5 MAJOR Pitfalls When Starting a Small Business

Hey, everyone, it's Mike Andes, and you're listening to the Business Bootcamp podcast. Today I'm going to be sharing with you some of the tips, the tricks and things that I've learned after starting over 25 small businesses along with the franchisees at Augusta Lawn Care Services. So before we get into the show, though, a big thank you to today's sponsor, which is Gusto. If you haven't already, go to gusto.combootcamp and check out their software, completely free for 90 days. You can do payroll, benefits, direct deposit, all the things you need to keep your employees happy, as well as keep reports for the government, which right now is really important if you have government programs that you've been using. So check them out Today, go to gusto.combootcamp Try them out for 90 days instead of the usual 30 that you'd get from their regular website. So I'm gonna tell you five things that I've learned from starting small businesses. And when I say that I've started over 25, 20 of those are franchisees in locations from Augusta Lawn Care. And then I've done over five other things. I have the gym. I've done stuff online. I've done books and a bunch of other things. Even this podcast is a form of a business. So what are some of the things that I've learned along the way? Good, bad, ugly? I had to learn a lot of things. And maybe you're about to start a business or start a new venture and you're asking, what can I do or what can I accomplish without having to do it, you know, reinvent the wheel or make the same mistake. So hopefully some of these things are encouragement to you, especially if you're just getting started out can be very, very, very demoralizing. And in the current economic climate that we're in now, can be really, really hard to just mentally get the fortitude to start a business. So these are the five things that I would recommend, and this is something that I'm going through on a daily, weekly, monthly basis because we're constantly having new franchisees joining Augusta Lawn Care. And so I start to see some common themes of entrepreneurs as they begin to start their business. Number one is don't try to be perfect. This is a big issue for some people that are perfectionists or that are ocd about getting things right the first time. Entrepreneurship, starting a small business, it's a lot of building the plane while you fly it, especially if you're new to the new to the business or the industry. You've never done it before, or especially if you're going from a 9 to 5 job into an entrepreneurial role, like, you're going to have to learn QuickBooks, you're going to have to learn accounting, you're going to have to learn how to pay your employees, how to hire, how to interview people. These are just a lot of skills. And if you're trying to be perfect from the get go, you're gonna dampen and you're gonna definitely hamper your growth as you begin to start the business. So, number one, don't try to be perfect. And I see that a lot of times in people's software packages, because software, a lot of times can be so enormous and there's so many different avenues that you can use software. And if you're using a SaaS product like a CRM or an accounting service, they have to build that product for a range of services or industries typically. And so it's very easy for you to get in there and get into this maze of different options and ways that you can use the software. And it becomes so daunting and big, and you're trying to perfect it all the time. You literally spend more time working on dotting the I's and crossing the t's than you do, like creating the sentence. And so I find a lot of times that the most successful entrepreneurs that actually grow fast and then become successful and figure things out a little bit later, and maybe they have some inefficiencies, maybe they don't do some things right, maybe they have some customer complaints, but they get stuff done, they actually start the business and really begin to ramp it up. Those are the ones who usually are more successful, and the ones that don't do that and really get maniacal about the fine little details and are always trying to perfect every little thing when really it's like, hey, get the ball rolling. Let's learn by trial and error, let's learn by fire and get things done. And there's obviously a balance between those two things. But I find time and time again, the people that get really, really locked down on one or two things in their business, trying to perfect it, or they think that they got to spend days, weeks, months, years trying to figure out some element of their business. By the time they figured it out, the industry has moved on, technology has moved on, whatever it might be, the marketplace has moved on, and they are now behind. And so, number one thing I would say when you're starting a small business is don't try to Be perfect, realize that 90% is good enough and continue to go to the next thing and do that thing. 90% and the next thing 90%. You get three things done at 90%. It's better than getting one thing done at 99.999-876%. Don't try to be perfect. Number two is marketing capitalization determines your top line growth. I've made videos about this specifically for the lawn care industry. But when you are starting a small business, a lot of the growth that you're going to have in top line revenue for that first year or two is going to come down to how much capitalization you have from marketing. If you can spend five times more in marketing, it's going to lead to an enormous exponential growth comparison. If you just did 1x, for example, so many times the small businesses that do well, they have a marketing budget that is substantial. When they get into the business and they know how to spend it, they've educated themselves on how to spend that money, where it's best spent, where the best bang for their buck is they need to know their numbers on that marketing. But most importantly, I see people get into the business, buy equipment, buy hire people get all the licenses and the insurance and everything. And then they get to day one and they're like, oh, I don't have any money to go tell everyone about my product or service. And so I see this a lot in lawn care and landscaping where people will buy the trucks, buy the equipment, get debt, or use their own savings. And then all of a sudden they get to day one, it's like, oh, well, no one's calling me on my phone. Why aren't people, guess