What It Really Means to Run a Business
It's a type of freedom, that comes with a heavy burden.
May 10, 2022
As a part of the millennial generation I know how excited all of us get at the thought of having the freedom to run our own business. Choosing our own hours, building our clients or customer base and watching that money pour in. It's equally inspiring to think about how we could then go get that new car or upgrade our home. Whichever way you work the vision of running a business unless you have actually run a business there is likely a stark contrast to the reality of what it really means to run a business.
Creating a corporation takes all of 60 minutes on a variety of platforms, after all its just paperwork. But from that moment onward, if you're actively trying to build and run a business, it's a challenge. Let's assume you're already great at what you do. After all, once you become awesome at something the next step is often to build your own business so you capitalize on all your hard earned skills. After all, once people see who you are and what you've done the clients will come flocking your way. Believe me when I say I wish it were as simple as that.
Once you've established your niche (that thing you already do really well), and set up your company as a legal entity the next logical step is to layout your business model. Meaning how do you plan on making money and having that money support and grow the business. Let's say you charge your clients $50 an hour, and you need this new company that you own to pay you. That means you should pay yourself $40 an hour in order to build some surplus into your company books. However, will that be enough? What would you need to scale the business? What are you looking for with this business model and will it support your goals? In the above model you're still working endlessly and barely saving enough to take a vacation here and there.
The obvious next thing to explore once you've determined a business model is the world of accounting. Unless you have a huge amount of investor cash and want to hire an accountant. You will need to learn how to handle basic accounting. This means being able to balance your books, classify your spending, basic money management. You also need to be able to handle your tax payments, tax collection on your bills. You need to handle payroll and benefits (if you have them). You need to make sure that your business model provides you with enough capital to also get some accounting software to help with the whole process. Business models easily make or break a company but accounting is what can either sustain it or pull the carpet out below it.
Now even if you have a great business model and some decent accounting skills, without some capital for marketing or some serious effort put into it, the probability of your business being successful or sustaining itself is slim. Marketing is what gets your great skills noticed. It's what connects you with talented people who want to work with you, or better yet hire your company to do work for them. It would be amazing if simple ads in Google or Facebook would bring in paying customers by the boatloads, but they don't. They help put you in front of people but even if you were to have a 1% conversion rate of traffic to leads you're still potentially struggling unless you have such a monumental profit margin that you're ok.
Building and running a business is a combination of these aspects and adjusting them and their details until you find that sweet spot where you can let the system work for you. It's not easy. It's also not just a matter of simply being a freelancer, as even a freelancer has to consider many of these details. Be very mindful of these responsibilities that you will need to take on or at the very least delegate. Its very possible to run a sustainable small company and big company in todays market, but it is far from the walking on clouds easy life that the media so lovingly portrays.