5 Things I Learned In My First REAL Year of Entrepreneurship

5 Things I Learned In My First REAL Year of Entrepreneurship

A month before turning 29, after having spent the majority of my 20′s working for five different companies, I finally decided to strike out on my own.

In September of 2012 I said goodbye to what I hoped would be my last office job. In October, I created an online business that would teach entrepreneurs how to get started with online video.

Even though I technically started my business in October, the first 6 weeks were spent building a website (I had no skills and no experience doing so), and the next two months were spent blindly going to networking events and slowly becoming aware that:

1. In-person networking is a horrible way to grow an online business.
2. I didn’t know what the hell I was doing.

While I had budgeted, planned, and prepared, I had still somehow missed the fact that the key to my business making money was having a captive audience and lots of web traffic.

I had neither.

My fifth and sixth months were spent teaching Skillshare classes, consulting 1-on-1 for clients, trying to find businesses to produce videos for, all the while continuing to network like mad. I was essentially grasping at straws since I hadn’t yet really made any money and was rapidly burning through my savings.

It wasn’t until February of 2013 that Fizzle (then ThinkTraffic) posted a competition to get a year of free business mentorship from Corbett Barr. Knowing I was desperately in need of help, I did the only thing I really knew how to do, I created a pitch video.

I won the contest, and Corbett and Chase immediately set to work helping me figure out what would be the most sustainable model for me, something that I would enjoy that would also make me money.

Immediately I found focus, and realized I would rather be making videos than teaching people how to make them. So I pivoted, created a new site with a new name (from a template this time) and set out on a fresh course with a fresh set of challenges.

Today, after 18 months of what has felt like grasping in the dark, I am able to look back and observe some tangible things I’ve learned, and continue to benefit from.

1. It Costs More to Be An Entrepreneur

Articles will tell you to budget for unforeseen expenses, and I did. But not nearly enough.

One thing we are not used to doing when we have a full time job is putting away money for taxes. Since it is usually taken right out of our paycheck we don’t have experience with this. And since most likely as a fledgling entrepreneur our paychecks are few and far between, we find ourselves using every dollar we have just to keep going.

Remember, you should aim to make considerably more than whatever your monthly expenses are going to be. For me that number was double my monthly expenses. It might be less (or more) for you. But this should be something you give a lot of thought to.

You’re also going to be paying out of pocket a lot more for things you didn’t consider.

You’ll probably take a lot of meetings at coffee shops. It might be only 4 bucks a pop, but twice a week and suddenly it’s several hundred dollars a year you didn’t factor into your budget. There are a lot of other little expenses like that.

I did a year-end review after my first full year as an entrepreneur, but honestly I probably should have been checking every three months. And that’s something I’m going to start doing this year!

It’s ok to budget in a significant amount of money as “unknown”. Working for yourself means making a lot of little adjustments on a regular basis, not just one big change every so often.

2. Double The Amount of Chickens You Count Before They Hatch

When I first started, my goal was to make $5,000 a month. And I based my early revenue predictions on the clients I thought I might be bringing in.

A potential client would tell me they could afford a $2,000 video, which to me meant a guarantee. And if I had three of those lined up I thought, “oh great, I’m going to make $6,000 this month. I’m set!”

What I didn’t realize is that there are a lot of things that will happen. Things like:

1. A client will back out and not work with you.
2. The project will get delayed and that money won’t come in for months, perhaps even a year!

It took me a long time to figure out that if I want to be making 5K a month, I need to have at LEAST 10K in opportunities, which made me realize I need to be doing a shit ton of outreach to make sure that’s a possibility.

That way, if I have 10K in possibilities and half of them fall through, I can still pay my bills, but if they all come through… woohoo new shoes!

I use Insightly to keep track of my contacts and my revenue, but I also have a simple revenue forecast at the bottom of my to do list in Evernote, so I can adjust it every day easily and always be aware of how much money is coming in.

3. Specificity Up Front Saves Weeks on the Back End

I will readily admit this is the hardest one because you don’t know what you don’t know.

I have no background in law or contracts except the 5 months of business law I took in the 8th grade from which I remember nothing.

So when it came to my first contract, I cobbled it together from ones I found on the Internet and other entrepreneurs I knew. And inevitably, no matter how great I thought a client would be, it always ended in me adding a new clause to my contract about something I didn’t anticipate like… a kill fee, or 50% up front, or the specifics of the terms or even WHO the check should be made out to.

