Mistakes & Lessons From Our First 5 Years In Business
Sheena Schleicher
DISCLAIMER: I began writing this piece in early February, before all the craziness of 2020 hit us. I think most everything still applies in a normal world, however I recognize that most businesses are dealing with very different and tough decisions right now. We are as well. I wish we were celebrating our 5th year in business under different circumstances, but that just goes to show you how things can change in a moment and without notice. Keep pushing forward, friends.
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On April 2, 2015, following a lot of planning and a brief “Sheena Schleicher Consulting” solo stint that started in 2014, Schleicher Marketing LLC was officially formed, meaning our marketing consultancy is 5! I planned to share this letter on our actual anniversary, but then our baby decided to enter this world on the same day. Ha!
We’ve learned a lot in these last 5 years of doing business, often with lessons learned the hard way. Entrepreneurship is hard. Then add being young (26) and naive about all the nitty gritty behind-the-scenes details that go into running a successful business. Then add on starting a family and choosing to be a working mom and entrepreneur. We’ve faced challenges and successes, learned lots of new things about business and ourselves, and confirmed a number of assumptions we’ve had along the way.
For anyone who read my “Advice to Young Entrepreneurs” written in 2015 (just a few months after Schleicher Marketing’s official launch), my hope is that this piece will act as a follow-up. I hope to share about the good that’s come over the last 5 years, but also the hard stuff. The mistakes we made and the sometimes-hard-lessons learned. So here we go…
FINANCES & TAXES
Start With Having a Dedicated Accountant
I know I’m not alone in thinking we could DIY our accounting in order to save money, but let me tell you, this cost us big time (financially and emotionally). We just didn’t know what we didn’t know. But an accountant, once brought on, quickly identified areas where we were bleeding money—namely due to our lack of S Corp tax election.
After a few years of business, I was exhausted and frustrated about the fact that we seemed to barely break even. We were working incredibly hard, but couldn’t figure out how to be profitable while making proper quarterly tax payment. I even started to question if this was all worth it: “At least with an employer, we’d get PTO, raises, and insurance benefits!”
Consider Becoming an S Corp
At the recommendation of our accountant, we filed for status as an S Corporation, which stands for Small Business Corporation. The details of what being an S Corp actually does is honestly still confusing to me (my husband and business partner, Steven, manages our finances and works alongside our accountant), but I do know that it allowed me to breathe and sleep easier. Well, it wasn’t the status that brought relief, but the update from our accountant that we had drastically overpaid our estimated quarterly taxes and would be receiving a tax refund of nearly $60,000!
If that doesn’t convince you to review and discuss your tax status election, I don’t know what will. (Note: While the $60k was a much-needed relief, most of it remained with the IRS for the following year’s payments; then the rest helped balance out a large and frustrating loss that I’ll share about later.)
Now there’s a lot, A LOT, that comes with this new tax status. From various fees and taxes to required salary payments, it gets confusing quickly, but having a trusted accountant help educate and keep us on schedule has allowed us to have peace with this aspect of our finances.
Start With Having a Dedicated Business Bank Account and Business Credit Card
This will be recommended by any accountant, and for good reason. Because we put off having a dedicated business card for the first year or two, we had to sort through thousands of transaction exports from personal bank accounts and credit cards to figure out our total business expenses. It was incredibly stressful and tiring, and could have easily been avoided by having a dedicated business credit card.
Protect Your Personal Assets
We were considered Sole Proprietors for the first few years of business, but we really should have been an LLC (Limited Liability Company) from the start. With a few real estate properties and a family, we’re fortunate our business never encountered any type of legal dispute in those first few years that could have put our personal assets at risk. Now as an LLC, all of our personal assets are protected from the business’ liabilities.
Have Reserves
Cash flow may be tight at times. To prevent this from stressing you out or, worse, having to cut team members, be sure to have 3-6 months of your operating costs set aside as a buffer. We learned this from our experience with rental properties, where we (and all landlords) should have a buffer of 3-6 months’ mortgage and other monthly fees in the event a rental is vacant for a few months. The same holds true in business, and I personally feel most at ease when we’re on the higher end of the spectrum.
