Advice for the self-employed: Pay on time, treat ’em nice
Fisheries Minister Stuart Nash is a lucky man. Speaking at last Thursday’s aquaculture conference in Blenheim, he quipped his way through 20 minutes of a speech that he appeared not to have read before taking the stage, slightly late.
As the first address by a new minister to an industry that produces some of New Zealand’s highest-margin, highly branded exports, and has a small environmental footprint compared with most land-based agriculture, it was a shocker.
Essentially, he encouraged the industry to produce more high-margin, branded exports while striving to meet high environmental standards. And, yeah, we’re working on a strategy for you. Should take a year or so. Reactions from the audience ranged from underwhelmed to livid.
That was to have been the subject of this week’s column. However, the Stuff business editor intervened.
Tell us, she said, what 10 years as a smallbusiness owner has taught you – this being Small Business Month. So here goes.
1) Don’t rely on governments. For a start, see above. They are lumbering beasts and both the policy and the funding keep changing. Maybe it’s my mistake, but the ratio of form-filling to the likelihood of pay-off seemed too uncertain to make applying for small-business assistance schemes a good use of time.
2) Know your margins. If you don’t know how long a job is taking and what each hour of your business’s time is worth, you’ll probably go broke.
3) Have target margins. You’ll often miss those targets, but they’re better than shooting in the dark. The more specialised or unrepeatable the work is, the higher the margin should be.
4) Never work for free. The likes of contra deals and promises of ‘‘exposure’’ rarely make sense. Ask yourself: ‘‘What does it say about my brand that I’m losing money on this?’’
5) Seek sources of regular income. Charge more for one-off work and be willing to negotiate for work with certainty month in, month out.
6) Always pay bills on time, starting with your staff. Tax is a bill, too. If you can’t pay your bills, particularly if you’re falling behind with the Inland Revenue Department, swiftly dismount and find other employment.
7) Invoice on time and follow up. The number of small businesses that forget to invoice – sometimes at all – is ridiculous. Why are you in business if you don’t prioritise getting paid? 8) Have a budget. And keep updating it.
9) Hire a bookkeeper. Money for a part-time accounts executive to keep the bills, PAYE, ACC, GST, invoicing and budgets up to date is some of the best you’ll ever spend.
10) Treat people well. Steely Dan dispensed timeless wisdom with the lyric: ‘‘Dudes you misuse on your way up, you might meet up, on your way down.’’ That’s particularly true in a village like New Zealand.
Finally, pay yourself properly. If you’re paying all your bills and your staff well, that’s a huge achievement. But if you’re not paying yourself what you’re worth, then you’d better have a very good reason for staying in business.
Unless you’re an export sensation-in-waiting, which most small businesses aren’t, you owe it not only yourself but to your partner, children and any other significant others not to waste your life working hard for too little reward.