Make money, save money, get alternative income, and have more free time.

Sunday, May 8, 2011

Lessons in Starting a Business

This post documents the lesson's I learned in business.  It will continually grow as I learn more and more.

Create an Operating Agreement that is effective in keeping the members of the company responsible for doing their duties.

For example, if Person A is responsible for approving timesheets, make sure Person B is responsible for asking Person A about the timesheets.  In other words, you need 1 person (a CEO) to make sure everyone else is doing their job.

Nothing is more frustrating than working all hours to finish a product only to realize that the marketing guy didn't advertise the product.

Have an Exit Strategy - As Jack Donaghy from the show "30 Rock" said, "no wonder your career is being held back by a lack of foresight and an addiction to dysfunctional relationships, you have no exit strategies."  Upon entering any type of deal, you need to have an exit clause.  This is essential if you want to keep your friendships and have a amiable separation.

Make the exit clause as detailed as possible so that nothing is left to be decided when the actual event happens.  And don't think it won't happen. Anything can happen:  Your spouse could get sick and you may need focus all your time on him/her, you may have a friend that desperately needs your business expertise, you may just flat out loose interest.  Act as if the buyout is happening right now and make sure both sides get a fair deal as best you can. 

Document Everything so that anyone can reproduce the outcome of your actions over and over again without having to try to ask you what you did or research how its done.

Have you ever opened a box of Legos that is supposed to make a huge city?  Then you look at the directions and you end up making the city in several minutes.  Have you ever tried not reading the directions?  It would take you a lot longer and you probably won't have the exact city as shown on the box.  Relating this back to your business...  Ever did something so great that you keep doing it over and over?   How about writing it down so that someone else can do it for you.  Or if you have a partner, write it down so that if you ever can't do it, your partner can.  The end product of whether you do it or someone else does it would be exactly the same if they followed your instructions.  

This theory of "franchising" your business is explained more in Michael Gerber's Emyth.  Among other things, it teaches you that your business should be a system that consistently produces the same customer experience each and every time without taking time from you.

1 comment:

  1. It's true that documenting everything is the best idea, since it will be a big help to you and everyone who will need it. Planning ahead is also a good idea, because it's purpose is to help you be successful and avoid making mistakes. These lessons will serve as a reminder to those who are planning to start their own business.