How Not To Run A Small Business

There are days when I think I should be the poster child for what not to do – especially when it comes to running a business!

Several years ago I had a wake up call when I looked at my retirement account and realized that I didn't have enough money to give me the lifestyle that I wanted in the second half of my life. Which was approaching much faster than I'd ever imagined.

That's when I started my so called "wealth creation journey", reading lots of books by successful people and attending seminars by experts in business, the stock market and real estate. I also did two things that had a lasting impact on my life – I joined a Cashflow club and started a web site to share the information I was learning.

Three years later I was working 12-15 hour days, seven days a week ... and earning less than I did working in a regular job.

Doing what exactly?

Creating web site for clients.

The fact was that setting up my own web site (Hidden Wealth Keys) inspired me to choose the Internet as my first wealth creation vehicle. I planned to start a number of web sites on topics I was passionate about and create an income from them.

As usual, I threw myself into research and sourced the best of the best in the field. But when I started writing about Internet marketing in my Wealth Keys newsletter, some of the subscribers complained that I was getting off track. Which lead to my neglecting the newsletter, as I was no longer spending my time researching wealth creation methods and felt I had nothing immediate to share.

Information overload? No kidding.

While I was doing all this research, plus learning HTML and the basics of graphic design, I realized that I had no income to cover my monthly expenses. So I set up an ad as a web designer. I did some free web sites for friends and family to begin building a portfolio. Which took months to complete but I learned a lot along the way (including not to do free web sites for friends and family.)

Enter the clients.

Much as I love them, my clients taught me some hard lessons about business. Like not to work 'in' your business but 'on' your business (I finally know what that means). Running a one-person business, complete with clients, means that you work 'in' your business all the time. It's 'active' (or labor-intensive) income, as opposed to passive income, the latter being the goal of all wealth creation methods.

Then there's the financial side. With active income, you're limited by the number of hours in the day you can work. Even if you charge per project and not hourly, this still applies.

A number of my clients invited me to become joint venture partners with them, which I considered flattering until I realized that it meant they wouldn't be paying me any further money. Instead I'd be entitled to a share of future profits. In reality this meant that I'd have to take over much of the marketing of their site in order to ensure some income. More time commitment for no immediate reward.

Then I had clients who would disappear for months on end when it was time for them to provide some input, like graphics or information on their products or services. As I was billing them via interim payments, that source of income would dry up temporarily. So I was forced to fill the gap with new clients Then the disappearing clients would reappear with a slew of new data to include on the site, along with a request that it be completed within two days as "we have an important meeting (or event or presentation) scheduled and an updated web site is essential". Migraine time.

Why didn't I get help?

For months I advertised for an assistant at the Universities and colleges in my area, but I didn't find one person who had the skills I needed to take over many of the tasks I do. I also hit a stumbling block regarding pay. Most students were looking for an annual salary and didn't relate to the concept of payment per contract. So I let it go for the moment.

The main drawbacks to a one-person client-based business

Apart from eating up all of my time, the business model I was using had three drawbacks:

  1. With clients continually asking for minor improvements and changes, my actual hourly rate of pay diminished rapidly with each request, sometimes settling at around $10 an hour.

  2. I had no free time to keep with the rapidly changing world of Internet marketing.

  3. I had no time to apply what I knew to my own web sites and make them more useful and profitable.
A happier ending in sight

The past month I've stepped back from the business and re-evaluated my position, as well as my long-term goals, and have made a few major changes.

  1. I am now very choosy when it comes to new clients. No more joint ventures, no more impoverished clients, no more indefinite time schedules. And there is a maintenance fee for too many changes.

  2. I finally got smart enough to look for help online and found two capable assistants who have taken over the web design tasks. This frees up my time to work on my own sites and to sort out all the products I have on my hard drive so I can share them on my web sites.

  3. I can now reconnect with my neglected subscribers and go back to enjoying my time online.
Feels like win-win to me.

Disclaimer: This site is purely educational and we make no claims or guarantees with regard to the information presented. Please consult a certified NLP practitioner for individual coaching in the use of NLP techniques. We strongly advise consulting a financial industry professional before embarking on a wealth creation journey.