There’s something about January that brings out the entrepreneur in people. Maybe it’s the New Year’s-resolution-turn-over-a-new-leaf-lose-10-pounds phenomenon.
Whatever the reason, hundreds of thousands of Americans start new ventures in January, according to the Current Population Survey of the U.S. Census.
To give a helping hand, It’s Your Business asked some veteran business owners for advice about the essential activities the 2007 crop of startups should do in order to be around this time next year.
“Everything takes longer than you think it will,” said Donna McGovern, who started a financial-consulting business in 1995. The name, since incorporation in 1999, is Custom Business Results Inc. in Westminster, Calif. “My intent was to start a high-level accounting service to be the chief financial officer for companies.”
Developing a client base took much longer than McGovern anticipated, and her business survived the first 18 months by creating financial statements for manufacturers with software she learned at a previous employer.
Her advice to newbies: “Create forecasts on a best-case/worst-case basis and be sure you have funding to get you through the worst case.” McGovern was fortunate that her husband had a good job to tide them over.
Today, he’s one of her clients.
Another bit of McGovern wisdom is to remember: “Cash is king.
Spend it on the important things and reserve it for those inevitable rainy days.” Another startup survivor, Abdi Ahmed, launched NetServe Systems, a software programming and network-management company, in Irvine, Calif. in 1996.
His first mistake was ignoring advice from professional advisers to write a business plan.
Now, he said: “The most important lesson is to have a sound business plan that is flexible and can be visited frequently for adjustments. It is critical to remain focused.” Without a written plan, NetServe tried to attract big accounts, but winning large customers takes a long time, Ahmed said, so he changed and went after small and midsize companies that needed top-quality information-technology services.
“That allowed us to meet our payroll obligations (while) we went after big accounts,” he said. One of Ahmed’s best moves when he started was setting up his financial recordkeeping in a professional way.
“I bought QuickBooks Pro (accounting software by Intel) and hired an accountant for three hours to set it up and train me,” he said.
Ahmed’s other wise startup move was organizing his contacts and prospective clients and putting them into a computer.
“Unless you follow up with prospects and translate that into some kind of (business) relationship, you simply won’t succeed,” he said.
Ahmed started with ACT contact-management software but recently has relied more on Salesforce.com, a customer-management Web site.
Yet another startup survivor, James Van Orden, president of Electronic Marketing Inc. in Newport Beach, Calif., believes passion is the most important ingredient for success.
However, passion alone is not enough.
“I was passionate but not informed,” Van Orden said of starting his website design and services business more than three years ago.
Even after 10 years in computers and Flash multimedia, Van Orden found so many things he didn’t know about business.
He started studying and researching, a practice he continues even today.
“If I have five minutes (free), I’m studying,” Van Orden said.
When he decided to develop a separate online venture for electronic marketing for Orange County cities, called www.TheOrangeConnection.com, Van Orden kept detailed records of every step and task.
That project is not profitable, but it represents Van Orden’s graduate degree in business ownership.
“I’ve kept all those lessons on what it takes to be successful,” he said.
Entrepreneurship “is a continual evolution and learning process.” And the best lesson he learned from both startup efforts is significant for every startup: Expect to work harder than you ever have in your life.
“When you become a business owner, you never clock out,” Van Orden said.
“The only day I had off (in the past year) was Christmas.”
