This January, my first online company turns 5 years old, which is why I wanted to share some strategies on how to run an online business for an extended period of time. As a young online entrepreneur you need to quickly become aware of the fact that some things are essential to the survival of your business. To avoid entering slippery ground here are some tips to prepare yourself.
It is often grossly underestimated how much work goes even into the tiniest business in order to keep it alive for more than 5 years and strive. Some things can really tear you down if you do not take care of them regularly on a weekly, if not daily basis.
I do not run a classical startup with the goal of selling out, instead I am running a lifestyle business that allows me to do whatever I want when I want, but many lessons apply to startups as well.
1 Your Cashflow: Don’t Push It
Always know how much money you are spending in a single quarter. Do not cross your limits. Only stretch the limits of your credit card or get a loan for critical, essential things.
Simplified cash flow statements: If it’s possible create a simple cash flow statement for yourself, not for your accountant. Regular cash flow statements are fine, but they are too general and take too long to create every month. Instead create a simplified version for internal use. It can be as simple as writing down your income on one side and expenses on the other, sorted by expense type.
Regular cash flow statements: Too complex for everyday use
2 Your Health: Supplements, Gym Equipment And Travelling
What most entrepreneurs tend to forget early on is to avoid things that can deteriorate their health: Frequent night shifts, long hours at the desk, little to no exercise.
Invest a small amount of money each month into fitness and health supplies, including supplements like zinc, magnesium, calcium, folic acid, a solid B-complex and other basic nutrients. It also doesn’t hurt to stock up on heart-healthy stuff like fish oil and get some green tea or ginseng tea. Stimulants like Alpha-GPC, NADH can give temporary mood boosts, but long-term use is probably not a good idea due to the lack of long-term safety studies.
Also invest a small amount of money into gym equipment to avoid cardiovascular problems.
Last, but not least, take frequent breaks. Sitting for an extended period can cause health problems. Also take extended breaks from work whenever possible. Frequent travelling, attending meetups, conferences and what not will keep you busy and give you networking opportunities to expand your reach and improve your health at the same time. Use the opportunity to see and explore different countries. Business trips should be mixed with pleasure and recreational activities. 50% of the flight and essential hotel expenses are deductible from your taxes, use it to your advantage.
3 Your Tax Returns: Learn How To Do It Yourself
Early on, you can save a lot of money by learning how to do tax returns yourself. Tax accountants can chew up a lot of your hard earned money. While you’re still growing it is essential you keep costs to a minimum. 10% or more of your earnings is what you will end up paying if you hire an accountant to do your tax returns. That’s $10,000 for a $100,000 income. It adds up real quick.
There are many platforms where you can ask tax questions online. Don’t know how to file them properly or declare earnings from your stock investments? Don’t worry, many experts online can give you legally-binding advise for very little money. There are also free forums that can give you invaluable advice.
While it’s often the most tedious job, monthly reviews can help you to spot problems in advance.
Later on, hiring accountants to offload some of the work is a great idea, but for the first few years, I would recommend doing it yourself to build up cash reserves. The cash that you generate early on will be critical to your operations for years to come.
4 Your Cost-Cutting Procedures
Simply creating a cash flow statement is not going to cut it. You need to act on it. It’s very easy to lose track of your expenses. While you’re growing you keep investing into services and products to offload the incredible amount of work even the tiniest business will have to face, but that will quickly eat you up: Cutting non-essential costs is critical to your operations.
5 Your Maintenance Procedures: What Is Your Datacenter Up To?
Every business will have some kind of maintenance, particularly online business owners. Data centers can perform unexpected maintenance in the middle of the night, servers can crash, energy blackouts can ruin your live event, the list goes on.
(Source: Singlehop.com – Data Center Amsterdam)
If you don’t prepare, you will face twice the trouble. Prepare for the worst, expect a nightmare.
With that being said, don’t get the cheapest hosting provider. A solid webhost will at least charge you $130 bucks per month. High-performance SSD servers will cost you $200 and upwards. A CDN will easily cost you another $100 per month, depending on how much traffic you get. Low-traffic sites can get away with a lower bill.
Don’t be cheap on this kind of stuff, it will cost you a lot more in the long run: Lost advertising revenue and customers.
Performance is ESSENTIAL to online business owners. If your website is slow, it’s your fault and you lose thousands in potential ad revenue every month. I invest hundreds of hours each year into performance reviews.
6 Your Backup Plans
Which leads me to a critical point for business owners. You not only need to have backups of your office PC’s, you also need several backups of your servers and preferably a live backup server if you can afford it.
