Was 2021 the year you set your dreams in motion to start a business? According to Google Trends, the world searched "how to start a business" more than "how to get a job" in 2021. If this Google trend describes you, congratulations! Starting a new business ranks up there with buying your first home and having your first baby. For over 25 years, we've worked with aspiring entrepreneurs like you to help them achieve their dreams of small business success. This post focuses on the answers you sought from Google - how to start a business. We offer five practical points learned from thousands of conversations with new and seasoned business owners.
5 Lessons on Starting a New Business
1 - The Most Important Point on How to Start a Business
The most important piece of advice is the hardest for a new business owner to adopt - delegate. You laugh at that one because you can't afford to pay yourself. How can you afford to hire anyone to do anything? Fair point, but every successful business has five distinct roles, and you can't do them all.
The Five Roles Present in All Businesses
- Management - You and your management team. High-level vision-casting, driving all teams forward
- Administration - Hiring, payroll, purchasing
- Marketing - Not to be confused with Sales. Marketing finds the leads
- Sales - Converts leads to customers
- Operations - The daily task of supervising, supporting, and doing work for your customers
The best business book on delegation is The E-Myth Revisited by Michael Gerber. The E-Myth is required reading for all new business owners. Gerber bluntly states,
"If your business depends on you, you don’t own a business—you have a job!”
And it will be the most demanding, most stressful job you've ever worked. Gerber says you create a business to get rid of a job and create jobs for other people.
Your first hire should be on the operations side. The service you sell your customers is the first job you need to delegate. You started a company because you're good at a service, but you can't make it a business if you do all the work. You can wear the supervisor or operations manager hat, but you'll need to hire employees.
I asked the owner of Chronotek, Brandon Fox, what his advice is for someone who wants to know how to start a business. It's not a coincidence that this experienced business owner agreed with Gerber. His reply was:
Consider an online time clock app system for help on the admin and operations side when you hire. A good time clock app will save you money on payroll and precious time doing payroll. An employee time clock app gives you eyes in the field. You can receive no-show alerts and view who's clocking in and out on the supervisor's app.
One client grew his cleaning business to 35 employees and 79 job sites without a supervisor. I mentioned that we are his virtual manager, and he agreed. Our time clock system saved him a supervisor's salary for all practical purposes.
2 - The Best Point on Hiring Employees (How to start a business with the right people)
I spoke with a longtime customer who runs a commercial cleaning company. I noticed the hire dates on most of his employees were over ten years ago. That's an astounding fact! Most janitorial companies struggle with a 200% employee turnover. I asked the 72-year-old gentleman how he managed to keep employees for so long. He said he'd learned a lot in 43 years of running a cleaning business. Here's what he told me, and if you want to know how to start a business, it's good advice to follow.
- Hire only people who have full-time employment and are seeking extra work. These folks are more committed and mature. They have higher purposes for working - saving for a house, paying for college, or paying off debt. He won't hire a person who has a part-time job. These candidates eventually get a full-time job and leave him.
- Hire only people looking for 10-15 hours of work each week. The wise man said this range is the sweet spot. The financial incentive is enough without burning out the employee.
Give employees flexibility. Employees have set schedules, but he's flexible when the employees show up in the evenings. The customers' offices are closed, so he doesn't care when they start.
- Pay minimum wage during a 60-day review and then give generous periodic raises. He tells each candidate, "I don't know you. You know you, and I'm only willing to risk minimum wage, but if you're willing to invest in yourself and things work out, I'll make it worth your while." After the 60-day review, the employee gets a raise and frequent subsequent raises. Later, when the employee gives the required 3-week notice to quit, the owner pays a $100 bonus. This bonus more than offsets the employee's minimum wage pay for the first 60 days.
Consider a point or cash bonus system for employees. He awards employees one point or a $10 cash bonus when they cover a one-hour shift for an employee who calls out. Employees lose one point for calling out, forgetting to clock out, and other infractions. When an employee reaches -3 points, they risk termination. Banking points instead of bonus dollars is sometimes the best route. If an employee knows she will need a few days off in the future, storing points is a good option. Employees can cash in stored points for $10 each.
Any person who can run a successful business for 43 years deserves our attention.
Also, we surveyed our customers and asked the question, "What is your strategy for keeping your best employees?" As you can see below, a positive work environment won by a landslide.
What Is Your Strategy For Keeping Your Best Employees?
The cost is the best reason to build a positive work environment for your employees. It’s free! Encouraging words, pats on the back, and smiles don’t cost a penny. Please don’t underestimate the importance of retaining your good employees. High turnover does come at a high cost.