Make your contracts as concrete and clear as possible so there is no question of what needs to be done.

Sometimes a client wants to get to work right away without a contract. I don’t care how much you like them, it’s not worth it.

Every project I ever did without a contract turned into a nightmare.

If you can, find a lawyer friend to do you a solid in the beginning and help you get a legit contract to protect yourself. Even if it’s taking a while for a client to pay me, as long as I have a signed contract in place, I feel much more secure than if I don’t. Which brings me to my next point.

4. Clients Who Haggle Over Price Will Be a Problem

This isn’t that revelatory. You see this talked about in many entrepreneur blogs, but it really is true. Keep in mind, haggling is different than negotiating.

Call it the 80/20 rule or whatever you want, when clients beat you up over price, it is foreshadowing that they will beat you up over everything!

In the past 18 months I have done jobs that range in price from 600 dollars to 10,000 dollars. And looking back now, every time I discounted my rates because I needed the work or was trying to be a nice guy, it has caused me enough stress to lose sleep.

I have found a magic number regarding the price of projects for my own clients that sets apart those who complain about everything from those I actually enjoy working with.

If at all possible, say no to unfairly discounted rates. Set a floor for yourself and then price yourself quite a bit above that so even if you have to discount, you aren’t really taking a loss. But you probably shouldn’t even take those clients because they still are trying to get something for nothing.

I know this is hard if you aren’t bringing in any money and you need that contract to pay the electric bill. I have been in that scenario, so I really do understand. That is why it is important to have multiple streams of revenue, savings, or at least a fall back part-time income that can sustain you.

Once you start doing crappy projects, it’s hard to break out of that cycle.

5. There Are a Thousand Different Ways to Get Clients and You Might Need to Try Them All

I spent an entire year going to between two and four networking events a week. I joined 20 Meetup groups. Some days my first networking event started at 6:45am and my last event ended at 10pm.

It was exhausting.

Do you know how many clients I got from going to 100+ networking events in one year? Zero. Not one. I emailed every single person whose business card I got, of which there were over 600, and had a bunch of lunch meetings, calls and coffees but not a single one amounted to a dollar made.

On the surface, it appears that networking events were a horrible investment.

But I did learn a lot from them.

I learned how to talk about my business in one sentence. I learned how to interact with people and to promote my business without being a jerk. More than anything I learned a ton about human nature.

Looking back it was really just flying blind. The quickest way to make money is to find people who need your services. I can’t tell you where that is, but there are always options. If you feel like you don’t have any options, it means you aren’t looking in the right place.

Bonus

A lot of things make no sense as an entrepreneur.

I’ve had leads come from places I never expected. I met great clients in places I almost didn’t go. I’ve acquired clients from calls I almost cancelled. For the most part, you have to use a fair amount of discretion in choosing where you allot your time because you can’t do everything all the time. You can try, but you just can’t.

Allow yourself to be surprised, consistently check out new avenues, try new things, experiment. If something doesn’t seem like a good investment of your time, it will be hard to get excited about, but ask yourself, could this provide some other value outside of monetary? Many times you won’t know the answer.

And many times it will be very hard to figure out where your efforts are actually paying off. But you must plow forward. You must continue to do. Because when you stop doing, you stop getting. And when you stop getting, you stop making.

I’m getting better at understanding and trusting my gut. It’s a powerful tool when you are on your own. If nothing else, just take some time to think about your options.

If somebody wants you to commit something immediately and you’re not sure about it, give yourself a day to think about it. Time and perspective are incredibly important for making good decisions. And the more scenarios you find yourself in that require that skill set the better that skill set will become.

The first year as an entrepreneur will be messy.

You won’t know what to do in every scenario and you will have to face a lot of discomfort. But like Brene Brown says, lean into the discomfort. Nobody gets through anything by leaning back.

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  • JakeDK

    Really nice article on starting by yourself!.Thanks for sharing with us.

    • Richard Boehmcke

      My pleasure Jakob, thanks for reading.

  • Davina Choy

    Awesome read, Richard! I’m in my first year as an entrepreneur, and I’m totally in the networking trap. But I’m going to these events mainly to connect with other entrepreneurs and not so muc to pitch my business, although that happens too! Incidentally I also just signed a contract to teach courses with Skillshare. How was your experience teaching with them?