what? Your website doesn't have traffic. You're not ranking well on Google. No one likes you on Facebook. There's no word of mouth happening because you only your trucks are parked right now in the storage. So these are things I see time and time again. And that is marketing capitalization determines your top line revenue growth, especially for the first year or two. And so you want to make sure you have money set aside or have access to capital to use to make awareness around your product or service in the form of marketing and advertising. Number three is don't fear the phone. I see this a lot of times, especially with younger entrepreneurs. They're afraid to pick up the phone and call people. They want to text, they want to email, but they're afraid to pick up the phone. The phone will make you a lot of money. And I know with automation and with texting and email and all these other forms of communication. It very easily, you know, just like delegate over to automation, let a software system run it, let a texting platform do it, let just have it a drip campaign, make it happen. Like to follow up with people. Picking up the phone and following up with people will make you a lot of money. So literally right now we have a second location for Augusta Lawn Care that we're doing as a corporate location that's about 45 minutes south of our first location. And so I'm going through all of this stuff live. And literally today I was like, hey, we need to kind of drive sales a little bit. So I stepped in a little bit, picked up the phone and sharpened those phone skills a little bit. Guess what? We closed four deals just in the past two hours by just going back and calling these people that had expressed interest, had maybe done some work, change orders, had asked a couple questions, but never actually closed the deal. Call those people, get them on the phone. You gotta shorten the time of your transaction. You've gotta take time out of the equation. And if people are showing interest, after you send them an estimate or a proposal or they show any interest online even, that's the time to call them, pick up the phone, call them, get them live. There's just so much you can get out of a phone call. Inflection of voice, pace, mood. Instead of just over texting an email, which is much more difficult and much slower, I was able to close deals in a couple minutes and make negotiations, make work, change orders real quickly, fire it, and get the deal on the schedule very, very quickly on the phone. Email and texting, that could have taken a day, two days, Stuff gets lost, stuff gets in the mode of communication, they don't understand you. There's miscommunication, there's misunderstanding. Highly, highly recommend using the phone especially for follow up, but also for customer service. You can email people until you're blue in the face, but if they're mad, picking up the phone is going to be a much faster solution. Again, taking time out of the equation and making yourself more personable and being able to get to the issue as fast as possible. That's what you want to do when it comes to customer service and you should use the phone when it comes to follow up. Emails are great, voice notes are fine, voicemails are fine, texting is fine. But picking up the phone and learning how to use the phone is very, very important to your follow up success. And making sales guarantee you it can double your closing ratio. By following up using the phone effectively. So number three is don't fear the phone. Whether you're selling product or you're selling proposals and you're sending out or selling services, whatever it is, use the phone to your advantage. Make calls. Don't be afraid to do it. Punch it into the phone quick and push send. Like whatever that. Call the green button on your phone, Click the green button on your phone and make the call. Get them live and in person. And if you're a decent communicator, once you have someone on the phone, it's not so bad. Most people just fear the phone and fear the ability that someone can literally deny you live instead of just via a text or an email. The reason we don't pick up the phone is because we're afraid of people giving us a confrontation or a complaint or just denying us when we're trying to follow up. And so we avoid the phone where the phone can give you the best feedback from the customer and close the deal based upon their mood to their inflection and a whole bunch of other stuff that you can't get via text and email. So number three is do not feed the phone, especially for follow up. Number four is know your profitability numbers to be able to forecast your growth. This is very important because your growth is going to be hampered by your capitalization and your capitalization is going to be dependent upon your profitability. Like, when are you profitable? And so when I say capitalization, I'm talking about cash flow. Really. Like, so if I am running a very profitable organization, I know that I'm gonna have margin, I'm gonna have money to be able to go and spend on growth, buy new equipment, hire new people, do more marketing, expand into a marketplace. Whereas if I don't know my profitability numbers and they're up and down, I don't really understand them. I'm not gonna be able to predict accurately in terms of how much money I can spend on marketing, how much I can spend on growth and expansion and hiring and equipment. I'm not gonna be able to do that if I don't know my profitability numbers. And on a daily, hourly and monthly basis, I need to be knowing how much money do I need to generate to break even, how much money do I need to generate to have X amount profit margin? And then trying to really track those numbers. So, you know, okay, I need to make $5,000 this week or I'm losing money. Okay, great. Well, if I want to make a 25% margin after my expenses and my fixed and variable expenses or whatever, I need to make 8,000. Okay, well, if I make 5,000, I break even. If I hit 8,000, I'm able to take my pay to home that I need for my family. Knowing those numbers is important and then be able to track those numbers every week. Like, are you at 5? Are you at 6? Are you at 4,500? And you lost money this week. These are things that you need to be doing as you're growing the business and as it grows and the business is actually growing in revenue, it just compounds the importance of knowing your profitability. Because once you hit profitability, if you're not. Once you hit