Five Things I Learnt In My First Year Of Entrepreneurship

Five Things I Learnt In My First Year Of Entrepreneurship

After having spent the majority of my 20s working for five different companies, I finally decided to strike out on my own. I started my own online business and quickly discovered the unexpected challenges that come with the territory. Here are five major lessons from my first year as an entrepreneur.

Picture: Ratch (Shutterstock), Steven Depolo (Flickr), Steve Snodgrass (Flickr), Thomas Geiregger (Flickr)

This post originally appeared on Fizzle.

In September of 2012 I said goodbye to what I hoped would be my last office job. In October, I created an online business that would teach entrepreneurs how to get started with online video. Even though I technically started my business in October, the first six weeks were spent building a website (I had no skills and no experience doing so), and the next two months were spent blindly going to networking events — and slowly becoming aware that:

  • In-person networking is a horrible way to grow an online business.
  • I didn’t know what the hell I was doing.

While I had budgeted, planned and prepared, I had still somehow missed the fact that the key to my business making money was having a captive audience and lots of web traffic.

I had neither.

My Background

After my initial foray, I realised I would rather be making videos than teaching people how to make them. So I pivoted, created a new site with a new name (from a template this time) and set out on a fresh course with a fresh set of challenges.

My fifth and sixth months were spent teaching Skillshare classes, consulting one on one for clients, trying to find businesses to produce videos for, all the while continuing to network like mad. I was essentially grasping at straws since I hadn’t yet really made any money and was rapidly burning through my savings.

It wasn’t until February of 2013 that Fizzle (then ThinkTraffic) posted a competition to get a year of free business mentorship from Corbett Barr. Knowing I was desperately in need of help, I did the only thing I really knew how to do, I created a pitch video.

I won the contest with them, and their team immediately set to work helping me figure out what would be the most sustainable model for me — something that I would enjoy that would also make me money.

Today, after 18 months of what has felt like grasping in the dark, I am able to look back and observe some tangible things I’ve learned, and continue to benefit from.

1. It Costs More to Be An Entrepreneur

Five Things I Learnt In My First Year Of Entrepreneurship

Articles will tell you to budget for unforeseen expenses, and I did. But not nearly enough.

One thing we are not used to doing when we have a full time job is putting away money for taxes. Since it is usually taken right out of our paycheck, most new entrepreneurs and freelancers have no experience with this. And since most likely as a fledgling entrepreneur our paychecks are few and far between, we find ourselves using every dollar we have just to keep going.

Remember, you should aim to make considerably more than whatever your monthly expenses are going to be. For me, that number was double my monthly expenses. It might be less (or more) for you. But this should be something you give a lot of thought to.

You’re also going to be paying out of pocket a lot more for things you didn’t consider.

You’ll probably take a lot of meetings at coffee shops. It might be only four bucks a pop, but twice a week and suddenly it’s several hundred dollars a year you didn’t factor into your budget. There are a lot of other little expenses like that.

I did a year-end review after my first full year as an entrepreneur, but honestly I probably should have been checking every three months. And that’s something I’m going to start doing this year!

It’s ok to budget in a significant amount of money as “unknown.” Working for yourself means making a lot of little adjustments on a regular basis, not just one big change every so often.

2. Double The Amount of Chickens You Count Before They Hatch

When I first started, my goal was to make $US5,000 a month. And I based my early revenue predictions on the clients I thought I might be bringing in.

A potential client would tell me they could afford a $US2,000 video, which to me meant a guarantee. And if I had three of those lined up I thought, “oh great, I’m going to make $US6,000 this month. I’m set!”

What I didn’t realise is that there are a lot of things that will happen. For example, a client will back out and not work with you, or the project will get delayed and that money won’t come in for months, perhaps even a year!

It took me a long time to figure out that if I want to be making $US5K a month, I need to have at least $US10K in opportunities — which made me realise I needed to be doing a ton of outreach to make sure that’s a possibility.

That way, if I have $US10K in possibilities and half of them fall through, I can still pay my bills, but if they all come through… woohoo new shoes!

I use Insightly to keep track of my contacts and my revenue, but I also have a simple revenue forecast at the bottom of my to do list in Evernote, so I can adjust it every day easily and always be aware of how much money is coming in.

3. Be as Specific as Possible When Writing Contracts

Five Things I Learnt In My First Year Of Entrepreneurship

I will readily admit this is the hardest one because you don’t know what you don’t know. By which I mean I have no background in law or contracts, except the five months of business law I took in the 8th grade from which I remember nothing.

