My own small business story is just starting back up after being placed on hold for two years. A partner and I formed a personal organizing business in a small city in Florida, and despite our best networking efforts, not enough people were willing to pay for our services to make the business viable. Ironically, because it technically operated in the black, we held onto it for a long time, hoping that we were approaching the “hump” past which our sales would pick up momentum. But eventually both of us were deeply in debt because we were using credit cards and loans to pay our personal bills.
I’ve spent a long time since then trying to figure out if we could have done anything differently, or if we should have held on just a few months longer. But the thing that probably hurt us the most was the market — our prospective client base was too small and didn’t have enough disposable income to drop a thousand (or two) dollars at one time. We could pick up jobs here and there, but not enough work to make a living.
Since then, I returned to the industry I have the most experience in — administrative work. I can make a regulated income to ensure my monthly expenses are covered, and taxes and insurance are far simpler. But I miss several aspects of having my own business, and recently when my car began to show signs it was time to replace it, I realized I was going to need to get a second job. After considering several possibilities, I decided I was going to start up an organizing business by myself. I face a lot of the same challenges as before, because even though I am living in Tennessee now, the city is only marginally larger, and the average income is most likely marginally lower. But I’m going to leverage my previous experience, and am able to accept whatever level of business comes my way because I don’t need the business to meet my personal expenses.
One of the first things I’ve done is contacted SCORE. We used them before in Florida, and whether you’re just forming your business or if you’ve been operating for some time, this organization can offer you free advice and counseling for your small business. There may be regulations or even incentives in your area that they can clue you in on, and just in general it will be helpful to have a person to whom you can ask questions instead of relying on local government websites that are often difficult to navigate or have outdated or incomplete data. Of course results will vary, so ideally you’ll be utilizing multiple resources.
Word-of-mouth recommendations are truly the small business’s best friend, because paying for advertising has mixed results. The most effective advertisements have one thing in common - people see them several times. So unless you’re willing to spend enough to run an ad in successive circulars or multiple places, I would recommend concentrating your efforts on getting people talking about your business.
We previously belonged to the chamber of commerce, which is helpful in gaining networking contacts. The people we met through our membership brought us business well above our costs to join. However, this time around I am following a strategy of zero debt in the business, so I will not be paying the $300+ membership fee. Luckily, most chambers sponsor networking events that are open to anyone - members receive a discount, but tickets are reasonably priced for all. This will also enable me to visit events held by more than one chamber in my area. If you can afford to join, there are other perks offered as well - for example, discounts on advertising in participating newspapers or other promotions as the chamber chooses, plus discounts that chamber members offer to other members. You can also choose to offer a discount yourself, to encourage other business owners to give yours a try. One of the best ways to get results from networking this way is when those business owners recommend you to their clients - anyone not directly in competition with you is a potential asset.
Also, never forget a client. They are resources in many different ways, from repeat business, to word-of-mouth advertising and testimonials, and even to critical feedback. Think about ways a client may use your business at different times - for example, we promoted our organizing services as useful to people with New Year’s resolutions in December, then in February we started a “spring cleaning” campaign. We always urged satisfied customers to pass along word to their friends, families and coworkers, but we also asked if they could write a letter of recommendation or allow us to use their names and photos of their projects on our websites and brochures. And because this kind of service involves working directly with clients in very personal settings, we always encouraged them to let us know how they felt about the entire process. Sometimes even when you can’t satisfy a customer 100%, you can use this chance to mitigate their more unrealistic expectations, or at least learn how to avoid that kind of misstep in the future.
Because word of mouth is completely unregulated, I also offer free consultations. In my previous business, we began by charging for consultations, but our phone began ringing much more often when we changed over to free. So, although this will take up my time without generating any income unto itself, it will get my foot in the door when people otherwise might feel unsure. Then I can impress my prospective clients with my professionalism and expertise, as well as get a look at their specific needs so that I can offer each client a customized proposal.
Another way to raise awareness of your business is to give talks or submit articles to small newsletters. I plan to visit retirement villages and speak to seniors who are struggling to fit a lifetime’s worth of dear possessions into a small apartment. I will also offer to contribute content to newsletters distributed by the management of apartment complexes. I also plan to speak at neighborhood association meetings. Along with the talk or article, offering a coupon, even at only a slight discount, can also create more positive associations with your business, and raise people’s motivation to give you a call.
Careful accounting is integral to the running of any business, and the small business must especially keep track of all expenses because there is so little wiggle room. For example, to offset free consultations, I will scrupulously expense out my mileage (but note that my time is not claimable). Because my county assesses a real property tax, I will claim my computer and certain other office supplies as a deduction (this requires some research and/or consultation with a tax preparer to be done properly). Be aware of the differences between a sole proprietorship, a partnership, corporations, and other possible business formations - each of them have pros and cons that could make a big difference in your taxes and personal liability. For example, my previous simple partnership proved to have the most complicated tax reporting of all, and since we were unwilling to pay to have a professional prepare our taxes, I spent a good number of hours slogging through the federal tax code. But if my current sole proprietorship proves too complicated, I will consult a tax preparer and preserve my precious time.
One of the double-edged swords of small businesses is how much one can differ from the other. But resources are readily available no matter how unique your good, service or business structure. The best general advice I can offer is to get online and look up SCORE, the Small Business Administration, your local government website, local chambers of commerce, and any professional associations in your market.