Be Frugal Even During Times of Success
We’re fortunate to have really only encountered success in our adulthood. We graduated college in 2010, the same year we were married, and have only grown in experience and salary. I know this is largely due to the timing of entering the workforce right when digital marketing/SEO/eCommerce was taking off. But it’s also the result of years of internships, working for free, and doing everything I could to gain experience while still in school.
Coming from a low-income family, I knew that education and experience was the only way I’d succeed. Coming from poverty also taught me to be extremely frugal and cautious with spending. I’ve literally had a friend joke about me being like a Depression survivor, but I believe that mindset has contributed to our success in real estate and entrepreneurship.
We also know that a recession is coming, so we’re striving to work and save as much as possible during this high time… you never know when the opportunities to make money will dry up, even in our industry.
Talk With a Financial Advisor Regularly
Before talking with Kevin Witowich, a long-time friend and trusted financial advisor, we spent countless hours and days researching what investment strategy was right for us–a family of (soon-to-be) five with real estate properties and an LLC classified as an S-Corp. We ended up more confused than when we started.
Put simply, I was amazed by the wealth of information and thoughtful strategy our financial advisor provided to us. He took the time to understand our situation and goals, then proposed an investment structure that we understood and would benefit from. He also provided tax benefit ideas that could complement what our CPA recommended.
What it really comes down to is this: Financial Advisors know all the legal-but-less-known ways to reduce your tax liability through investments and insurances. For instance, maxed out on your Roth IRA? Consider a Universal Permanent Index Life Insurance plan. I would have NEVER discovered that strategy on my own.
Find a financial advisor you trust and talk with them regularly. The most common response you’ll hear from this person is “You could do that, but it’d be better to do this…”
Know Your Value
I still struggle with this one, but it’s changed as our team and expertise grows. It’s no longer about what my value is, but what we, as a whole team, bring to the table.
The best way I’ve found to understand the value we bring to businesses is to get input from trusted colleagues and even clients you have a good relationship with. The resounding theme in responses from clients is that we: “are lightweight and smart,” “see the forest and the trees,” “have the ability to move up and down effortlessly from strategy to execution,” “prioritize understanding our business...and ask critical questions,” “skill-set stretches far beyond SEO and encompasses all digital and content marketing efforts,” “have become our business strategy consultant and sounding-board.”
It’s clear we bring a lot of value to our brand partners, but what’s an appropriate fee? For this, we turned to various industry survey results, where we discovered that our fees were at the upper end of the spectrum, and I believe rightfully so considering the value we bring to our partners.
We’ve tested various fee/payment structures and have found that for us, there’s no one right way. Retainers paid upfront seem ideal, but we still encounter projects where a minimum number of hours per month (paid at the end of the service month) is the better option.
At one point we offered a discounted rate for hours beyond that minimum, but have since removed that per the recommendation of John Doherty, Founder of GetCredo.com. He made the wise, yet obvious observation of “Why are you charging less for additional hours? This should be billed at the same amount. They're taking more time, and if you're discounting then you're cheapening your work.” Helpful free insight from someone very relevant to the topic of how much agencies and consultants should charge.
All of our current clients are on a retainer and it seems to be working better than ever. However, I know that our willingness to meet client needs–whether related to fee structure, payment timelines, or services–is often what allows them to signup and what keeps them with us year after year, so I anticipate pivoting or at least continuing that flexibility while we’re still small and able.
CONTRACTS
I wish I could share v.1 of our client contracts, but I’d have to first get over my embarrassment. Once again, we’re fortunate things with clients never went sideways, especially since we were still a Sole Proprietorship back then (not yet an LLC).
I won’t go into what each section details, but here’s a list of the sections included in our current agreements:
Statement of Work
Client Responsibility
Communication
Terms
Payment and Fees
Payment Terms
Automatic Renewal and Price Assurance
Early Termination
SEO, PPC Considerations
Company-provided Assets
Limitation of Liability
Indemnification
Governing Law
Attorney Fees
Independent Contractor
Confidential Information
The best advice I can give regarding client contracts and agreements is to get a lawyer involved. Put an agreement together that includes every possible service you offer, the specific descriptions of each service (SOW, Statement of Work), along with all the sections/clauses you think you need. Then have a contract lawyer review. I guarantee they’ll find holes and areas for better protecting both parties.