A 2016 study entitled, Cost of Employee Turnover, by CharTec, states,
“It should be noted that the costs of time and lost productivity are no less important or real than the costs associated with paying cash to vendors for services such as advertising or temporary staff. These are all very real costs to the employer. These calculations will easily reach 150% of the employee’s annual compensation figure.” (1)
The Very Real Costs Of Employee Turnover:
- Recruitment costs
- Training costs
- Lost productivity costs
- New hire costs
Check out the CharTec study for details about each of the costs. Keep this point in mind - it takes a new hire 20 weeks to perform at 100% production levels. You're losing money during those 20 weeks and compensating for time-killing mistakes. My customer told me that most janitorial companies hire new employees every 3 to 6 months. If he can keep an employee for 12 years, that's 48 three-month periods he doesn't have to train someone new.
Two Key Takeaways About Employees
3 - The Best Point on Screening Your Prospective Customers
Screen your prospects? This advice seems counterintuitive on how to start a business. Fear drives you to take all work that comes your way. Beggars can't be choosers, as they say. This is your business, your dream - a very special club, and not everyone deserves to cross the velvet rope. A troublesome customer base costs you time, money, and emotional energy. And a customer who's not a good fit will ultimately be unhappy. Unhappy customers leave bad reviews on Google, Facebook, and other review sites. According to a survey by Reviewtrackers.com, 94% of consumers said a negative review would keep them from using a business.
Your strategy for building a customer base is similar to creating your workforce. The best way to prevent customer problems is to handpick the best customers. In other words, develop a customer persona. A customer persona defines your ideal customer and gives you a target. Federal agents are experts on real currency, making it easy to spot counterfeit bills. Know your ideal customer so well that you don't waste time and resources on counterfeits.
Imagine a Customer Base with These Qualities:
- Upholds your contract and doesn't try to negotiate a lower price
- Respects you and your employees
- Treats you as a partner, not a vendor
- Maintains the scope of work expected
- Appreciates your team's excellent efforts and files complaints only when necessary
- Honors loyalty and doesn't threaten to leave for another service provider
As a startup, you'll probably have to say "yes" more often than not, but pull the weeds as your business blossoms. A solid, loyal customer base is the key to profitability.
As you see from the chart below, customer profits grow with longevity.
How Much Profit A Customer Generates Over Time
" 'Who should we be serving' is a question that every service business needs to ask periodically. Not all customers offer a good fit with the organization's capabilities, delivery technologies, and strategic direction... Leaders are picky about acquiring only the right customers, which are those for whom their firms have been designed to deliver truly special value. Acquiring the right customers often brings long-term revenues and continued growth from referrals. It can also enhance employees' satisfaction, whose daily jobs are improved when they can deal with appreciative customers. Attracting the wrong customers typically results in costly churn, a diminished company reputation, and disillusioned employees."
Choose your customers as carefully as you do your employees. And build trust with your customers by using an employee management application.
4 - The Best Point on Marketing Your New Business
This advice on how to start a business comes once again from Brandon, the owner of Chronotek. He says,
no acquisition costs
higher customer retention rates
- greater levels of trust
increased profits - a referred customer's lifetime value is 16 - 25% higher than a non-referred customer .
5 Important Stats About Local Online Marketing You Need to Know
- 88% of consumers will contact a local business within 24 hours of doing a search on a mobile device
If marketing is the lifeblood of your business, Google is the heart that keeps the money flowing. Customers need to find you when they're searching. List your business with the major search engines Google and Bing. Surprisingly, 56% of local businesses haven't claimed their listing on Google and 82% are unclaimed on Bing. Don't let this be you! Get listed and be ahead of half your competition.
“Ignoring online marketing is like opening a business but not telling anyone.” — KB Marketing Agency
Check out Hubspot's ultimate guide to local marketing for more details.
5 - The Best Personal Point on How to Start a Business
You can delegate, hire the best employees, acquire the most incredible customers, and become a local marketing ninja, but starting a business has one more requirement.
Brandon should know. He started Chronotek over 25 years ago and still works every day because of one passion - helping small business owners achieve their dreams with a proven time clock system.
The following comment from Brandon makes it real. It’s very insightful and could be a reason for business failures if neglected.
Go Chase Your Business Dreams!
Over one million brave souls chased their dreams and launched new businesses last year. We hope you're in that number this year and that our advice on how to start a business is helpful. If you decide to give it a go, we can help manage your employees and control your labor costs. Give us a try for free for 14 days.
- Cost Of Employee Turnover, CharTec, William G. Bliss
By embracing these solutions, you can simplify payroll processes, reduce administrative burdens, eliminate time theft, and minimize costly mistakes. Invest in an automated time clock system to save time and money while ensuring accurate and efficient payroll calculations. With the right tools and processes, you can focus on more strategic aspects of your business and watch your profits grow.
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