profitability and then you're taking money out of the business for a paycheck, anything above that is technically on the table to be able to grow the business. And if you know what that money is, how much that's going to be and you can predictably guesstimate or know in the future forecast when that money is going to be there and how much it's going to be, that is power. When you need to start growing the business, because you know exactly how much you have and when you're going to have it. So number four is know your profitability numbers to forecast your growth. Especially you're starting out. And if you're just starting out, it might literally mean like, I need to make X amount just to pay the fixed cost of rent and utilities. Then it might be, okay, I need to make X amount to pay myself a reasonable salary of $1,000 a week. Next step, okay, I need to make X amount in order to be able to afford an employee. Next, like when is all of those markers? And that's going to be very much predicated upon your local demographic, what your wages are, how much you are spending on your lease. And all those things need to be calibrate and taking into account when you look at your profitability and forecasting your numbers. Number five, the last thing that I would recommend for someone that's starting a business based upon what I've seen as starting so many of them is your mindset. And there's a really good book that I recently read. It's called It Takes what It Takes. Really good book. Talks about neutral thinking when it comes to circumstances that come into play. And the book was mostly written about sports, but it can be taken into business as well as in that instead of creating a narrative of the future based upon the past, looking at the past in a neutral state and not thinking positive or Negative, not saying like, oh yeah, this is not just like making rainbows and everything's perfect and sunshine, but then also not looking at the negative. Not like, oh yeah, because I did this and the past was bad, then therefore I'm going to have a bad outcome or bad future. Really being able to look at a neutral state, where am I at? What can I do about the future to make it positive outcome? And neutral thinking is one of the things that I think is very important for small business owners. And if you're going to lean either way, lean towards the positive side. Because if someone is negative in their thinking when it comes to their business, they don't go on the attack mode. If they're not positive about the outcome of their success in the business, they begin to not follow up with the phone. All these other things begin to fall apart. They just begin to get, they start focusing on becoming perfected every little thing in their business. Why? Because they don't have a positive outlook of the growth of where the business is going. And so you've got to have a positive mindset. Because if you don't have a positive mindset, there's so many roadblocks and so many hurdles and so many issues and so many problems that you're going to be able to focus on. Because if you're not going to focus on the good, I promise you, the bad and the ugly will make themselves very apparent. When, when you're starting and starting really scaling up your small business, there's going to be times where you can really focus on the difficulty of a project or the difficulty of a client, or the frustration around customer complaint or something that went wrong or a warranty issue. There are just so many things that can go wrong and then it's not to take away the fact that they're bad and they're horrible and they're annoying to deal with and it's very, very hard. The fact is though that like if you get focused on that and you get zeroed in on that, you're going to miss out on all the positive things that are going to drive the business forward and allow you to grow. Alright, so the fifth thing is probably the most important. That is your mindset determines your future. If you have a positive mindset, and I don't just mean in airy, fair way, I mean like you have a plan, you know where the business is going, you have a mission, you have a purpose, you're going in a certain direction and like you realize there's gonna be negative things, you realize there's gonna be problems, but you're focused on solutions instead of focusing on the problems the same way that this can camera, if you took it out of focus and it was focusing on something like that, or maybe even this grass, if it was focused on that grass, I would become blurry. If you get focused on something that's so close and relevant to you, seemingly, you're going to miss out on the things that are in the foreground, the things that are in the back, they're a little further down the road. That is your future of your business. If you get so wrapped up in the negative and so focused in and the camera gets so focused on making that problem clear, the future's gonna get fuzzy. It's gonna start to go, where am I going? I'm so focused on what's in front of me, this negative thing, I can't see down the road. And so I highly recommend that you have a positive mindset and at least a neutral thought pattern when it comes to decision making as you start your business. So number one, when you're starting your small business, if you wanna scale it up and make it bigger, do not try to be perfect, number one. Number two is you gotta remember that marketing capitalization determines top line growth. So ads and marketing, to do that from the onset of your business is going to give you massive returns and exponential growth if you have that money. Number three is do not fear the phone. Pick up the phone, make the sales call, push the green button and get someone on the phone and make the sale. Don't be afraid to ask, don't be afraid to push, don't be afraid to ask some hard questions and sit in the pain of the customer to get those follow up sales. Number four is know your profitability numbers in order to forecast your growth. You do not know what you're forecasting next year or five years from now. If you do not know your profitability this hour, this day and this week, you've got to focus on your profitability numbers and knowing those like the back of your hand. And number five, keep your mindset positive. Because your positive mindset or your negative mindset will become a reality in your future. Because your mindset determines your future. Listen to Mike Andy's on the Business Boot Camp podcast. I'll see you next time.