is that you’ll stumble along the way.

Conclusion

It’s too late for me to go back in time to when I was starting out, but it isn’t too late for you. Hopefully you won’t make all of the big mistakes I made.