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The Things I Wish I Had Known Before Starting a Small Business

[5-minute read]

Written by guest writer, Renee Fortune

I have 33 years under my belt, and in those 3 decades, I’ve launched 5 different entrepreneurial ventures (that’s not counting all my numerous half-baked attempts and the world-shattering ideas I came up with at 3AM). Here are the facts:

2 out of 5 of those small businesses broke even
1 out of 5 of those small businesses made a profit
And only 1 of those 5 small businesses survived the 6-month mark

At first I thought that those were some pretty bleak stats. But then I changed my perspective. I started seeing my failures as stepping stones. I’m not going to lie and say that I didn’t have moments of “oh God why me?” but I can say that I’ve managed to pull myself together after every failure and try again.

In case you’re wondering, the one business that did succeed was my freelance copywriting side hustle – I’ve managed to keep that flame going for over a decade now and I’m still going strong. Let me assure you however, that the hustle is real – more real than my inability to nurture plant life (even a cactus).

I forewarn you – what I’m about to say might sound like something your mother would say, but it’s true: every failure is a lesson in disguise. Go on, yawn, roll your eyes, mutter something offensive under your breath. I understand. You’ve heard it all before. But I promise I can get really practical about it. Here are the things I wish someone had told me before I started a small business.

Never underestimate the power of negotiation

One of my first business ventures was selling these dangling crystal thingies to a woman who owned an aromatherapy business. She was gracious enough to humour me and buy stock rather than sell my crystals on consignment. What I didn’t realise back then was that everything is negotiable. In my opinion, it’s one of the best kept secrets of the business world. At the time, I suffered from extreme imposter syndrome – I felt as if with my limited skills I had no right to be starting anything resembling a business. As a result of that insecurity, I failed to negotiate my price. She told me what she would pay for my crystals. I agreed. And that was that. Later on I went on to work for an agency that sold advertising space in magazines and I was expected to bully my way through stroppy personal assistants and cold call marketing directors to whom I’d pitch my products. I cried every day at that job. But when I eventually left that job, I walked away realising that there is no such thing as a set price in business. Today, I spend a lot of time and resources on developing my negotiation skills. I win some, I lose some. But what’s important as a business owner is that I’m not ashamed or embarrassed about negotiating costs. A lot of this whole negotiation business is tied to self-esteem. Come to know your worth and you won’t let anyone tell you that you’re worth less.

Pricing can make or break your business

The most recent business I started was a hand-painted, custom baby shoe brand. I thought I was very clever when I called my product, “craft sneakers” (like the beer). At the end of the day, the product had people swooning. Everyone who saw my little artistic creations wanted a pair for a baby shower or a christening or a little one’s birthday. In short, the brand positioning was on point. However, when it came down to the question (which always seems to be preceded by a drumroll in my mind), “how much are these?” I went horribly wrong. I went about pricing my product by calculating the cost of all the raw materials, then slapping a 30% profit on it. The end result was a product that was priced way beyond similar products that my competitors were flogging. And the worst part was that my competitors were established brands with actual teams and factories and resources. They could afford to produce shoes at a much lower price due to the power of bulk buying, established supplier connections, assembly lines and cheap labour. I just couldn’t compete. In retrospect, I forgot one of the golden rules of good business – invest in market research. If I had researched the market, my competitors and their business models more thoroughly, I would have realised very early on that I did not have a commercially viable product – the cost of my raw materials was far too high and I was not connected enough in the industry to negotiate lower prices. So in short, the lesson is – do market research and get your pricing right the first time. If you don’t have the resources, hire a business consultant to help you make an informed decision. Trust me, the investment is worth it. On the bright side though, I now have a drawer filled with cutesy bottles of fabric paint, sparkles, ribbon and crafty tools. So if anything, I can still make cool stuff. Need a baby shower gift? Call me.

Friends and family don’t necessarily make good business partners

I’m sure you’ve heard this one before so this is just my attempt at trying to labour the point because it was a difficult lesson to learn. A few years ago I started an event styling business with my best friend, and… my mother. Yes, I went there. The idea was solid. The branding was on point. Our combined talents were the makings of a decorative dream team. But one thing I didn’t realise until it was too late, was that people are very different in the context of a friendship than in the context of a business partner. And quite frankly, if they’re not, there’s probably a bit of a problem. I struggled to be 100% transparent with my friend. I struggled with expressing strong opinions that I thought could hurt her feelings. And the problem is that she’s one of the most amazing human beings I know. So I was always cognisant of not wanting to cause her any harm. What that resulted in, was me tuning down my “don’t-mess-with-me, take-no-prisoners, I’m-a-hardcore-boss,” attitude and replacing it with my “I’m-such-a-nice-person” alter ego. And we all know that in a competitive business environment, nice people get nowhere. Then of course, there was the issue of my mother. Here’ s lesson that may not seem obvious – you can’t manage someone you’re afraid of (lol). So in a nutshell, my mom ended up bossing me about and running my business and I ended up walking on eggshells to avoid upsetting her. We ended up pulling off a beautiful, magical wedding and we are all smiles on the outside, but behind-the-scenes… Let’s just say in the end I decided to spare myself the inevitable loss of a friend and the scorn of a mother by bowing out as graciously as I could. Lesson learnt.

What do you wish you knew before you started your business? Share your thoughts and tag us on InstagramTwitter, Facebook  and LinkedIn.

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Saskia Schuldig
Content Marketer at Truevo Payments
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Disclaimer: This content has been written for informational purposes only. It should not be construed as legal or business advice.

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