    • Richard Boehmcke

      Thanks so much Davina. It does feel like a trap sometimes doesn’t it? I was so exhausted at the end of a full year of networking that the thought of going to another event gave me a gag reflex. I was so grateful for the holiday break where I literally couldn’t attend events to be able to pull back. I did Skillshare classes almost a year ago now and it was a fun but mixed experience. The technology had some limitations when I did it but I learned a lot!

  • Chezare Sievers

    Great article Richard!

    • Richard Boehmcke

      Thank you kindly!

  • http://www.MastermindFinder.com/ Julia

    Wow, thank you! Great reminder on counting your chickens & doubling expenses. Hold on, I have a spreadsheet I need to tweak …!

    • Richard Boehmcke

      Haha spreadsheets give me anxiety. That’s not even a joke. Sometimes I have to make them just so I can see all the information but yea, double your chickens. MORE CHICKENS FOR EVERYBODY!

  • Laurie Clark

    Great article, thanks for telling it like it is. I traveled the enterpreneur road a long time ago and wasn’t prepared, trying it again and more prepared this time. Thanks for the reminders of what it is really like!

    • Richard Boehmcke

      Good luck on your second round! I feel like I’m always in the 9th round of everything and then I find out there are 4,000 rounds to go. ::shrugs:: Good job on focusing on preparation!

  • http://tigercatstudio.com/ Sofia Garcês

    Great post, Kudos to Richard for sticking in there! Looks like I’ll have quite a year ahead! Can’t wait to get in there!

    • Richard Boehmcke

      Wohooo good luck on your journey. “Sticking in there” isn’t something that goes on resumes very often (are people still using those) but it’s something that I value, even when I’m having a hard time doing it myself… which is often.

      • http://tigercatstudio.com/ Sofia Garcês

        Totally get what your saying Richard! But seems to me in the end it’s worth all the hard work!

  • http://thebeachhousesp.com Beach House

    Honestly you have quite a spectacular article here. Let me just say thank you and that my biggest takeaway is that chasing down clients is not the road one should take. Why, because as you said “I’d rather make videos, than teach people how to make them”. This is by far your most powerful point for me.

    Just find something you enjoy doing and do it twice as much as you do now! The rest will work itself out when the clients come and find you!

    • Richard Boehmcke

      Thanks so much. A lot of the things I’ve done in the last 10 years have felt like the thing NEXT to the thing I actually wanted to be doing. The hard part is figuring that out. Sometimes it’s pointed out for me, sometimes I discover it myself, and sometimes I continue making the wrong decision until it’s just painfully obvious. That’s my least favorite.

  • Richard Boehmcke

    Thank YOU Jim.

  • http://www.sharktankpodcast.net/ Shark Tank Podcast

    Richard this article was excellent. I will not and do not mess with #4. Clients that don’t understand the value of time will spend yours with reckless abandon.
    Cheers-
    TJ

    • Richard Boehmcke

      Thanks TJ, well said yourself! I got tired of being frustrated. I still get frustrated, but with new stuff.

  • Chase Reeves

    Man, great article, RIchard. You’ve summed up parts of my own story here better than I could have myself.

    • Richard Boehmcke

      Thank you kind sir. You helped me write it whether you know it or not.

  • http://joeyaugustin.com/ Joey Augustin

    Thanks for sharing! What was it about your discussions with Chase and Corbett that made you realize you’d rather make videos than teach?

    • Richard Boehmcke

      They basically yelled at me for an hour until I changed my business model. HA! Just kidding, they were great and very patient as they asked the fundamental question: if I could only do one thing well, which would I rather it be? The answer was easy.

      • http://joeyaugustin.com/ Joey Augustin

        Thanks Richard! That’s a great question to ponder.

  • Richard Boehmcke

    Right? Who knew money was so important. The hard part is constantly reevaluating your strategy without questioning why you are doing it in the first place. Money was by far the most stressful part of it for me, worrying, constantly checking bank balances etc. It really requires a lot of deep breathing to stay sane.

  • Richard Boehmcke

    My pleasure Fabiola!

  • http://kimanziconstable.com/ kimanzi constable

    Congrats Richard on winning and creating a successful business! I think we all echo this post, you have to hustle even harder when you work for yourself. These are great lessons, especially about taxes. I started with a service business offline and learned about taxes the hard way. When I started my online business, I knew I better do things differently. You see the money coming in and life is good, you go to your accountant the next year and you get a reality check!

    • Richard Boehmcke

      The hardest part was knowing that was I going to have to pay taxes, and knowing I needed to put money away, but somehow botching the math that I needed to make more money. When running out of money becomes the potential reality, you, and by you I mean I, learn real fast!

