Negotiate. Many first-time business owners don’t realize that many of their expenses are negotiable. “When I moved out of my first studio space, I left behind $4,000 worth of improvements I’d paid for myself,” Johnson says. “I had no idea I could ask the landlord to take on some of those expenses. He got to raise the rent for the next tenant on my dime.” Choose your professional support team wisely. You need a lawyer and an accountant, both of whom must understand the special needs of new and growing companies. Johnson
turned first to the accountant who prepared her
individual tax return, but his inexperience with
small business issues cost her more than $1,500
in fees and penalties at a time when she was
still learning to manage her cash flow. When
Hassi and her business partner parted ways, they
discovered their partnership agreement failed
to cover several critical issues. Had the two not
been reasonable people committed to an amicable outcome, she says, dissolving the partnership
might have dissolved the company, too.
Work for what you’re worth. Buckley says
her biggest rookie mistake was accidental under
pricing. “We neglected to charge for things
like airfare and meals because we just weren’t
business-savvy,” she recalls. “For one major early
project, we even quoted a cost based on one con-
sultant but sent two. It took some time to recover
from that.” Undercutting the competition’s prices
can make strategic sense— but it can also trigger
customers’ fears that anything cheap is worth
what they paid for it, Buckley warns. She notes
for the record that her company actually landed
more business in its first year by raising prices.
Create policies and stick to them. When you
develop a consistent system for handling recurring
issues, it’s easier for you to respond to questions,
and harder for customers to argue about the
answers. “I learned very quickly that I had to put
my policies and rates in writing,” Johnson says.
“I have all my clients sign an agreement so they
can’t claim they didn’t know about or under-
stand things like my 24-hour cancellation policy.”
Finally, remember to tell your customers
you exist! You may laugh, but it’s a common
mistake. Johnson didn’t think to put up a sign
for her studio—so in her first year, she says, she
had no walk-in business. (She did, however, fill
her appointment book with a single newspaper
ad.) Buckley, too, assumed that if she and her
partners built it, customers would come. “We
were so naïve!” she exclaims. “We were overly
optimistic about how much we’d make on
our first product and how quickly the revenue
would come in. We’d always been technical
people at a big corporation, so we had never
really been aware that there was a marketing
department generating demand. We learned that
very quickly.” —Fawn Fitter
