What I've learned while building a business

my experience and the lessons I've learned

June 26th, 2018

I'm currently building a web agency with a founding partner. I was a freelancer for several years so it was natural for me to work alone or just temporarily with employees as part of my contract work. So managing people was something I had to learn.

I'll just share my experience and hope that you'll find it useful.

Short list of tips:

  1. Make a list of what can possibly fail. Then prepare a way to prevent each possible failure. For small businesses, 90% of the risk is getting new customers and building enough savings in case of any unexpected problems.
  2. Always question yourself. But when in doubt or you're getting into paralysis, better act fast and correct later on small decisions.
  3. Communicate effectively. This doesn't mean "rational", this means: In the way that the other person can understand you. If they are emotional, talk emotionally. If they are rational, talk facts. If they are anxious, talk reassuring. If they are angry, listen to their complaints. Be flexible. Always adapt to your conversational partner.
  4. Have a vision. What kind of challenges does the business solve? What does your perfect work day looks like? If you don't care about your work (the "why" and the "how"), you will burn out and your employees won't be inspired.

managing people and your vision

What good leadership basically is: understand what people want and what they desire and enable them to achieve their goals. To achieve that, good communication skills are necessary so that you're able to deeply understand your employees and their wishes. Build an environment where they can share their fears and talk about issues. This is extremely important and due to my sometimes cynical worldview, it was sometimes hard to admit that I wasn't as empathetic as the employees needed it. Being sensible and trying to understand the emotions of your colleagues is a soft skill that you need. We're used to be very sensible in sales talks and customer conversations, so why should we compromise this when we talk with friends, employees, and acquaintances?

Another thing is a clear vision. You can only lead if you know where you want to be. Without a clear vision, the whole business becomes a nihilistic journey without ambition. Define what you want in life and let those decisions lead your business decisions. That means that the business should be shaped to the desires of the employees and founders e.g. if you want to have a lifestyle where you can work everywhere in the world, change the direction of your business and make this possible. Otherwise, you'll regret your business decisions. Always ask yourself if you want the life that the business creates. If you don't want the resulting life that you'll achieve with the business (e.g. making a lot of money, but you have to work 100 hours a week), you'll get dissatisfied. The same is true for your employees: if you don't give them the environment that they want, they'll grow resentful and leave your company. You should be careful to not use this idea as a way to act overly emotional in business contexts, though. Using your life goals as a way to fuel your business decisions is not the same as "just do whatever you feel like", I just see it as a warning that if you ignore your wishes, you'll become dissatisfied and unmotivated in your business because it doesn't align with your goals.

It's not about the specific vision e.g. you could try to build the next big thing for a billion users (expect to work 100h-weeks for years) or just a lifestyle business (making enough to live, but otherwise invest your time in other things e.g. playing guitar), but it's about decision-making and living with the consequences. If you don't like a life where you have to work 100 hours per week, maybe you should build a business that supports the lifestyle that you want to live with. It's more about your life goals and vision than anything else.

If you try to be someone you don't want to be, you'll regret it in the long term. So try to assess what you want in life and build your business accordingly. Don't be a victim of the sunken cost fallacy. Although this sounds trivial, this is a mistake many people make, especially when money gets into the equation.

do proper project management

I think there is a fine line between micromanaging and too little supervision. And this balancing act has to be solved every single day. If you're reading every line of code your employees write, you'll get nowhere, but having weekly code reviews can be the perfect solution. This question depends on your business. In an agency, it's best to use tools like Trello, workflow tools (to see the project status, time budgets, etc.), use agile methods (sometimes a bit more structured using waterfall models), and be constantly present so your employees can ask you questions immediately if they're stuck.

understand yourself

Strong leadership without deep self-awareness is not possible. Read about personal development, reflect, read some things about philosophy, politics, religion, economics, and science. Get a deeper understanding of what you believe in. A reflected and carefully put together belief system enables you to know what's right and wrong even if reality doesn't reveal what's happening right now (this doesn't mean that you have to have strong beliefs; it's more about a general direction that you should know). Most of the time you'll have to make decisions without complete information. With proper training of your personality, logical thinking and reasoning skills and other aspects, you can make better decisions, and therefore you can lead better.

Always ask yourself why, then analyze how and then think about possible failures to avoid them (this is a tip by Charlie Munger). Use different mental models to assess your behavior, the current situation, and your strategy. Integrity, communication, problem-solving skills, and perseverance are extremely important to lead (and also to have a good life). When people get emotional don't automatically respond emotionally — analyze their circumstances and their expectations and be a helping hand for them instead of handing out emotional responses.

In my opinion, building a business is 90% understanding and learning about yourself, your weaknesses and strengths, others, and your customers. 10% is numbers, logics, developing software (or whatever you do), and other things that are very mechanical. Mastering yourself and understanding human nature enables you to be a great leader. I don't think that I have all the required qualities yet, but I strive to overcome my weaknesses.