  • TeNeisha Ragin

    I love this article. Really sounds like a potential friend letting me know what’s real out here. Thanks.

    • Richard Boehmcke

      Haha well I’m glad it felt that way. It’s just a bunch of stuff I wish I had seen or heard before hand and just didn’t for whatever reason. So I’m glad it’s helpful!

  • Russell James

    I have been in ” conventional ” business a long time when I just recently launched a business based on my passion.

    The dynamics of trying to “sell ” something that otherwise you would dispense your information for free is an awkward one.

    Setting up benchmarks for a workable spreadsheet and determining an ROI that is not tied solely to the bottom line is one of the entrepreneurial calls that only comes from being in the trenches.

    learning to cut out the things that don’t work and doing more of the things that do work is part of the entrepreneurial journey.

  • Mathew

    Go Rich! I take all of these points to heart, so it’s great to see them laid out so eloquently for new and existing entrepreneurs.

    • Richard Boehmcke

      Thanks so much Matthew!

  • http://www.i7marketing.com Sean Gallahar

    As someone who went through a similar process, I wholeheartedly agree with every word. A lot of time people don’t realize how big of a risk, and how much of their own life and money they’ll have to give up in order for their business to start making a profit.

    • Richard Boehmcke

      Tell me about it Sean, if I realized the ramifications of anything before I did anything, I would never do anything.

  • http://www.ldnaturephotography.com/blog Ld Nature Photography

    Great article and advice. I recognized some of the things you talk about, and need to keep in mind others. # 4 is something I really need to work on. Thanks for the article!

    • Richard Boehmcke

      It’s so hard right? It’s hard to value yourself when you also value just… paying your bills. Hopefully you are never in a position where one thing is everything. All you can do is prepare like mad and trust your gut and realize there is no rule book. You write the book as you go.

  • http://darnoffice.com/ Alex Schriewer

    Everyone who just merely plays with the idea of being an entrepreneur should read this post. Probably eye-opening to many.
    “A lot of things make no sense as an entrepreneur.” I guess the art is to overcome the queasy moment when this insight hits you and move on anyway.
    You can even replace the last three words with “in life”…

    • Richard Boehmcke

      Thanks so much Alex, what kind words! I really appreciate it. As anybody who tries to do something big on their own can attest, it’s easy to be completely lost and confused, and sometimes seemingly impossible to move forward, but I’ve been fortunate to have great people around me so hopefully others can find great people as well.

  • Spouse Dates

    Good word, Richard! Thanks for linking to the tools you are using. Gonna check out Insightly. I’ve been looking for something like that. You going all in like you did is an inspiration. Thanks! Steve

    • Richard Boehmcke

      Thanks so much! I actually came across Insightly through Fizzle! I don’t use it for all it’s features but today is actually a day where I have a lot of follow ups, so I just tuck into Inisghtly, see who’s due (or overdue) and it frees up brain space. Then as soon as I send an email I make a reminder for myself to follow up again in a certain amount of time.

  • Richard Boehmcke

    It’s extremely challenging not to get outraged or offended or disheartened (or all three at once) but I definitely have realized that negotiation is really hard to read about without practice. Being in negotiations makes me realize that I have a lot to learn. It’s definitely scary but so important to become proficient at.

  • Richard Boehmcke

    Thanks so much Donna!

  • Richard Boehmcke

    Thanks so much Ryan!

  • Bree Brouwer

    Love this, Richard! It hits a chord for me specifically, because I just decided to focus on creating content (blogging, script writing, etc.) for companies that focus on digital media and online video. I spent a whole year freelancing for whatever interested me, and then I realized, much like you did, that I wasn’t making what I wanted to.

    As soon as I started focusing on these two niches, I’ve received a few more opportunities and am aware of gaps I can help fill (did you know Entrepreneur.com’s video marketing topic wasn’t updated for THREE MONTHS this year? How is that possible with all the developments happening in this industry?!)

    Side note: will you be at VidCon? Maybe we can meet up!

    • Richard Boehmcke

      Hey Bree thanks so much. Good for you as well! Finding the gaps is like finding gold. It’s so exciting. And no I won’t be attending VidCon, too many shrieking tweens. My goal is the next time I attend VidCon it’s as a presenter.

      • Bree Brouwer

        Didn’t see this reply until now — sorry! Yes, I think I’ll hit up Entrepreneur with an idea or two for a story.

