I decided to start my own event planning company back in 1999. As luck would have it, I ran across a quote in a trade magazine that became the mantra of my company: “In every entrepreneur's mind, there is always a race between fear and greed.” Those of you who have decided to ditch the 9-to-5 grind to start your own business will relate to this, I'm sure. So let's explore …
As entrepreneurs, we are constantly afraid of passing on an opportunity because, what if we never get another one? However, this fatal mistake will get you in trouble with your clients. You will compromise your services, your time and your compensation if you are too afraid to lose a client.
The ultimate human flaw! This is how you end up overcharging or, worse, undercharging and, ultimately, under-delivering.
So here you are, ready to start your own company — doing what you do best without having to answer to anyone, enjoying more free time and, finally, living a balanced life. Well, guess what? You will never work as hard as when you are running your own company. That's the key: You are running a company. If you do this the right way, you will be busier than you've ever been. So before you paint a glorious picture for yourself, remember that at least in the first two or three years, every aspect of your business is your responsibility, and that means considerable time, energy and resources.
The best way to move forward is to establish a system that will keep the business side running smoothly so you can concentrate on what you really love to do: producing events! If you want a smooth start on the road to success, here are roadblocks to avoid:
MISTAKE NO. 1: PICK JUST ANY NAME
While the tendency for some of us is to choose a name that has a personal and/or emotional connection, we have to keep in mind that the company name is what will identify us to our prospects. It is also imperative to do some research and make sure the name you choose is not too closely identifiable with your competitors.
MISTAKE NO. 2: DON'T DRAFT A BUSINESS PLAN
Yes, it will take time to put a business plan together, but it is essential. There are lots of resources out there to help you write the plan: software, templates and, if you can afford it, consultants, who can take your vision and translate it into a business plan format. My suggestion, however, is to try to write it yourself. Why? Drafting your business plan is a great opportunity to delve deep and crystallize your vision. It will help you clearly identify your services, your client base, your financial goals and the future of your company. There are two types of business plans — a start-up plan and marketing plan. If you are not looking for financial assistance to start your company, then you can concentrate on writing a marketing plan.
MISTAKE NO. 3: START WITHOUT STRUCTURE
Ideally, before you land your first client, you should have a business structure firmly in place. Are you going to operate as a sole proprietor, or do you want to establish a company? If you do, should you incorporate? What kind of incorporation is best for you? Find a good lawyer and establish your structure legally. In today's market, most legitimate organizations are looking for legitimate companies. If you do not have a structure in place, you will lose opportunities simply because your prospective client might have policies in place that will preclude them from hiring you. Your attorney will also be able to provide one of the key tools to running a successful business: a clear and concise contract template that is designed to protect both you and your client. Standard business contract templates do not have the essential clauses needed for our industry. You need to have a template that not only covers the basics (like indemnity, non-disclosure, confidentiality) but one that is tailored specifically for your services.
Next, find a good account-ant. A good accountant or CPA who knows the ins and outs of running a company is essential. Especially if you have decided to operate as a sole proprietor — at least to start — then you need guidance on exactly how to record and keep track of all of your expenses and, more importantly, your taxes! I can't tell you how many conversations I have had with absolutely incredulous independent planners who are shocked by the amount of taxes they have to pay at the end of each year. Remember, when you are a sole proprietor, close to 30 percent of that big check you get each month from your No. 1 client needs to be allotted towards your taxes. A good accountant will prepare you for this, and you can budget accordingly.
MISTAKE NO. 4: AVOID INSURANCE
In today's market, and especially if you are going after the big corporate clients, you need to get at least a Commercial General Liability policy. Most corporate clients require that their contractors/vendors provide this; further, a number of nonprofit organizations now require it as well.
I also highly recommend looking into an Errors & Omissions policy. Events are very subjective: I might think it was the best event I have ever attended, while someone else will think it was the worst. Usually, the loudest complainers turn out to be key members of your client's organization, and believe me, your client will come back to you with a laundry list of complaints. An E&O policy will protect you and your company should the situation deteriorate further.
Again, you need to find an insurance broker who is familiar with our industry. Start looking at industry Web sites (such as MPI's at www.mpiweb.org) for more guidance. If you are at a stage where you feel the need to hire employees, then you definitely have to look into workers' compensation insurance as well. Remember, it's the law!
HARD-EARNED WORDS OF WISDOM
Remember the “fear and greed” concept at the beginning of this article? Keep that in mind — always. There is nothing worse than going after a client or project simply because you are afraid that you might not get another piece of business. Keep reminding yourself of the reasons you wanted to “go independent” — to flex your creative muscles, provide the industry with a fresh approach and offer exceptional service. If you fall into the trap of taking on clients who don't really fit your business profile, or if you take on projects that are beyond your capabilities, you will exhaust yourself and, worse yet, will ultimately be disillusioned by your brave endeavor.
Yes, you are very brave to take on this challenge. It is not easy to let go of a steady income and embark on the road to entrepreneurship. If you follow the vision that you've outlined in your business plan and stick to it, you will reap the benefits and the joy of owning and operating your own company. There is nothing more satisfying than getting that first thank-you letter from a client who is thrilled with your work.
Personal fulfillment should be your No. 1 goal — other-wise, all you have done is create a “job” for yourself.
Naz Keynejad, CMP, is the founder and president of Western Direct, an event management and marketing firm that she closed in December. She is currently taking some time off and relaxing as an independent meetings and event producer, handling “only” up to 10 projects a month, she says. She can be reached at email@example.com.