Posts Tagged ‘entrepreneurship’

Lessons in Startup: Business Plans

Posted on January 8th, 2012 by emdash in Lessons in Startup, Pixel Foundry

It’s true that to start a business, you’ll need a business plan of some kind. At the very least, to receive a business loan, your bank will want to take a look at one. Despite this, a lot of small businesses (especially sole proprietors) never get around to developing a plan, or believe they don’t need one.

The Pixel Foundry business plan took a while to write, partly because it was our first time being serious about starting up a company… but mostly because Statistics Canada is useless when it comes to properly categorizing and tabulating information on our industry. For us, the market research was the most difficult part of the entire writing process.

There are many good reasons to write a business plan. We decided against the bank loan route, but still needed the written document… here’s why:

  • The marketing plan section forced us to consider where we’re going to find our clients and how to reach them. From what I’ve seen with friends who’ve started up a business, this is where small businesses tend to fail. If you build it, they won’t come… because they don’t know you exist. Spend some time on this area and the financials – even if you don’t write a formal business plan – is my advice.
  • The financials section gave us a breakdown to let us know exactly how much we need to break even, pay ourselves salary, or grow and expand our business. From this, we could extrapolate how many projects we should take on per month, what our hourly rate should be, and how many clients we should aim to work with ongoing. Nearly every freelancer or small design studio charges too little at first, and we were no exception, but having these numbers prevented us from pricing ourselves into a corner.
  • The research section made us scope out the competition. This helps you develop your USP (more on that in another blog post) and find out if you are even offering something people want. We also gained information on how much other small design studios and freelancers charge, and what their portfolios include.
  • We worked on an exact list of goals over a 2 year period, including when to lease an office, when to hire freelancers to help out with work, and how many new clients we wanted per month. Remarkably, we’re close to our goals, perhaps because we set them with realistic expectations. It’s easy to get caught up in the grind of producing work… this goal-setting keeps you focused on the true reasons you’re starting a small business instead of working for someone else.
  • We knew what equipment, software, office space, and expenses would be before we even looked at whether or not we needed a loan. It turns out we didn’t need to go through the hassle of a business loan, since we didn’t have much for overhead. Too many people think they can’t start a small business without a huge investment. It helps, but if you’re tough, you can sacrifice for a while and be financially independent from the start.

If you don’t want to go through the process of writing a business plan, I’d urge you to at least write a goals sheet, financial statement, and marketing plan. These are the sections we have found the most helpful. You’ll probably find out later that your numbers were wrong, your marketing plan needed adjusting, and your goals weren’t realistic. Keep revising your business plan and referring to it… it is not a static document to be filed away!

Small Business BC offers an interactive business planner. Other samples and templates exist online.

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Lessons in Startup: The Personal Cost of Entrepreneurship

Posted on April 29th, 2011 by emdash in Lessons in Startup, Opinion, Pixel Foundry

Alternate Title: Help, My Friends Have Forgotten I Exist

When you’re working for yourself starting up your own business, it truly becomes your sole focus in life. The long hours, combined with the fact your work doesn’t leave you at the end of the day, can leave you too drained for anything else.

I’d never try to talk someone out of starting up a small business (quite the opposite, I’d argue many of the reasons people talk themselves out of chasing their dreams are invalid) but it’s important to know that you’ll have to make a lot of sacrifices for the first while.

Here are some of the things you can expect:

Love & Romance: You’ll be busy starting up your company and won’t have time for these things. Well, okay, that’s an overgeneralization. If you’re already in a relationship, your long hours devoted to your business can put strain on things. Your partner might end up feeling jealous, then weird about feeling jealous. You may find you want to devote time to the person you’re with, but your mind is often elsewhere… worrying about tasks, perhaps, or planning strategies for the next few months. You might be too exhausted at the end of the day for intimacy. I’m fortunate enough to have a relationship that is mutually supportive… we’re both entrepreneurs. However… I’m not going to lie, the fact our schedules conflict can annoy me.

If you’re looking for someone special, you might have a harder time of it. Dating requires attention: attention to the other person and learning about them, attention to yourself and making yourself feel confident and attractive, etc. Chances are, your business requires more attention than the stranger you met off okCupid.com. I also have a sneaking suspicion that many potential mates will find your ambition intimidating, especially if you’re female.

Friendships: You can’t pull that late night getting a project ready for a client and go out to the pub. You might think you can do both, but you can’t. There are only so many hours in one day. So you turn down invitation after invitation, explaining you have work to do, and your friends are confused because it’s after working hours. Here’s the thing: they’re not going to understand. They may accept your reason, but they’re not going to really get why it’s important that you work on Saturday night. It’s useless to try to make them understand, because they haven’t been there. But, they’re your friends and they’ll understand that you’ll have time to hang out later.

Money and Finances: As far as the bank is concerned, self-employed means unemployed. Unless you have a stellar credit rating and a great relationship with your bank, chances are they’re going to be a jerk about lending you money for anything personal. My long-time big bank refused me a $500 limit credit card once, with the reminder that I can always re-apply if “I get a full-time job”. (I switched to a credit union instead.)