        Sorry to hear about you not going to VidCon, but now I know what to prepare myself for. :)

  • Caleb

    Hey Richard, thanks for writing! I recently learned point 1 after doing my taxes this year. This next year I am putting away my estimated taxes monthly in a separate account so that I never really see that money.

    I can also vouch for point 2 in my business experience as well. As entrepreneurs, we are often overly optimistic because we want to work on cool project and make more money. I have learned that until you have a contract signed and the first payment in your hand, you don’t have the project!

    • Richard Boehmcke

      Rude awakening huh? I got lucky but it’s still something I think about with every paycheck that comes in. Good call on putting the money in a separate account. I’m always the first person to calculate how much money I COULD make, and completely ignore how much I will likely make.

  • Richard Boehmcke

    No shoulds! Congratulations man, best of luck moving forward! Go kick some tail.

  • Richard Boehmcke

    I like discovery, it sounds better than “soul crushing mistakes.” Keep rocking.

  • Richard Boehmcke

    Right on! I have resigned myself to the fact that I am never going to know enough about anything. It’s freeing and disappointing at the same time. But it does allow you to move forward with less worry I believe.

  • http://www.financialsamurai.com/ Sam Dogen

    Good stuff. Hope more people can learn to get laid off instead of quit in order to get a nice severance as a runway to be an entrepreneur.

    • Richard Boehmcke

      Haha my uncle told me a long time ago that when he wanted to go back to school in his 20s he told his boss to lay him off so he could collect unemployment. We can all hope to be lucky but we aren’t always. So the best you can do is find the way that works for you. There are so many different roads, I’ve tried a few, I know people who have taken way more and made things work despite outrageous odds. Ultimately your skill set, your circumstances, and your ambitious come together to form some crazy cocktail strong enough to make things happen. That’s just my opinion. I could also be horribly wrong.

  • Mike Goncalves

    Good stuff Richard. Love your honesty and candor. Love how you said you’re getting better at understanding and trusting your gut, it more often than not knows what’s best. Also love your perspective on the networking you did and instead of viewing it as a disaster, you mentioned you learned a ton such as talking about your business in one sentence, interacting with others, and most importantly, about human nature in general…. Awesome! Leaning into fear and discomfort, usually right about where life begins. All the best to you…. Cheers!

    • Richard Boehmcke

      Thanks so much Mike. Yea I mean if you spend enough time saying the wrong thing, you eventually start picking up that it’s just not working. The gut thing is hard, because I come from a mental background of assuming I’m always in the wrong, but at a certain point you realize, listen, if I trust my gut and it goes wrong, well then I learned. But as a past CEO of mine once said, “Nobody ever says, ahh I shouldn’t have trusted my gut.”

  • http://www.meiszephung.wordpress.com Mei Sze Phung

    Would you say that your 20′s are your golden years? I’m twenty right now and I’m excited for this decade of my life, yet I don’t want it to pass by too fast.

    • Richard Boehmcke

      Nope I wouldn’t say your 20′s are your golden years because that presumes that everything gets worse from there. I think every age, every decade has it’s glorious elements and it’s horrid frustrations, and of course it’s hard to know what is what until you’re on to the next. All I know is that I’m grateful for what I was able to make happen in my 20s and I think that holds true at any age. It’s only as good as you make it.

  • http://fanchimp.com/ Nicoletta @Fanchimp

    Hi Richard, I really enjoyed your post, I think is one of the most true post about startup. I think the same about networking, it’s better work on project, talk to your customers or write a good blog post than participate to thousand of events that didn’t bring you nothing at the end of the day.
    Have a nice day and best wishes for your company!

    • Richard Boehmcke

      Thanks so much Nicoletta. Yep it’s kind of crazy you have to (Or I had to) spend so much time doing a bunch of things I didn’t enjoy to figure this out, but there is something gratifying in that too when you come out the other side and realizing that there IS a better way. I tend to make a lot of mistakes before I have successes. It’s different for everybody. This just happened to be the way I went.

      • http://fanchimp.com/ Nicoletta @Fanchimp

        Mistakes are the way we learn, ;)

  • Richard Boehmcke

    Good on you Nick! I hope it comes sooner rather than later. But also, a partial income online is a good start too! Hell, just having an income is awesome.

  • Richard Boehmcke

    Thanks Norman and I wish the same to you! Go after it man. Try and have some fun along the way!

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