I’ve been self-employed one way or another since I was in high school. Also, I have been running a graphic and web design business in earnest for five years, through which I have both made my own mistakes and witnessed the mistakes of many startups. I have a few suggestions for new businesses, as well as some notes on things I would have done differently.
If it’s just you, don’t try to look bigger by calling yourself “we.” I see it all the time: Bill the IT guy or Susan the consultant has “we” on everything. “We provide the best end-to-end solutions…” “We cater to corporations that…” “We have been in business since…” and so on. Don’t believe that pretending to be a larger entity will be an easier sell than admitting that you’re the judge, jury, and executioner of your own business. What happens if your clients wonder where all of “we” are hiding? If it’s just you, say so. It’s inauthentic to claim otherwise.
Plan your harvest. What does success look like to you? Do you plan to run this business forever and let it take over the rest of your life? You’d be surprised by how many entrepreneurs get trapped in businesses that become reasonably successful, but not hugely successful. They have no idea how to get out, but they have to keep working long hours every day. You can end up working day and night and taking in enough to hire multiple employees, while you can afford to pay yourself only $20,000 in annual income from the business. It won’t do you any good to have built this entity with employees and customers and money going in and out when you never get to enjoy some end result. Plan the harvest before you plant the seeds. Do you intend to one day sell your business, have a partner take over, or grow in a different direction? Perhaps you want to earn a certain amount of money, build a portfolio, or gain certain kinds of experience. Give some thought to what you want to get from the business before you start.
Don’t worry about the logo just yet. And this is coming from someone who earns most of his income doing corporate identity work! So many new businesses prematurely focus on identity when they have no strategy, no sales, and nothing to offer but plans for the future. I’ve had people ordering business cards and stationery and branding work for companies that are just ideas in their heads. It’s awfully hard to express in visual form the identity of a totally amorphous, tentative entity. You can, in fact, be very successful and make some sales without so much as a business card bearing your name. When your business is more than just a dream and you’re ready to get serious about your brand, then you can call me.
Sell benefits, not features. A list of features sounds enticing to salesmen and experts but means little to the people who are most likely to be your customers. Your job is to translate the features of your product into benefits that every non-expert can understand. You would not sell a camera by listing the intensity of its flash, the aperture of its lens, or the speed of its shutter. You would explain that the camera can quickly and easily take beautiful photos of the customer’s children at any time of day, which will capture wonderful moments forever. Only professionals care about f-stops. Everyone else wants to know the benefits.
Never offer promotional discounts. Discounting says, in effect: my product is not worth the regular asking price. In the face of competition, do not reduce prices temporarily, but do make your product worth every penny of what you ask. It’s better to do that, and capture the five percent of customers who prefer better things, than to aim at the ninety-five percent who simply want the lowest price. Why fight the big price cutters for the lowest common denominator? Offer the best you can at a price you believe in, sell it to fewer people, and prosper on your own terms.
Choose an alternative fiscal year. Not every business closes its books on December 31. With certain business entities, you can choose your own fiscal year when reporting to the IRS (Don’t ask me how to do it or whether it applies to you, though. I have no clue.) If you turn in your taxes every October instead of every April, your accountant should be a lot less busy and be able to devote more quality time to your problem. I wish I had done this, but it’s too late now.
Start an LLC. As far as I’m concerned, it’s just not worth spending a great deal of time investigating other options. Other forms of incorporation have laborious paperwork requirements that aren’t suitable for a brand new business, despite the articles that proclaim the benefits you’ll experience down the road. Guess what? Down the road, you can transfer the assets of your LLC to a C-Corp or an S-Corp when you truly need to. Your State might even allow you to transform an LLC into a different type of entity. Unless you have serious start-up capital or expect to offer stock to the public in the foreseeable future, an LLC should be just fine for most people. I say this because years ago I formed a C Corporation which I ended up not using for anything. Eventually, I dissolved it. I was only 18 at the time and I was thinking too far into the future.
Keep a customer list. This is so obvious, you must think I’m the dumbest blogger in the world to have written it. Yet I can tell you tales of companies that did more than three million dollars a year in business and had a dozen or more employees, but had no idea who their customers were. And don’t stop at names. Track what products or services they buy, how much they spend, and how many phone calls or mailings you sent them. You will eventually discover useful — and maybe surprising — statistics about the people who are sending you their money. And then you can figure out how to get more of it. 
Any U.S. tax advice provided in this article is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.
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