It's an exciting moment when your business celebrates its first complete year of existence. You survived! You thrived! And looking back, you're able to gauge your success (primarily through your most important financial reports like the profit and loss statement), but growing older means there's more to think about it. There are new challenges you'll likely need to consider as your business enters toddler phase. So we sat down with a few business owners who've walked the walk. Here's what they had to say about their year one vs. year two experiences...
Sharpen Your Focus
Now that you’ve got some experience under your belt and you’ve learned a lot about dealing with clients and customers, you need to tighten your focus. Jane Clark of Teakettica Design says, “That first year, you're dealing with both awesome and not so awesome clients. This means it’s a good idea to start choosing projects and clients more carefully. After your first year in business, you start discovering your niche and can turn away those you don't want to work with. That is really the best part: having enough work and confidence to turn away those who aren't a good fit to preserve your happiness and sanity.”
Don’t Just Focus On New Clients
A critical aspect of any business is having enough work and clients—without that, cash flow starts to dip in the wrong direction! While it is important to focus on new business, Jeff Gibbard of True Voice Media reminds us to keep up with our current customers as well. “My best pieces of advice for a second year business is to focus on your current clients,” says Jeff. “Many new businesses get obsessed with new business and don't recognize how much easier it is to keep a current client or generate new work from an existing client than it is to find a new one.”
Growing and Hiring Means Tightening Your Belt—Again
Making your first hire is pretty exciting, but be prepared for the ramifications. “Get ready to go back to ramen noodles and cereal if you are going to hire,” says Wil Reynolds of Seer Interactive. “After years of struggling, you finally made it and need to reinvest back into the business—so get those expenses down. Your first hires will never appreciate the fact that you were eating cup o’ noodles before the business grew and you finally could eat steak again—just to hire them and go back to ramen. So don't hold it against them.”
Look at Your Business Structure
If you’re hiring, you might need to change from a sole proprietorship to an LLC or another business entity that's more formal and appropriate for building out a team. You might need to get a different license or permit depending on the regulations where your business is headquartered as well. Reynolds also brings up another important point: “If you have a partner, now is the time to draft up your separation clause. You still love each other, business is going great—and that is the exact time to build a separation clause that is fair to you both.”
Review Your Business Regularly
You need to constantly evaluate all aspects of the business to see what is working and what isn’t. Clark notes, “During the first year, magic happens. Although you're not entirely sure what you're doing, people are giving you money.” So now that you do know what you’re doing, you need to take inventory—even if you don’t carry stock. Gibbard adds, “Never stop examining your business: your sales process, your services, your account management. There's always room to grow.”
So while you will measure year two success much like you did in year one, there are new challenges and new things to think about as your business matures. Keep an eye your monthly and quarterly financial reports (i.e., cash flow, P&L, balance sheet) as you did since day one (right?!?!) but also keep the advice of our three experts in mind!
How do you expect year two of business to be different from year one for you? Tweet us your thoughts.