Without redundancy, you will face costs that easily go into the thousands. You only make the mistake once: After your first hard drive crash without backups you will quickly realize that not having a backup plan can disrupt your business for weeks, if not months. Don’t let it get this far.
Most backups can and should be fully automated.
7 Become A Prepper: How To Deal With Emergency Situations
Much like doomsday preppers prepare for the end of the world, you need to become an emergency prepper.
If you’re in it for the long haul, you will have all sorts of emergency situations over the years. From those emergency situations I dealt with, I have learnt a lot: Most importantly, never bring a knife to a gunfight or in other words, don’t get caught unprepared.
It is a great idea to create an emergency protocol. This can be a simple sheet of paper telling you what to do in the case of an emergency situation:
- – Step 1: Execute Command XYZ, Step 2: …
You should make your emergency protcol as detailed as possible. During emergency situations your stress levels will peak and you don’t have time to make mistakes, so if you mess up it can cost you thousands. Yep, shit happens and a protocol will tell you exactly what you have to do that you can follow blindly.
8 Dealing With The 24/7 Economy
We’re living in troubled times: Never before has a civilization on this planet been so well connected and our economies run 24/7, 365 days of the year.
For business owners this means twice the trouble. In the old days, after a day of hard work at the office the work was done. In today’s world, you take the work with you, wherever you go. This is mostly a bad thing, because it requires you to be “on” all the time, not giving you sufficient room to relax and turn your mind off of things. See point 2, this can cause health issues.
Make sure you create sufficient redundancy systems and emergency-notifications to allow your mind to turn off after a hard day of work. Without this, you may always have a pit in your stomach wondering what is currently going on with your business while you sleep or while you’re out.
So what situations require instant-notifications?:
- – Server outages
- – High-priority customer support tickets
- – Any and all essential operations
Services such as NewRelic, Site24x7 or Pingdom can help you get notified instantly should outages occur.
One recent addition that I want to highlight here is the “Button”. It’s a simple button that can trigger a web action.
Let’s say you are leaving the house and want to get status updates on something, then you simply hit button before leaving the house and when you return you hit it again to turn it off. Obviously, the possibilities are endless:
The Button: Triggering Web Notifications / Actions With A Push
9 Allow For Non-Constructive Periods: Slacking
Slacking or only doing the most essential things for an extended period can be beneficial, just don’t let it get a habit.
It is important to allow yourself and your team to slack a little every once in a while. You can’t deliver quality work all of the time, it is more important to focus on the big picture and you can’t do that if you’re working non-stop.
(Source: Slack.com – A Service For Easier Team Communication)
Without those periods, you will not deliver your best results. Slack.com is a service that may help you to organize your workflow and decide when it’s a good time to give everyone some well-deserved slack.
10 Happiness & Jumping Ship – About Exit Strategies
Last, but not least, finding happiness in what you do is important. It’s easy when you’re just starting out, but after some years if you believe that steam engine is running out of steam you may have to tweak it a little to keep it going.
Having an exit strategy, an endgame can be beneficial. Many startup investors will demand their CEO’s to come up with an exit strategy eventually. Selling out to a different party may be beneficial.
Serial entrepreneurs are not rare. Starting a company is easy, but successfully running a company for 10 or 20 years successfully is really a mammoth-task unless you find something that keeps you going.
If you are a small business and finding a buyer is nearly impossible, it may be a good idea to simply shift focus to another project. As an entrepreneur you will already know that relying on a single income source is not a very good idea, so take a look at your options, evaluate them and find something that makes you happy and keeps earning you a paycheck at the end of the month.
Planning A Startup? Here’s Why Life-Style Entrepreneurs Are Happier And Statistically More Successful
On a sidenote: I highly recommend that if you are planning a startup backed by investors that you instead look at a lifestyle business. There are hundred-thousands of startups out there and most fail within a year or if the founder is any good, maybe a few years. The chances that you really hit it big are slim.
There are many stories of broken and crashed Silicon Valley founders. The competition is huge and well-funded. Find a niche instead and grow at your own pace: No investors to please and you can do whatever you want with your business. Hatch it, keep it, grow it.
I live and breath the strategies above and I’m still here are after 5 years and while I may not have the chance to sell my company for a few million to Google yet, I am my own boss and can travel wherever I want and take my work with me, that’s enough for me to avoid investors until they become a necessary evil. I am not saying investors are bad, in fact the contacts and invaluable advice they often bring to the table are the things that can catapult your company into the stratosphere, but you will lose a lot of independence going that route and may end up in a stressful corporate position anyway.