I have a friend and his name is Hal.
He is the kind of man I’d like to grow to become. Hal is a good man and a wonderful grandfather. Hal asked me to meet with him and his grandson of 21 years to offer some advice on starting a business.
I organized my thoughts into 12 lessons learned in the first 12 years of our business. I figured readers would also find this list useful, as I believe there are some good principles in here for both employees and entrepreneurs.
1. America is still the land of opportunity. The U.S. economy is expected to grow to about $34 billion by 2050. The World Economic Forum reports our economy accounts for about one-quarter of the world’s economy. With nearly 330 million people needing products and services in this country alone, a good business run by good people can most certainly do well.
2. Keep the law. America is built upon a system of laws that reward you for doing the right thing. Fraud is not the norm and laws are in place to protect and fight against doing the wrong thing. There are many countries in the world where this is not true.
3. Work hard. Nothing beats hard work. As the business grows though, you should be working ON the business far more than you’re working IN the business.
4. Love your family, like your work. I often say to people, “I love my family and really like my work.” I’ve seen many owners get their priorities upside-down. Our families are our support system and when it’s all said and done, they’ll be there for you long after the business has gone — if you prioritize accordingly.
5. Master accounting. Most small businesses fail because of a lack of financial acumen. Make sure you understand basic accounting principles and how to read financial statements. You don’t have to do the books but you should be able to understand them to help prevent fraud and make smart business decisions.
6. It’s less crowded at the top. Many businesses compete in the middle of the pack or scratch out a living at the bottom of the pile when it comes to pricing. My experience has been that if you can support your products and services with processes, systems, procedures and people that exude quality — your customers will pay higher prices.
7. Hire well. In a service business, your people are your brand. Even in a manufacturing or retail business your people can be a key differentiator. Recruit well. Train well. Pay well.
8. Be of service. I remember my parents saying to me: “Focus on being of service and the money will follow.” I have found this to be true. As a business owner ensure your quality of service is second to none and your customers will keep coming back.
9. Focus your time. There are only so many hours in the day and many entrepreneurs exhaust themselves by getting too absorbed in their work. They wonder why their health suffers and their relationships break down. Keep a record of how many hours you work each week. Challenge yourself to grow revenue and profits while working less.
10. Take time to think. As a business owner, ensure you take time to think. It’s easy to get trapped in the day to day. We always take a day of rest once a week. We also invest time at the end of each year to think through what to stop, start and continue as we head into a new year.
11. Prepay your taxes. This is a big mistake we made, as we prioritized getting our two children through college with no debt. Rather than prepaying quarterly, I encourage you to prepay monthly — a good approximation is 10 percent of your revenue.
12. Calculate your hourly rate. I encourage you to look at your revenue each month and divide it by the hours you worked that month. Why? Well, wouldn’t you agree you want to ensure you’re earning more per hour than what you could earn as an employee?
I’m hoping this list will be useful to Hal’s grandson — if he is anything like his grandfather though, I am sure he will do very well whatever he chooses to do.
Paul Butler is a Santa Clarita resident and a client partner with Newleaf Training and Development of Valencia (newleaf-ca.com). The views and opinions expressed in this article are those of the author and do not necessarily represent those of The Signal newspaper. For questions or comments, email Butler at [email protected].