7 tips from a seasoned professional services business owner
11 hours ago
There’s a lot written on ye olde interwebs, in print and on social about starting a business.
But as with all advice, you should probably take what you read with a grain of salt until you figure out just how qualified those people are to be giving you advice in the first place.
Ask how long they’ve been in business — Anything less than five years, by all means, be polite and listen; you might glean some good tips. However, if you want a business that’s still around in five, ten or 20 years, find someone who’s done whatever you’re aiming for. The truth is anyone can start a business — the barriers to entry have never been lower. But there’s a reason why the global stats report most businesses fail in the first five years — because making it to and past that mark is difficult. It’s staying the distance that’s the truly hardest bit.Ask them what their business turnover is — If it’s less than six figures, there’s probably not enough money in the business for them to live on long term. A general rule of thumb is 1/3 to staff/contractors, 1/3 to overhead (rent, computers, bills to keep everything functioning, marketing, accounting, etc) and 1/3 to profit. It takes a bit to get to that, and you can certainly do better than 30-ish% profit if you’re great at what you do and watch your costs like a hawk. But you get the gist.Ask them what their profit is as a percentage and how long it took to get to that point — If they hedge or tell you they have a business with 80–90% profit, smile and nod and put up your BS filter super quick.Ask if they regularly pay themselves — That’s the mark of a functional business. Now, granted, many business owners, particularly in the startup stage, don’t take a salary. But if they’re three, five years in or longer and they’re not taking a salary — even a small one, something’s possibly not quite right there. Do note, though, just because it’s their business and they maybe can, they don’t have to take a zillion dollars in take home. Some people prefer the tax breaks they get from keeping retained profits in…