They always say learn from other’s mistakes, so I thought I’d mention a few regrets of mine:
Yeah, I managed to mess this one up. We definitely did not have enough money starting the company – we budgeted $15,000 total of start-up capital. However, looking back we’d have been better if we had about $100,000. We eventually ended up financing it to that level anyway, but if we had budgeted properly, we would have avoided a lot of issues.
Lawyers & Incorporation
Don’t get me wrong; there’s a time and place to use their services. However, many of the basic filings required while incorporated is extremely simple and can be done by yourself. Spend a couple of hours by yourself, read up and learn the necessary information and you’ll save yourself a few thousand dollars. However, anything outside of the ‘run of the mill’ docs (e.g. our shareholder agreement was very specific) should be done through a lawyer.
Not Doing the Books Immediately
When we were first started, one of the major focuses was on getting the site up and running. We didn’t get around to doing the books until after 4 months of operation (nearly 9 months after incorporation). Let’s just say that it was a mess; we had to take a few short-cuts to sort the books out in time to file; and since then we’re still cleaning up the mess that resulted from it. Talk to a good accountant / bookkeeper to help set-up your accounts first and then doing them consistently is very, very important.
Starting Too Late
When we first started talking about the company, it was late September 2006. By the time we actually had the site up and selling, it was August 2007. I really wish we had gotten the site up by April 2007 as I had first planned for, giving us a much longer run-up to Christmas. It would have made our finances for 2008 look a lot better.
Not Planning for Growth
We’ve wasted a lot of money not really planning for growth properly. Space requirements in our storage location have made us move locations 4 times in less than 4 years. That’s a lot of time and money wasted making those moves and finding new locations. We’ve finally moved to a space that I expect to be in for at least another 2 years, but it’s taken me a while to learn this lesson.
Setting & Agreeing on Standards
This is more of an issue when you are working with others, but creating a set of documents that list and detail the minimum standards that are expected for any particular area of operation is important. Whether it’s the books should be 2 months behind at most or all orders ship within 48 hours (or customers informed why); these standards should be set and agreed upon immediately. A lot of our issues during 2008 for were due to the fact that we hadn’t set and agreed on these standards, and didn’t hold to them. Now that they are fixed, it’s much less of a problem even when I hire 3rd parties to help.