Business pitfalls for new business owners
Like college and the military, business ownership has pitfalls for noobs
So you want open your own business?
“Go ahead,” you thought. “It’ll be fun,” you thought. If you wanted to open your own business and be your own boss because you thought it would be fun, think again. The pursuit of fun is the wrong reason to become self-employed.
Sure, early on it is very exciting and even has moments of an adrenalin rush or two.
Think about the sense of pride you will have when driving around in a service truck with your name magnetized to the door and the happiness you experience when you receive payment for a job well done from a satisfied customer. Remember you can set your own hours and you don’t have to answer to anybody but your wife, the picture can be very rosy. But you cannot acquire a rose without the risk of getting pricked by a thorn or two.
Let’s talk for a few minutes about the above -mentioned topics that accompany business ownership.
Your name is on the door of the truck. That’s a good thing until you cut someone off on the freeway or you suffer the embarrassment of being broken down on the side of the road; or worse yet, you get in a collision. Because your name (brand) is on the vehicle, that vehicle becomes a representation of your brand. Everything you do in that truck impacts the image of your brand. Speeding, rolling through a stop sign or texting all become public and not private. Whether you extend courtesies to other drivers, or you don’t, is all a matter of public interest. If you litter by throwing a cigarette butt out the window or don’t follow other rules of law and society, you are making a brand statement. The statement says, “I don’t follow the rules.” Which translates to, “I don’t follow the plumbing codes.” If you don’t follow the rules of the road, you likely don’t follow the rules of the code. You are a driving billboard broadcasting a brand message everywhere you go. A quick stop at the liquor store on your way home says, “I’m a drinker.” Parking in a handicap stall when you shouldn’t says, “I’m a cheater.” Having a busted brake light or a cracked windshield says, “I don’t pay attention to details.” What message do you think driving around in a filthy vehicle says about you? If you want to have a sense of pride by driving around in your own personally branded vehicle, then be proud of everything you do in it.
The happiness that comes from receiving payment. That, too, is a good thing. Especially when you consider that previously you only got a small piece of that pie while the owner that you used to work for got the big piece of pie. The feeling we get when we get the whole pie is elation. It is a feeling of “I deserve this.” But there is a very real danger in thinking that the whole enchilada is yours. The danger is that you consume the whole pie because you know that there is another pie just like it that will come with the next phone call, service order or job. First, you must realize that the whole pie is not yours. There is a spreadsheet or chart of accounts of vendors who are waiting for their rightly earned share of your pie. The list is too long to be comprehensive here, so I’ll just highlight a few. First is your uncle. No, not the rich uncle that you borrowed start up capital from, but he too is deserving of payback and a piece of pie, I’m talking the uncle that can make life unbearable for you if you don’t pay him; Uncle Sam, the tax man, for those of you who have not met this powerful uncle yet. A sizeable chunk is gobbled up by Uncle Sam.
Then there is your supplier. Just because you have a credit line with the local supply house and you didn’t have to pay for the materials when you picked them up doesn’t mean it’s free. A danger with credit accounts is the temptation to underestimate the actual costs of products received. It is not free. In fact, it is very expensive and the longer you wait to pay, the more it costs. That’s why it’s called compounding interest. The longer you wait to pay it off, the greater the compounded effect it has on your wallet.
Let’s finish this pie splitting section with a necessary evil. Insurance. It is a love-hate relationship. Nobody likes to pay for insurance, especially if you never need it. But, if you ever do need it, you will be glad you have it. You have to have Worker’s Compensation insurance if you have employees, even just one employee. I’ve seen many owners try to avoid this expense by paying their guy “under the table.” Don’t do it. Not only is it illegal, but one accident or claim can wipe you out. You are not insuring yourself with this mandated coverage, you are insuring your guy, your employee. You are giving them the assurance that if something goes wrong, and an accident happens, they will be properly treated. Another necessary coverage is Liability. This too is not just to protect you, but to protect your clients and their property. A simple rule: be well insured.
I’m out of space already and I’ve got two more issues to cover. Next time I’ll address the dangers of setting your own hours and of answering to no one.
My purpose today isn’t to discourage you from launching out on your own, but to inform you of what you must navigate in order to do it successfully. There is a whole checklist that I have created to help my potential Plumbing Doctor franchise partners understand that financial growth begins with personal growth.
The Doctor is out.