No one can tell you how to run your business. An entrepreneurship textbook or business mentor can help you learn how to develop a business plan or make investments, but the real learning happens when your business is tested in difficult situations.
Over the years, I have made a lot of mistakes, but my greatest successes have come through trial and error. Here are a few things I was unprepared for as a new entrepreneur and how you can handle them better.
Lesson 1: Hiring (and Firing) Your Friends
It’s natural to ask friends for help when starting a business or hire them to work for you directly. It can be a great boost to a new company, but things can get messy when personal feelings are involved.
To avoid ruining your friendship and hurting your business, it’s important to clearly define roles and responsibilities and put any agreements in writing. You may be best friends, but you should still have a clear exit strategy in place when things go wrong. Keep communication open on personal and business matters, and for the sake of your friendship, agree to disagree about business-related decisions.
Lesson 2: Dealing With Bad Days (or Weeks)
With all the pressure and stress of being an entrepreneur, you’re bound to have “off” days. When you’re in charge, your bad day can trickle down and throw everyone off their game. When you have those days, take a step back and acknowledge that your rut is only temporary. Be honest with your team that you’re not at your best so they can support you and make your life easier.
Finally, don’t rush important decisions when you’re having an “off” day. Make decisions from a place of clarity, rather than a place of fear or uncertainty.
Lesson 3: Managing a Multicultural Team
If you’re not a foreigner yourself, odds are you’ll be working with one. Immigrants make up nearly 16 percent of the U.S. workforce, and one in 10 owns a business. I’m originally from Turkey, so coming to the U.S. meant facing constant cultural and language barriers.
The key to effectively working across cultural lines is patience. Speak slowly and clearly, and frequently check to make sure you’re understood. When communicating with customers, staff, and vendors in a multicultural situation, I always ask, “What’s your understanding of this process?” instead of “Do you have any questions?”
Lesson 4: Understand the Value of Your Team
In business school, we learn that customers come first, but my experience has taught me that employees come first. If your team knows you’re on their side, they’ll take care of your customers and make your business thrive.
Even at a startup where money is tight, you should offer good employee benefits and free employee perks, such as flexible hours. Communicate openly with your staff, and show a genuine interest in your employees’ personal and professional success.
Lesson 5: Getting Sued
Unfortunately, this can happen no matter what industry you’re in. A lawsuit can involve a patent or a former employee, and you might get sued even if you’ve done everything correctly. To protect yourself, document everything. Conduct regular employee reviews, take care of the necessary hiring paperwork, record every stage of product development, and keep thorough records.
Before you face a crisis, surround yourself with business lawyers and human resources personnel. If you don’t have the resources to hire, pay for consulting and educate yourself on all legal details that could expose you to lawsuits. The Society for Human Resource Management (SHRM) and the United States Patent and Trademark Office (USPTO) are great places to go to stay up-to-date on new regulations.
Lesson 6: Creating Business Contracts
Contracts for sales and products with vendors or distributors are vital to getting new accounts and partnerships while expanding your reach. And they’re binding, so you better know what you’re signing.
Always avoid oral agreements, even if you trust each other completely. Create clear written agreements with simple, numbered paragraphs. Pick a state to govern the contract, and if you’re in different states, decide which state’s laws apply. Finally, ensure that there’s a well-defined exit strategy included in every contract.
Lesson 7: Dealing With Payment and Revenue
It’s easy to make assumptions about revenue through spreadsheets, but it’s difficult to accurately predict in real life. It usually takes twice as long as you expect to close that sale or collect accounts receivables, and bills pile up faster than you anticipated.
To avoid a dire cash flow situation, determine the real length of your sales cycle. Then, determine your customers’ payment cycles, including how long it usually takes them to pay and what you’ll do if they’re late. You should track your cash flow daily and be aware of the resources you have to run your business.
After being in business for a few years, it’s such a relief to master so many of these real-life challenges. After you handle these things once, you’ll feel much more prepared to field problems in the future. Making these decisions can be tough in the moment, but empowering in the long term. As an entrepreneur, there’s always pressure to grow and succeed quickly, but I’ve found that there’s rarely any harm in taking your time.
Originally from Turkey, Zeynep Ilgaz and her husband immigrated to the United States with nothing but two suitcases, a love for each other, and a desire for entrepreneurship. They co-founded Confirm BioSciences and TestCountry, where Ilgaz serves as President. As the global leader in the field of lab and instant testing for drugs of abuse and health, Confirm BioSciences is committed to being on the cutting edge of offering new, service-oriented drug testing technologies. Connect with @ConfirmBio on Twitter.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.