So when it came to my first contract, I cobbled it together from ones I found on the internet and other entrepreneurs I knew. And inevitably, no matter how great I thought a client would be, it always ended in me adding a new clause to my contract about something I didn’t anticipate like a kill fee, or 50% up front, or the specifics of the terms or even WHO the check should be made out to.

Make your contracts as concrete and clear as possible so there is no question of what needs to be done.

Sometimes a client wants to get to work right away without a contract. I don’t care how much you like them — it’s not worth it.

Every project I ever did without a contract turned into a nightmare.

If you can, find a lawyer friend to do you a favour in the beginning and help you get a legit contract to protect yourself. Even if it’s taking a while for a client to pay me, as long as I have a signed contract in place, I feel much more secure than if I don’t. Which brings me to my next point.

4. Clients Who Haggle Over Price Will Be a Problem

This isn’t that revelatory. You see this talked about in many entrepreneur blogs, but it really is true. Keep in mind, haggling is different than negotiating.

Call it the 80/20 rule or whatever you want, when clients beat you up over price, it is foreshadowing that they will beat you up over everything!

In the past 18 months I have done jobs that range in price from $US600 to $US10,000. And looking back now, every time I discounted my rates because I needed the work or was trying to be a nice guy, it has caused me enough stress to lose sleep.

I have found a magic number regarding the price of projects for my own clients that sets apart those who complain about everything from those I actually enjoy working with.

If at all possible, say no to unfairly discounted rates. Set a floor for yourself and then price yourself quite a bit above that so even if you have to discount, you aren’t really taking a loss. But you probably shouldn’t even take those clients because they still are trying to get something for nothing.

I know this is hard if you aren’t bringing in any money and you need that contract to pay the electric bill. I have been in that scenario, so I really do understand. That is why it is important to have multiple streams of revenue, savings, or at least a fall back part-time income that can sustain you.

Once you start doing crappy projects, it’s hard to break out of that cycle.

5. There Are a Thousand Ways to Get Clients and You Might Need to Try Them All

Five Things I Learnt In My First Year Of Entrepreneurship

I spent an entire year going to between two and four networking events a week. I joined 20 Meetup groups. Some days my first networking event started at 6:45am and my last event ended at 10pm.

It was exhausting.

Do you know how many clients I got from going to 100+ networking events in one year? Zero. Not one. I emailed every single person whose business card I got, of which there were over 600, and had a bunch of lunch meetings, calls, and coffees, but not a single one amounted to a dollar made.

On the surface, it appears that networking events were a horrible investment, but I did learn a lot from them.

I learned how to talk about my business in one sentence. I learned how to interact with people and to promote my business without being a jerk. More than anything I learned a ton about human nature.

Looking back it was really just flying blind. The quickest way to make money is to find people who need your services. I can’t tell you where that is, but there are always options. If you feel like you don’t have any options, it means you aren’t looking in the right place.

One More Thing

A lot of things make no sense as an entrepreneur. I’ve had leads come from places I never expected. I met great clients in places I almost didn’t go. I’ve acquired clients from calls I almost cancelled. For the most part, you have to use a fair amount of discretion in choosing where you allot your time because you can’t do everything all the time. You can try, but you just can’t.

Allow yourself to be surprised, consistently check out new avenues, try new things, experiment. If something doesn’t seem like a good investment of your time, it might be hard to get excited about, but ask yourself: could this provide some value other than money? Many times you won’t know the answer.

And many times it will be very hard to figure out where your efforts are actually paying off. But you must plow forward. You must continue to do. Because when you stop doing, you stop getting. And when you stop getting, you stop making.

I’m getting better at understanding and trusting my gut. It’s a powerful tool when you are on your own. If nothing else, just take some time to think about your options.

If somebody wants you to commit something immediately and you’re not sure about it, give yourself a day to think about it. Time and perspective are incredibly important for making good decisions. And the more scenarios you find yourself in that require that skill set, the better that skill set will become.

The first year as an entrepreneur will be messy.

You won’t know what to do in every scenario and you will have to face a lot of discomfort. But like Brene Brown says, lean into the discomfort. Nobody gets through anything by leaning back.

5 Things I Learned In My First Real Year of Entrepreneurship [Fizzle]

Richard Boehmcke’s latest business is Vibrant Motion, through which he works with successful brands to produce videos to tell their stories.

Fizzle’s mission is to help the online entrepreneur grow their business, revenue and fulfillment until they’re buzzing, crackling and {cough} fizzling with creativity, impact, potential and purpose.

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