First Rule In Running a Small Business: Have enough human capital
For the past couple of days, I have been discussing with @vectorshore about some issues with his IRL business. It hasn't been performing the way he had hoped, and he has made the proper decision to rethink the process.
Many years ago, I was paid as a consultant. A local training and advisory board would pay me to visit local businesses and teach them to succeed. About 80 percent of small businesses fail within the first year. None of my clients did. My usefulness as a consultant only extended for companies earning up to $50 million per year. Usually, companies will face some critical decisions as they improve. Once a company rises to a certain level, it is no longer a "Mom and Pop" business; it goes "Public." I haven't been able to shepherd a company through at that level. If I had gone to work in the "Big City" when I left school, I would have had more exposure to the "Big Game." As it was, there are only so many businesses that can reach that level in a Rural-Urban - Rurban - environment that I chose to live in.
I have found that the businesses that would fail within the first year did so because they were under-capitalized. This could mean one of two things if you don't have enough money or enough intellectual (human) capital. My brother's company had early success because he brought me on board. It wasn't because of my skill, but because I recruited two of my university friends to join in at a particular stage.
If I made a list of rules, hiring people who are better than you are is probably at the top of my list. I started doing accounting when I was fifteen. I studied it in secondary school; I studied it in university; I helped businesses set up accounting systems for about six years before starting a business; I was an architect of an online accounting software package (although it was never sold); I was an architect of online automotive, purchasing, work order, payroll, preventative maintenance applications (that did sell). Despite having the ability to work in the accounting environment, the first year I used an accountant, I had an $11000 tax refund. I know how to dig a ditch, but it is better to employ someone with the tools and ability to do the job well.
If I could rewind my life, I knew so many skilled people while I was in university; I know that working together would have been amazing. If you are in college or university and thinking of starting a business, look at your schoolmates and maybe put together a team that will win over the world. While you are at it, look at the Steem Skillshare community. We are aggregating a powerhouse of skills, all ready to be partners in success.
Thanking @vectorshore for the inspiration and additionally the following as beneficiaries.
Thanks a lot @dwarrilow2002. Human capital is very important, and in this case, I ignored it. It wasn't enough to run my small business. But in this new niche for my website, I will surely be prepared for it to make it boost more than the graphic design niche. Once again, thank you so much. It's very helpful.
At your school, did they offer courses in marketing? If so, are you friends with someone?
I have additional thoughts but I need to go to sleep now. I have a lot of food preparation that I need to do early in the morning.
Yes I have a friend in the marketing department. Okay, thanks. I would like to read what you have to tell me.
When I would start a course, I would ask the students to point at Balaclava. They would invariably point in all directions. First, none of them knew the destination (Balaclava is an obscure hamlet north of where I would give the classes) but if they did, they would need to know where they were to start with. When you are in the classroom, could you point north?
Where is your Balaclava? Do you know where you want to be in ten years' time? That is a serious question.
Where are you now? What skills and strengths do you have now? Bill Gates did now create the first Microsoft DOS. He knew some guys who had written the code for a DOS and bought it from them. His strength lay in that he convinced IBM to put this DOS on all of the computers (initially for free). Once it was on most computers, he made his money on the upgrades.
He knew what resources he had. He identified that IBM would be willing to put his software on all their computers.
There is another consideration. Never take advice from a person who doesn't have a vested interest in your welfare. If I can give you advice that is helpful, pay me 1% of your gross income. I will reinvest it in your company, but it might help to say that you are partnered with a Canadian company. Also when you make $Billion, I will be able to afford to buy you a really nice bottle of champagne.
Wow, thanks for sharing with us this vital information on hot to set up a small business. Really do enjoyed it.