Six Lessons From Starting, Building, and Selling My Business

Preparing to start a new business got me thinking about the last one.

I’ve been thinking quite a bit recently about my next business venture.

After five years of running a successful business, I sold it and went back to working for someone else.

The stability is nice, and the hours are much more conducive to my children’s schedules, but there are tradeoffs in other areas of the schedule.

I definitely miss the freedom to govern my own time.

It wasn’t all roses though.

I was not only willing, but eager to sell the business when the time came, because of things like burnout, feeling like I’d lost traction (in hindsight more of a feeling than a reality), and a sense that it was time to move on.

Many of these things were the result of my own bad business practices.

Some of my failures would’ve doomed me in today’s business landscape.

I hope and pray that the person who bought the business from me is better at some of the things I’m going to outline below because I’m not sure how my operation of the business would’ve held up to the strains of the current environment.

Here are six lessons on running your own business from my retrospective foxhole.

Some contradict common lessons, some you’ve probably heard before, but hopefully, if you run, or are thinking about running a business, you’ll take me seriously. This is not theory, this is hindsight.

“Grandma always said to save for a rainy day because, ya know what, it always rains eventually!” -Dave Ramsey

1. Build a reserve.

I often overextended myself and lacked a reserve to handle expansion, improvement, or even just a bad month.

This left me scrambling and overly dependent upon credit, which just made the next tough month even worse. I could often sell myself out of this hole, and the pressure often lit a spark of progress that lasted well beyond the crisis, but it wore me out.

This reserve should be built during all months-good and bad- with a close eye on keeping expenses down and not over-committing when cash-flush. This reserve should handle a period of regular expenses as well as build toward periodic expenses, updates, and expansions.

I drafted this article before the current business crisis caused by the COVID-19 pandemic, but I know just how incredibly critical a healthy reserve is for peace of mind during regular months — I can only imagine how some of those businesses which are overly “leveraged” feel right now.

2. Analyze your budget each month

In ignorance and hubris, I played finances rather fast and loose.

I did periodic budget reviews, particularly when things were tight, but the inconsistency prevented me from seeing trends more clearly and left me continually reactive rather than proactive.

Since selling the business, I’ve adopted the habit of monthly full-budget analysis with my personal finances ala Dave Ramsey’s Financial Peace University, and it has been incredible.

I wish I’d had that habit and discipline when I had my business.

3. Build an annual calendar

In my original business plan, I built certain recurring events and activities into the yearly cycle.

And I executed them.

But, again and again, I found myself throwing things together at the last minute and scrambling to get the word out.

I went from one urgent issue to another because I failed to plan.

A calendar including tasks would’ve helped me stay on track and could’ve prevented this.

It would also have given me a better sense of my marketing and activity cycles so I could identify drop-offs and opportunities.

Most critically, in the long run, the flurry of activity to keep these events going exhausted me and in some cases made me averse to events because I was so unnecessarily exhausted when they were complete.

4. Annually review and update your business plan

I wrote one business plan and never updated, expanded or refined it.

This meant tons of things in my original plan were never actually evaluated or pursued.

This was a huge failure.

Looking back there were some really good ideas that I never pursued because I didn’t take stock of progress regularly.

Even more critically, aspects of my original vision were never executed.

This annual update should include many of the things included in other parts of this article, but should also ensure engagement on –

a. Annual marketing plan b. Business partnerships c. Financial targets d. Event plan (balancing employee events and customer events) e. Impact goals (partner support activities, non-profit participation) f. Minimum vs. stretch goals g. Revenue streams h. Product or service changes

Alongside the business plan, I should’ve integrated my personal goals and nested them with business goals throughout the year.

This would include things like my personal development, travel, time-off (or restricted time for particular projects) all of which impact and will be impacted by the structure and intensity of the business plan.

“What gets measured, gets managed.” — Peter Drucker, The Practice of Management, 1954

5. Identify, and then track metrics

A well-structured business plan will also identify metrics of performance that tie to key elements of business operation.

With my business, one of my insight metrics was revenue per square foot.

How much did I make off each square foot I was renting?

This allowed me to evaluate how each foot of space was being utilized and determine if less, or more, space would impact profitability. I also sporadically tracked things like conversion rates, renewal percentages, and value per client.

In a restaurant, metrics might be customer wait time, waste volume, order accuracy, and dining room utilization.

I identified and occasionally evaluated some of these metrics, but I did not consistently capture or review them, so they did not inform strategies or problems. They were nothing more than interesting information, not markers of business strategy.

6. Protect your daily schedule

When you are an entrepreneur there is a tendency to throw everything to the side for a customer. This is especially true when you actually do need the money. You procrastinate on some of the things listed above, as well as recovery time, in favor of seizing every opportunity because…well…you can just work harder.

Or at least you tell yourself that. This may mean trading more high-value planning activity for lower, but more immediate return opportunities working “in” the business.

I don’t know how many times I read, or heard on a podcast, the warnings about not falling into the trap I just described, but for whatever reason, I never tied it to protecting my calendar and working intentionally “on” the business.

I knew I needed to do certain business growth activities, but I didn’t connect that to protecting my schedule so I actually had time to do them.

Another critical part of protecting your calendar is bolstering yourself against burnout and protecting relationships.

I was pretty careful with relationships (mostly my wife says) but entirely cavalier about rest. I protected my schedule if I had plans with family or something to attend at my kids’ school, but recovery time was just a window to get something else done.

I’d give up “downtime” in a heartbeat, and what happened?

After five years, I burned out.

This was aggravated by some medical concerns unrelated to the business, but the burnout exacerbated the medical condition, and the medical condition lit a spark on the burnout.

If you don’t have some margin in your physical, emotional, and spiritual energy then you’re not building anything.

You’re treading water and will eventually drown.

(Side Note: It took me almost two years to feel like I’d fully recovered from the depth of my burnout because I’d ignored it for so long.)

On the brighter side

Hopefully, if you’re reading this you haven’t already built a business, burned out and had to sell it or watch it collapse.

If you are building a business, I hope these notes will help you.

If you have the passion and drive to build something, do it in a way that ensures you can still enjoy and benefit from it for the next decade or longer. So that, when you decide to move on, it is because you truly want to, not because you can’t keep going.

This doesn’t mean there won’t be times when you need to work so hard people call you crazy. But when those windows of opportunity close, you need to have the discipline to step back and look further down the road.

For all the entrepreneurs out there, facing the challenges of our current economic situation or thinking hard about venturing out into these choppy waters, I wish you the absolute best.

It is an incredible and gratifying adventure.

Building a business is one of the most rewarding things we can do in our professional lives, and it is something many people are too scared to ever try.

It takes the heart of the lion to begin.