Most people do not like surprises, especially when you are in a fresh venture when everything is new and moving at the speed of a rocket. Adrenaline, drive and long hours with no sleep are characteristic of the first few months of setting up a company.
Whether you are launching your first company or are onto the next ones, there are some bootstrapping lessons you hopefully will not have to experience.
1. CHOOSING THE RIGHT ACCOUNTANT
Turns out I am not alone in the horror stories in this category. It is really in your best interest to suck it up and go to your local government’s training/seminar to learn the rules and when you have to pay your dues to keep the CRA from sending you scary letters in the mail that you do not understand in the beginning.
Educate yourself; don’t rely on your accountants/bookkeepers as they may not be on it themselves or assume you know despite your blaring ignorance. The government charges late fees even if the people managing your books drop the ball.
Also, if you have a handle on the CRA’s process, you can get on your number crunchers with your expectations earlier. Take the decision of who you choose seriously, you can get held hostage by these people who have all of your data. Get references/referrals from experienced people you trust.
2. BUSINESS PARTNERS
All of the wives tales of do’s and don’ts when selecting a business partner are probably not worth shaping beliefs around. Look for someone with a conscience, has integrity, isn’t too greedy and works hard. It doesn’t matter if that person if you best friend or a stranger. I have partnered with both and thankfully my experiences have both been good.
We have all heard of messy situations but there are plenty of good ones out there too. When you are working to a common goal whoever has the best solution, not ego generally wins. Make smarter decisions, accomplish more and make up for your weaknesses collaborating.
3. OFFICE SPACE
Depending if someone privately owns your building or if you are signing a lease via a commercial realtor, you should expect to have to purchase insurance. Shop for the best rates as they fluctuate between companies.
Whether or not you should have a physical office space depends on your work ethic and discipline. One of the major pros to having an office is that you can invite clients to your space. When I launched my first company almost all of our clients came to us. No driving to coffee shops and wasting time throughout the day travelling to meetings. What is that time worth? Factor it in. You also look a lot more credible, especially when you are young.
That said, I work from home now and write off my space and only pay for one spot. It depends who your clients are and what your day to day looks like, I moved my sales process to the phone and internet.
Take care of this one before you start doing any work. No contract leaves the door open for people to walk away from their verbal agreements or terminate them at any time.
I know this sounds obvious but after a friendly meeting sometimes we forget to get it in ink. People also expect you to bring it up so if you don’t, it will be a costly mistake later.
Agree on a price, sign a contract and show that you mean business then proceed with your project. Formalities are important. If you think your friends and family are just going to hand out cash when you do work for them, if you didn’t ask for it, how awkward is the conversation when they thought you were doing them a favor. Lots of entrepreneurs set up family/friends rates for their loved ones.
5. TO INCORPORATE OR NOT
First and foremost, I am not a lawyer so do your own due diligence for this step and decide what works best for you. Talk to an accountant, talk to a lawyer then make a decision.
In a partnership/investor scenario incorporations are assumed due to liability and equity sharing. If you're riding solo, a simple to set up and manage sole proprietor company may work just fine for you. Each province has different tax rates but sole proprietors have less obligations and admin and also do not rely on chartered accountants to file taxes. Your first and last name is automatically a business in Canada up to $30,000 in revenue.
You can start charging people as soon as they offer you cash. As your revenue increases, it may make sense to incorporate, ask your lawyer and accountant both when is the best time.
6. BANK FEES
If the tellers are grouchy every time you go to your branch it may be worth considering going elsewhere. This is a hint to what kind of culture the establishment has.
The straw that broke the camel’s back for us was when we asked our Small Business Advisor a question in an email that was part of our strategic plan for our company, she told us we had to contact the office in British Columbia who was now managing our account (we were in Saskatchewan) and that she could not answer us. Soon after, we switched to another bank with lower fees, happier people and a designated line for time pressed business people. Wished we did it sooner, the switching process took around 30 minutes.
7. EXCHANGE OF SERVICES
Good old fashioned bartering. In the cash flow game of entrepreneurship it seems to be a wonderful option for projects and it can be, but it can also be hard to align/match the value of services. Also, motivation may be lacking if you did your end first.
We had a great experience with a graphic designer who needed help with marketing and an executive coach that needed help with his online presence. We have a few others where we are still friends but the business side of things did play out like we thought it would and made us gravely cautious about this seemingly wonderful strategy.
8. WORKING WITH DIFFERENT PEOPLE
Do not pretend to understand how they built their space ship or what their secret sauce is if you don’t. Ask questions until you understand, they appreciate that you want a deeper understanding of what they are trying to achieve. If it is complicated they will expect that you don’t get it. Things like age and background don't matter if there is a goal or a destination you are trying to reach together.
9. WHEN CLIENTS' BUSINESSES ARE FAILING
Generally they won’t tell you. They may give you clues, though, so pay attention. My background is in Marketing Consulting and it has been an unfortunate surprise on a few occasions to learn that they hired you to come in and be the rainmakers when it was already too late.
That shit is serious. Not only are your clients in desperate times, you need to be cautious that they will be able to pay your invoices and not bring you down with them. One of our clients was having a turnaround story and started to pay back a few invoices but the bank came and closed him down before he could make a full comeback.
10. THE VALUE OF NETWORKING
Networking grows your company. Go meet people; you never know who they are connected to or how they can help you.
Be yourself. There is nothing more convincing than authenticity and keeping it real with people. When I am out in public a lot, that is when the magic phone calls come in for referrals that fall out of the sky. Networking is inexpensive and it works for marketing yourself and your company. You do not have to go out in your industry only, volunteering and getting involved in non-profits has always opened doors for me unsuspectingly.