Ten things I've learned whilst running a small business

Hi there,

Just doing some tidying out of some admin folders, and I’ve found this, which I wrote last year. I think it’s still relevant, so I thought I’d share it - hope people might find it useful, or interesting. Comments welcomed…

H

1. Percentages charged by payment providers are much less important than the time those payment providers’ solutions take to implement.
Let’s say you take £100,000 in a year. Most payment providers charge between 3% and 4% as a fee. On your turnover, the difference between 3% and 4% is £1,000. This equates to around 2-3 days of developer time. Going for a solution that offers a 3% charge but takes two weeks for the developer to implement is worse than going for a solution that offers a 4% charge which takes one week.

2. Never underestimate how long it will take you to get a merchant bank account.
It took us five months, and we had a credit history. ‘Glacially slow’ is an appropriate description. Think about if you actually need one – for example, you don’t need one if you use Stripe.

3. Make a plan, and continually revisit it.
Back when we started developing Light Blue 4, we had a big list of what we wanted to do, roughly split by when we wanted to do it. Every month, we revisited that plan, moved priorities around based on how we got on in the previous month, and added or removed items. As well as being able to pick off things from future months which we could see easy ways of implementing, we also had future work in mind, and we could add in entry points which would make integration of future features much easier.

4. When you don’t have any experience of something, evaluate whether it’s better to buy in advice or learn yourself.
We’ve had some invaluable marketing advice from the CEDAR team at Anglia Ruskin University. They’ve got years of expertise in marketing and promotion and force us to think up answers to questions we hope they’re not going to ask us. We needed specific advice about how to launch our new product, how to market it, and how to position ourselves within the market. As another example, we decided relatively early on that we didn’t want to learn how to program for the iPhone and iPad, and we bought developer time for our apps. Conversely, much of the work we’ve been doing has involved the insides of databases, and buying in the quantity of time which would have been needed wasn’t feasible. We know now significantly more about database design and implementation than we previously thought was possible.

5. If you find yourself thinking ‘That’s a bit of a cop-out’, it’s not good enough.
If you’re serious about developing a really, really good product, you need to do it all really well. There are incredibly few cases where there isn’t a ‘best way’ of doing something; you just need to work out what that best way is.

6. Give at least as much praise as criticism.
Assuming point 5 is followed, when you’re looking at something which someone’s taken a week doing, it’s likely they’ll think it’s worthy of showing you. They will probably have come up against some difficult issues and worked through them in the way that they think is the best way. Jumping in with ‘I don’t like x’ is likely to raise their hackles. Instead, take some time to point out the things you like, before moving on to the things you think could be improved.

7. Set yourself good deadlines.
Too early, and you’ll miss them and feel bad; too late, and you’ll feel complacent. We’ve always chosen deadlines which we think are ambitious yet achievable; the feeling of achieving them is so much more than if we always know we’re going to make them.

8. Only tell people things when you’re sure of what you’re doing.
OK, so we’ve not learned this by making an error, but it’s an important one. If you announce stuff and then drop it later, it makes people feel like you’ve failed them. If you keep tight-lipped and only talk about things when you’re completely sure that you’re ready, you’ll get a reputation for delivering on what you promise. That’s really important in building up trust from your users.

9. Stop occasionally.
I’ve lost count of the number of times that I spent an afternoon swearing at something, only to be able to fix it within a few minutes the following morning. Sometimes, if it’s not going right, walk away and do something completely different.

10. Be proud of what you’ve done and recognise your achievements.
Most people (especially most English people) are not very good about giving themselves credit for things. Accepting praise from people doesn’t always come naturally, but it gives them a feeling that their compliment has been welcomed, and can make you enjoy your work more.

Point 1 is only true if you use the payment processor for only 1year. After 2 years its a wash, after 3 years the table has turned. :wink:

Yeah, true. Depends over how long you want to amortise your costs. I was once asked by someone to spend two weeks at £500/day on integrating a different solution which saved them 0.5% - now that really wasn’t worth it!

I read a Richard Branson book back in the late 1990’s. He admitted gaining part of his skill set, by going broke several times. Each time your business fails (fatally), you get some real life lessons on how not to do things next time round. While this advice might seem obvious, he pointed out that many who fail at business ventures, often do not learn a thing. As Robert Kiyosaki once said. “People do not plan to fail, they just fail to plan”. Running a business is somewhat akin to writing a good app where you need to want and know the end result before you make a start. This may seem abstract in the context of what Hamish has stated at the start of his thread, but intimately understanding your business and what is good and bad for it is part of the success formula. Letting the business just take you along for the ride will surely end badly. BTW, I couldn’t agree more with points 7,8,9,10.

Learn to say “I don’t know but I will find out”.
Especially if you’ve been hired in to do some work and you get asked about something you do not know.
It’s ok to say “I don’t know” rather than BS your way around - and worse to then get caught in the BS.

Yep, that’s a good one, Norman. Admitting that you don’t know an answer to something is much better than making something up.

Be honorable.
If you make ann agreement stick to it even if you realize that the contract you agreed to WASN’T in your favor.

Worked for one company that hired a couple contractors who took longer to do some work than they estimated.
The contract was drawn up based on their estimate. And everyone agreed & signed it.
The constructors balked at providing the product until the company agreed to revise the contract to take into account all the extra time they’d actually spent. They basically held the company hostage. (yes legal proceedings were undertaken as well but that would take too long for the crunch things were under)
Company paid the extra, got the code and immediately stopped sending them requests for any additional work (which WAS within the terms of the contract)
Bad move for those guys because every company they might have done work for very quickly heard whispers about these goings on.
They shut the company down & went to work for some other firms.
I’ve seen this behavior a few times in my career and usually just shake my head at what a bad move it is.