An interview with Melinda Emerson: Preparing to start a business
Listen to Melinda Emerson share her experience with starting her first business. She tells us what she wishes she would have known before getting started.
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Hi. I'm Ashley Meyers for the Wells Fargo Business Insight Series. Today we're talking with Melinda Emerson, the Small Biz Lady and the author of Become Your Own Boss in 12 Months. She's going to share her story, along with the things she wishes she would have known before starting her business. Thanks for joining me, Melinda.
Thank you for having me Ashley, and for giving me the chance to share my own experience.
Can you tell us about your first business venture, and how it came about?
Well, I started my first company in 1999. It was a video production company. I had been a broadcast journalist for five, six years, and I knew that I was meant to do more than just be a writer/producer in a television station.
I had zero business know how, but I was very fortunate that I was young when I started my business. I knew I didn’t know much. So, I turned myself into the ultimate student of small business. I’ve taken a course on some aspects of business or leadership practically every single year I’ve been in business.
Considering you didn’t have the experience, how did you prepare for starting a business?
Well, one of the things I did was I worked for another production company for one year before I started my company to learn the business. And this helped me learn a lot of the basics. I also took classes. I started with the Self Employment Assistance Program that was offered in my state. Later, I took classes on management, business planning, and leadership offered by the Small Business Administration, and a local small business development center, and other business support organizations in my area. I also took out a home equity loan and paid off all my bills, even my car.
It sounds like you made a lot of smart decisions as you worked to turn your dream into reality. But is there anything you wish you would have known prior to even getting started?
The first thing I would have liked to know is that running a business is not like a nine-to-five job. But it’s very important not to let your new business overcome your entire personal life. You must figure out how you want to live your life, and then build a business that aligns with your personal and professional goals.
Also, you must understand how long your business will be relevant in the marketplace. Every business has a cycle, and you must be clear on how long it’s going to take for your business model to work, and how long that business model will work.
Those are great points. What else would you have benefitted from knowing?
I think it would have been good to know exactly how much personal savings I needed before I went into business. You know, I now tell small business owners that they should save 20% to 40% of every paycheck, at least 12 months prior to starting. And then when you’re up and running, you must be on top of your numbers. You’ve got to know all of your hard and soft costs, including how much profit is in every sale. And most importantly, you need to use monthly financial statements to make business decisions. Successful businesses are run based on up-to-date financial information.
I can see why understanding your finances is critical when starting your business. What about developing your customer base? Is there anything you wish you would have known there?
Absolutely. Your network is your net worth when you start out in business. In my experience, 90% of all small businesses get business from referrals. So you must spend the time, at least 12 months prior to starting, building your network.
It’s also very important to have a niche target customer. Most business owners chase anybody that they think has money. But you need to build your personal network based upon the target customer you’re looking for. You need to make sure that you are a specialist in solving a specific customer’s problem.
And remember, the most valuable thing in your business is your customer base. You must always have ways to communicate with them: through emails, newsletters, text messages. Focus your energy on keeping customers, and less so on chasing new ones.
Those points all sound valuable for anyone considering starting their own business. Thank you for sharing your experience with us, Melinda.
It’s my pleasure.
And thank you for joining us for this segment of the Business Insights Series. To learn more about how Wells Fargo Business Banking can help you, visit wellsfargo.com/biz. In the meantime, we wish you continued success.