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5 Critical Lessons to Learn Before Building a New Business

hand_raisedI started ClearPivot, an inbound marketing agency based in Denver, four years ago. Back then ClearPivot was a sole proprietorship with a team of me, myself and I. Since then we have been expanding to a multi-person team and building ClearPivot into a sustainable business.

There have been a lot of thrilling successes and frustrating failures along the way, and we’ve learned a lot of business lessons the hard way: by doing things wrong the first time and having to undo and fix our mistakes later. Here are 5 key lessons we’ve learned from the early years of ClearPivot.

1) Minimize Financial Obligations

One of my acquaintances is another guy at a similar age to me who started a custom web development business. He’s a great person and we actually collaborated on several projects together. However, at the point when he started his business, he was two years into a big mortgage on a nice new house in Highlands Ranch. A year after starting his business, he was fighting foreclosure.

When starting any new business venture, you’re starting at revenue zero — and you’re probably putting in a fair amount of money up front to get it started. Make sure you’re in a financially healthy position before you do this!  If you want to start a business but aren’t quite financially independent enough, there are a few things you can do. Consolidation of debt is the best place to start. If you have long-term outstanding balances on multiple credit cards, start by consolidating your debt into a single lower-interest source such as Lending Club.

If you’ve built up a decent amount of equity in your house, consider refinancing your mortgage to reduce your monthly payment obligation. Then there’s the multitude of smaller things actions that collectively add up: cut the cable bill, replace your new car with a used car, cook your own food rather than eating out, etc. There’s plenty of time for this stuff after you have revenue traction with your new business, not now! For additional straight-shooting advice on how to get your personal finances in order, I recommend reading Mr. Money Mustache.

2) Use a CRM

For several years, we ran sales at ClearPivot on spreadsheets with contact info and notes listed on them. Two years in, we made the switch away from spreadsheets into a full CRM (customer relationship management) system. It was one of the best business decisions we’ve ever made. We use HubSpot combined with Zoho CRM.

Our CRM is now the master record of all our customers, all our prospects, our relationship and history with each customer, our sales revenue data, commission levels and project managers assignments, and more. I’m now convinced that our CRM data is our single most valuable marketing asset. (Our website is our second-most valuable).

(Bonus fact: CRM isn’t just for customer data! We also use it as our internal staffing database as well: it holds everyone’s contact info, skillsets and specialties, certifications, pay rates, contract status and more.)

3) Always be Recruiting

Around our third-year anniversary, we had a sudden crisis: we lost three team members all at once. All of a sudden we were stuck: we were short on people to fulfill on services to our clients, and we had no backup people on hand. After a period of frantic last-minute recruiting, we were able to come through okay — but it showed us how vulnerable we were. Since then we’ve worked hard at maintaining an active recruiting discipline.

We maintain an active list of prospects that we add to each week (it’s currently at 270 people and counting), and we maintain a full schedule of calls and interviews with prospects each month — even for areas in which we’re not actively hiring at the moment. With this active pipeline of talent, we’re now much more prepared for changes in our staff’s availability.

Case in point: recently one of our team members who had a jewelry business on the side recently decided to take the leap to focus on that venture full-time. We were glad for her success and were able to keep everything rolling smoothly even after she moved on, as a result of nurturing our pipeline of talent.

4) Know Your Worth

When we first started out, we made the same mistake that a lot of inexperienced businesses make: we competed on price. “We’re just as good as they are — only cheaper!” People were very happy to work with us at the rates we were giving them, and we were happy to get their business.

We quickly found out, however, that slaving away for long hours to satisfy low-budget clients was a sure-fire path to exhaustion and burnout. After reviewing our revenue and deciding that we didn’t want to be poor the rest of our lives, we doubled our rates.

We soon found that we were still closing as much business as before, but now we actually had the financial flexibility to begin staffing up more, put more money into our own marketing, and make our personal finances more stable.

It’s easy to end up selling yourself short and underestimating the value that you bring to the table. When you’re doing what you do day in and day out, it can start to seem routine and simple, and you forget how much expertise and experience it can take. But try and see how long it takes to train new people on how to do inbound marketing, and you’ll quickly realize that it is a rare skillset! Make sure you’re charging what you’re worth.

5) It's a Marathon, Not a Sprint

Now, I’ll be the first one to admit that this lesson has been the hardest to learn, and frankly we’re still working at it. When you first start a business your primary focus is just making it through to the next month, and it can feel like long-term planning is a luxury you can’t afford. But this mindset will eventually become a big roadblock in your growth as a company.

We found this out the hard way: we would bring on new contractors and drop them in the middle of projects, without realizing we hadn’t properly trained and on-boarded them. Likewise, we hadn’t formally documented our services and processes, so we were running into issues with all our team members doing things a little bit differently, contradicting each other, and causing confusion for our clients. It was a bit of a mess!

After this had been going on for awhile, we realized that this was not a sustainable way to run our business. So since then we’re systematizing our way of doing things: what we do, who we do them for, and how we do it. We’re documenting and standardizing our service packages, and we’re putting together on-boarding and training material for our current and new team members.

We plan on being in this business for the long haul, so flying by the seat of our pants is no longer an option. While tools and technology always change, we’re building out structures and processes that should hopefully last us years into the future.

You Don’t Have to Learn the Hard Way!

Starting and growing a business is always a roller coaster ride, and many businesses don’t make it. We feel extremely fortunate that we’ve been able to not just survive but even grow and expand. But we would have saved ourselves hours and hours of headaches if we had started off knowing these five lessons at the beginning, rather than learning them one-by-one the hard way.

Don’t make the same mistakes! It is my hope that these lessons here will save other business owners and soon-to-be business owners from some of our previous missteps. Best wishes to you in your ventures!

What other lessons have you learned in growing companies? Please share them in the comments below — I’d love to hear them.

Chris Strom is the Principal at ClearPivot, an inbound marketing agency in Denver. Visit the ClearPivot blog for additional business and marketing lessons from Chris and the other ClearPivot team members.

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