Now, there’s really a few ways to finance your small business… you can take out some small personal loans and grow as you can afford to, work from home for the first while, and hope you break even and don’t need to get a “real job”. That’s rather what the Pixel Foundry is doing. You can also seek investments or business loans. If your small business requires a lot of money to start up, you might have to do this. Regardless of how you fund your business, you’re not going to be writing any cheques to yourself for a long, long time. (Well, okay, you can always take your investment money and splurge on Herman Miller office furniture, fabulous salaries, and foosball tables with it… you can also be out of business within the first two years, like every other tech startup that does that.) Prepare to eat a lot of ramen and borrow money from friends to cover your rent shortfalls.

Housework: If you ended up getting an office, you might end up feeling like you live there, not home. I probably have the last apartment in Vancouver (other than my boyfriend’s) without a dishwasher. When I come home after a 12 hour workday, the last thing I want to do is the pile of evil-looking dishes in the sink. So it gets bigger, and eviller. Entrepreneurs should only have a needy pet (e.g. dog) if they work from home or can bring puppy with them to work. (Note: cats are pretty low maintenance, just don’t forget to feed them.) You can’t run the vacuum in a rental apartment at 1:00 am (unless you’re 207 down the hall from me, in which case you’re a jerk.) So mess piles up, and can feel overwhelming and stressful. My advice: try bribing a family member or friend with baked goods to get them to help out.

Your hobbies: Forget it. Pick them back up in a year or two.

I hope I haven’t talked you out of entrepreneurship. These sacrifices aren’t much different from ones I made to attend college, so I know I can do it… and if you went through college/university, you can do this too. University just has more beer involved.

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Lessons in Startup: Is Entrepreneurship a Good Fit for You?

Posted on March 18th, 2011 by emdash in Lessons in Startup, Opinion, Pixel Foundry

A few weeks ago, Kelly and I were asked to talk to the third year IDEA class at Capilano University about starting up Chestnut St. Pixel Foundry. Talking to young, un-jaded design students about their future is a really rewarding experience… getting their fresh perspective on what we were doing helped remind us why we started up in the first place. :)

The presentation we’ve put together has a lot of valuable information and fodder for Lessons in Startup posts, including a slide about the sort of person for whom entrepreneurship is a good fit.

Our talking points:

It’s easier to start a small studio if you are young with fewer responsibilities. During your startup, you can’t expect to make money for a while. Banks don’t care that you have a dry period while building up your clientele, they still want you to pay for your mortgage, car lease payments, etc. If you’re just starting out your adult life and you don’t have these financial worries, it’s less stressful to start up a small business. A lot of people believe one should get their life established before embarking on a business endeavour… I feel the responsibilities of family, home, car and insurance payments, etc, actually make it harder on both you and loved ones.

It’s easier to start a small studio if you have some money saved up. A lot of small businesses fail within the first couple of years. It’s also usual to expect to not make money in the first year or two. While I advise against having a parachute (I still believe it makes an entrepreneur lazy!) it’s good to have some savings to live off, or a backup plan for life expenses. Can you afford to live without income for a year? Can you move back in with your parents, perhaps, or take out a line of credit, or reduce your spending to a point where you don’t need a regular paycheque?

It’s easier to start a small studio if you continue to have part time work to pay bills. If you don’t have savings (I certainly didn’t, my student loan payments made sure of that!) you should consider keeping a part time job that covers your bare minimums. In my case, I work one day a week as a marketer/direct mail designer/web developer/admin at a small seminar business. I’ve been fortunate enough to be able to choose my schedule there, keeping things flexible for my studio work and clients. This job ensures I have some income during dry studio periods.

It’s easier to start a small studio if you already have freelance clients. While your costs might be higher as a studio due to your overhead, many of your existing clients might be convinced to work with your new team. After all, you can now offer more expertise and faster turnaround. Even if they’d prefer to still work with you alone, they might refer you to others looking for a design team for their company.

It’s easier to start a small studio if you have an independent mindset and prefer working without constraints/management. I will be the first to admit I don’t work well within office politics. My work mindset is to get things done efficiently… I don’t really tolerate bureaucracy or suffer egos (hopefully I have enough tact that I don’t step on too many toes!) Because of this, I thrive in a small business environment, but get resentful when working with larger groups. An entrepreneur has to be able to problem-solve and survive in business, whether on their own or in a small team. You can’t look to others for leadership; you are the leader! (Some people are happy to have others tell them what to do and are able to leave their work behind at the end of the day. These people may be great employees, but they probably shouldn’t be an entrepreneur.)

My advice to someone considering a small design-related business? Start now. It’s scary at first, but once you dive into a startup, you discover that everything is far easier than you thought possible. The biggest regret I’ve heard talking to other entrepreneurs is “I wish I started sooner.”

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