5 Ways to Avoid Mistakes in Your First Year of Business

5 Ways to Avoid Mistakes in Your First Year of Business
  • Opening Intro -

    While I was in college, I worked a lot of different jobs.

    One of the most memorable, however, was co-managing a fledgling medical clinic during its first few years of business.

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I will never forget the lessons I learned while working there, and though it was the biggest headache some days, it was also intensely fun.

Opening a new business is a challenge regardless, but combine that with the unique situations presented by patients and insurance companies, and I wasn’t sure if we would make it.

Luckily, we did.

There are a number of conditions unique to the beginning of a business’ life cycle. These can be hard to foresee unless you’ve stumbled through them before. Take a moment to learn from my team’s follies so that you can be more successful in your first year of business.

Back Up Everything

And I do mean everything.

Several months after our clinic doors were open, we finally felt like we were getting the hang of things. We weren’t putting out fires on a daily basis or just trying to get through. We were actually starting to build rapport with our patients and establish routines. Our software finally made sense to everyone in the office — or so we thought.

While trying to set up a new practitioner in the system (new hires — yay!), one of our front desk employees clicked the wrong button and deleted the doctor’s note macros. And I don’t mean temporarily disabled them, I mean the tool we used to note every patient interaction was GONE.

Over the following days, I learned that we had never created a backup file for the content. We were screwed. We ended up losing thousands of dollars as employees put in extra hours to painstakingly restore our content.

We definitely learned a lesson and immediately created a backup file for all our content — not just our patient records. In the worst case scenario, make sure you have a plan for data recovery in case your backup fails too. Be Prepared for Disaster

Loss won’t always strike your business in the form of a well-intentioned secretary trying to set up a new hire. Sometimes, natural disasters or other forces out of your control can damage property.

I once came in early to open the office before everyone arrived, so I could catch up on paperwork. Upon opening the front door, I was confronted with the sound of rain.

It was raining in the clinic.

The office was in a strip of businesses underneath apartments in the city’s downtown. That’s a great location for personal care businesses, until one of the tenants leaves the tub tap running and floods the floor above you.

Luckily, our inventory wasn’t damaged, and none of the electronics were fried. We were, however, down a treatment room for months as the building repaired damages at an excruciating pace. Luckily, we had renter’s insurance, so we were able to replace treatment equipment and other necessities. Working with the building manager was not as easy.

Make sure you understand what your lease says about property damage, especially regarding causes and responsibility. Look into rental insurance; some companies even offer policies specifically for businesses that are renting. Don’t get stuck in limbo trying to collect reimbursement or arguing with your landlord because something out of your control damages your space.

Hire Wisely

Our office was young and professional. Or at least, it tried to be. Our doctor had years of experience, but he wanted to serve in a small college town, which meant that the majority of his employees were young and going to school.

After six months, we finally had enough regular clients that we could add an assistant to help the doctor out with some of his duties. What ensued was a week of the worst interviews I have seen to date.

We finally hired a young lady who completed her training with stellar results. She was calm and collected and made patients feel at ease.

Within two months, she had been written up a record number of times and had to be sent home from work for being high on two occasions. She no longer resembled the professional young lady we had interviewed.

In the first year, the clinic had atrocious turnover rates. Only three employees made it past the first year. Turnover is one of the inevitable downfalls of hiring in a college town, but there are ways to alleviate some of the stress of hiring.

Make sure to have a consistent process for candidates. This way, you get a clear comparison between your possible hires. We didn’t have a consistent interviewing panel or process, so ended up with a different snapshot of each candidate. Our decisions were made more based on gut feelings and impressions than on information gathered and pertinent skills.

Hiring like this meant that sometimes the maturity level of the office left something to be desired. It wasn’t uncommon to hire someone and then realize they were not going to work out, but only after putting time and effort (and money) into trying to train them.

We didn’t always hire with culture in mind, either. When your office is small or you’re about to undergo the stress of pulling a business through its first years, you need to make sure your people get along.

Workplace culture does wonders for the resilience of employees, and employees have everything to do with the culture (it’s obnoxiously circular). Make sure you take care to hire the right people to make your business successful.

Budget, Budget, and Budget

Three months into business, we were celebrating the first really big win for the clinic. We took the whole office to lunch at the sushi restaurant a couple blocks down — this was a major upgrade from the occasional sandwiches we’d have delivered while working after hours.

Lunch was a huge success and we were in great spirits. On the walk back to the office, we stopped in to a new bakery that opened across the street. Everyone picked a cookie to take back to the office for our meeting.

Then the card declined.

Luckily for us, we hit our limit trying to buy cookies instead of several courses of sushi. I bought the cookies out of pocket and we headed back to the office with the bank account now at the top of our meeting agenda.

Even from the beginning, we used business software to keep track of our accounts. We had a budget straight out of business advice columns. The only problem was, no one paid attention to it, and we weren’t communicating.

We were getting comfortable and we all sort of assumed it would just … work.

Since we were doing so well, the business owner decided to pay some of our bills early to get ahead. When I had budgeted for the lunch, I didn’t know he was going to do that. And when he approved the lunch, he assumed I knew he had paid bills early.

Obviously, communication is paramount.

But so is making sure you understand the ins and outs of all the finances and how they impact each other, especially when it comes to credit. We could have done serious damage to the delicate office finances by overcharging our credit card and getting stuck in a cycle of debt.

Luckily we got away without suffering a major disaster, but it was close.

Hold Clients Accountable

People act interestingly when they think they can get something for free. As a new business owner, it’s up to you to dictate the relationship and make sure you are clear on the value of your services.

Sometimes, though, even that doesn’t work.

One of our first new patients came in and went through the whole process from paperwork (including the financial agreement) to the clinical visit, and then refused to pay us. Her reasoning, as absurd as it may seem, is that because we were a new business, we should comp her visit in exchange for word of mouth advertising. As she put it, “It’s just good business.”

Word of mouth is good business, but giving away products or services for free just because you’re a new business isn’t.

While there are some exceptions to this rule, the core idea stays the same. Don’t let people take advantage of you just because your business is young.

Make sure you have a good system for tracking your income. Point-of-service payments are ideal, but that isn’t possible in all business types. Some professions require the use of invoices, which creates opportunity for clients to pay late — or worse, not at all.

Invoices may seem simple, but it’s all too easy for someone to decide to ignore your bill. Have a plan for following up with difficult clients.

In some cases, rewards work better than consequences. Once you have your invoice strategy down, consider implementing a prompt pay discount, or a reward for paying balances in a lump sum rather than with a payment plan.

Go Forth and Conquer

The first year of a new business will be exciting. It will also be exhausting, infuriating, and incredibly rewarding. Stick with it, and with any luck (and a lot of hard work) you’ll be working on expanding in no time.

Remember to stick to the basics of what you do best. Avoid the pitfalls of a new business with the tips above. Before you know it, the challenges of a new business will be old news and you’ll be able to focus on details.

For instance, once the clinic got a rhythm going, we were free to worry about less crucial problems.

Like why one of the fish in our fish tank was systematically eating all his compatriots.

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