I was forced into entrepreneurship by “accident”
In 2006 I took on a full-time school load in order to finish my bachelor’s within 3 years (in order to make the New York State licensing changes cut).
The changes in the state were happening in 2009 and would add another year or two to my license wait time, so I wanted to save myself some time. My full-time job could not accommodate weekly late starts or early leaves, and so I left and found several small bookkeeping jobs–a day a week, a day every two weeks. And before I knew it, I ended up with 55 hours a week of work, and a full-time school schedule–but I was killing all of it. I became a true master of my time–and I loved being my own boss.
I went on like this for almost 3 years and loved it.
I graduated in the middle of the recession but still found a job I needed to get my license. Plus, I really wanted the experience in taxation. 6 months into the job I knew–I could never be “caged,” I could never work for someone else again after calling my own shots for 3 years. So I stuck it out for 2.5 years and left to be free.
Entrepreneurship is a form of freedom.
You decide what to do and you also have no limit as to how much money you can make. Having your own business provides freedom to build the life you want, but it’s also a great responsibility to take responsibility for yourself and those around you into your own hands.
Since 2015 a seed was planted in my mind to someday write a book, and in 2019 I made a strategic decision to stop working with starting businesses and once-a-year clients: those required a lot of time and did not bring money to cover expenses and time needed.
As I was conducting discovery calls with prospective clients, reviewed their paperwork and prior filings, I was heartbroken to learn how not knowing some of the simplest basics cost them money and anxiety and time. I found myself wishing “If only they’d known how to start better. If only they could skip the most common mistakes…”
So, I set out to write a life-changing book that would give all dreamers who want to be free, who want to have no limit to how much they make, an opportunity to build the life they always wanted. That’s how Dream Bold, Start Smart was born. This book is for someone who has a business idea and cannot afford to fail. It’s a plain-English roadmap for almost-preneurs and entrepreneurs to get money numbers and taxes setup right from the start.
A mistake many starting out almost-preneurs make is not treating it as a business. It starts with an idea, a vision, a passion or skill. Treating it as a business means making decisions using numbers. It also means having a goal of (eventually) hiring others to do the work, someday.
When starting a business, regardless of whether you’re starting it as side hustle or while still working for someone else, you must first get your business model right. How will you make money? Who will buy your product or service and why would they buy from you? You know, how will the wheels turn. I’ve met quite a few almost-preneurs who couldn’t answer that question, and so had they started it “anyway”, they would have probably closed down or would have had to jump through some big hoops to not sink financially.
A few years ago, I worked with a start-up that wanted to connect “growing” clothing designers with consumers. The idea was exciting in the beginning, but as my client was developing the business numbers to present to investors, he realized that there are only about a thousand designers in the world who would potentially pay for membership. So right off the start his revenue and growth was limited. My client abandoned the idea, and his company today has in common with that original one.
Another element of a solid business model is to have a healthy mix of recurring and one-time revenue. It’s very hard to chase after projects or clients every time. It gets exhausting and doesn’t help managing or planning cash. Think about an estate attorney – he or she is always in the hunter’s seat for new clients as clients are typically one-time deals. Whereas a tax accountant may have one-time projects here and there but overall, it’s a fairly predictable business and revenue that the entrepreneur can count on. How can you build a business that has both?
Know Your Numbers
When starting out, knowing your numbers is another critical point. Knowing how much you will need to invest initially, how long that money will last you and when you can count on taking it back will ensure that you have a plan on how to fund your idea. Some businesses require very little initial investment while others require a lot more.
After understanding your initial costs, it’s important to test your assumptions as to how much cash you can bring in every month. Notice that I said “cash”, not “income”. How much you’re billing is somewhat important but cash is king. Knowing – or at least having an idea – of how much you can bring in and how much you need to pay out (and what’s left) will empower you to set yourself up for your business success.
You also should set a target profit. Besides paying yourself a salary (for the time and effort you put in, and, eventually, this salary would go to a business manager), how much do you want this business to bring you? What’s the number that will make it “worth your while”? On the opposite side of that, how much in sales do you need to bring in every month at the minimum so that you don’t have to borrow to operate? (also known as Break-Even Point).
Last, but not least foundational element is pricing. Pricing your product and service right is essential and almost every entrepreneur I know struggles with finding the right price. When pricing your offer don’t try to be the cheapest girl on the block while also selling your quality or other perceived high values. Pick a side: either you’re the Walmart of the world (in which case you focus on cutting costs and increasing volume of sales) or you’re the Apple of the world and focus on making and selling the best and most beautiful computer ever (I realize this is argumentative, but humor me, I love macs and you get the point).
When you’ve picked a strategy, develop a plan on how you’re going to get to where you want to be. Recently a client of mine asked me to help determine an hourly rate for her design company’s services when calculating a project’s cost and price to the client. After several weeks of research and modeling, I came up with an hourly rate that was 50%+ higher than the rate the company was billing. So right off the top the company was simply losing money because they weren’t charging enough. Do you know your profit, direct and indirect costs? Are you making a profit? Is it enough for you?
We barely scratched the surface with these few strategies, there is a lot more than can be done to build a great business, but it’s a great starting point. And even those simple basics should be addressed in an established business. What I mean is even if you’ve been in business for a while, make sure that your business model is solid, you know who buys from you, what they buy and why. You want to have both recurring and one-time revenue setup to help your business provide for a certain level of money certainty. So, if you’ve always been hunting for projects, can you add a coaching business, or a digital course or a book to the revenue mix?
You also want to know your numbers not only when you’re starting out. The most successful business owners I know are always keeping an eye on their incoming and outgoing money. They know how every penny is spent, always, and investigate significant discrepancies and over-budget spends, as well as not meeting sales and cash-in goals.
Finally, pricing with your target profit in mind is something you will thank yourself for later. If you’re not getting a profit, why are you in business? What’s your plan for the future – will you be selling your time for money, or will you be hiring and leveraging other people’s time? These are all great questions – write your answers down on a piece of paper and remind yourself how important these basics are and note what you still need to work on. Always keep your eyes on the prize and know your numbers. Doing so will make you unstoppable.
If you’re early into your speaking career, check out my book “Dream Bold, Start Smart” and get resources on my website www.tatianatsoir.com
If you’ve been at it for years and would like to learn more about the few strategies I mentioned, schedule an intro call at www.workwithlinza.com