CLIENTS
We’ve never marketed our business, yet we’ve grown each year with 100% referral-based business. We do plan to take better care of our business and scale our services in the next few years, but for now our goal is to sustain our current relatively-small-but-positive growth trend. That’s just the stage of life we’re in with having young children.
This translates to being very selective with the clients we take on. Who they were referred to us by and what our first impression of the person contacting us plays a critical role. We messed this up with one client and it almost cost us big time. And by we I mean I messed up.
I should have run the opposite direction when I noticed how rude the business owner was being to a restaurant server during one of our first meetings. I’d like to say I was giving him the benefit of the doubt and wanted to believe he was just having a bad day, but the reality is I was blinded by dollar signs. I was the only woman in a group with five high profile businessmen involved in the project, and I was eager to get the contract. This would become our largest and highest valued project yet and it would allow us to grow our team!
Fast forward 6 months and we all wished we never signed the client on. The owner had a very clear disrespect for women, made obvious by his inability to look at or speak to me (the founder of the agency he hired) or any other woman in the meeting, and he was incredibly difficult to please.
Within 8 months of entering an agreement, the project came to an unofficial halt–unofficial in that the client went silent for the next several months and completely ignored a large invoice for services rendered. We thought we’d have to chalk this up to a very costly mistake since our contract was so weak when this client signed on, but there was one small section even in our older, weaker contract that would help us: clients could cancel at any time and for any reason, but it required a 30-day written notice.
Also, because our old contract did not specify a Governing Law (which state’s law would be used to decide a dispute), the resolution of our dispute was made possible largely because the laws where the client was located happened to favor service providers. Thank you, Texas!
When it comes to prospects and clients, these truths remain:
Listen to your gut
Trust that good work attracts good clients
Some clients may never implement recommendations
In person meet ups are still invaluable, both for ensuring the partnership is the right fit before starting and for strengthening current client relationships; at a minimum, video calls are a must
Know what business types you want to serve vs don’t; Stick to it
Ask clients for feedback, specifically how you’re bringing value to them/their business and where you can improve
TEAM
We’re a small and mighty team. We work remotely, we are in daily communication, and we travel to visit clients together. While I have a vision for growing the size of our team, I see us sticking to the remote, work from home (or anywhere) model. Because with the right people, remote teams work–maybe even better than in-person office teams.
We also work with a number of subcontractors that we lean on for design, content, analytics, and development needs. Whether an employee or subcontractor, listen to your gut before signing them on. And if it’s a good fit, treat them well, pay them well, and invest in those relationships.
TOOLS
Software was one of our largest business expenses for us in 2019. While I’d love to reduce this expense, the tools we’ve invested in are all critical to our business operations–including accounting, team collaboration, project management, and tactical industry tools.
These are the tools we rely on:
QuickBooks for accounting and invoicing
GoTo Meeting for reliable conference calls and screen-sharing (Update: we’ve since cut this and moved to Google Meet as part of our 2020 pandemic-induced budget cuts)
Slack for quick, reliable team communication (free)
Basecamp for internal management of projects
SEMRush and Moz for SEO monitoring and research
ScreamingFrog for website audits
Photoshop/Illustrator/InDesign for design/UX/content strategy work
We’ve tried a number of free or less expensive alternatives, but (like everything) you get what you pay for. For tools and software that are critical to our business operations, we happily invest in the more widely-respected and reliable paid options.
And Now The More Important Lessons
What I shared above are a lot of the tactical, more operational lessons learned, but I also want to share about the relational affirmations we’ve experienced over these 5 years...
Family > Work
The big lesson from 2020, am I right? In 2015 I experienced bilateral vertebral artery dissections that caused a mini stroke and month-long hospital stay (more on that later). It sucked. But the experience came with an incredible gift of clarity that pushed me to go after my dreams of launching a business and becoming a mom.
2020 has been another one of those experiences, the silver lining of a scary year. I don’t need to elaborate much here, as we’ve all experienced the pangs of the quarantine and stay-at-home orders. Time spent together has become the new measure of wealth, and I hope it stays that way.
Relationships Still Matter Most
It’s a really interesting exercise to trace back your career growth and success to see what’s made the greatest impact. For us, every single project and brand we’ve been involved with has been referred to us by a current or former client or colleague. And actually, all of them trace back to two key individuals I hit it off with while working agency-side. Yes, they were agency clients at the time, but relationships are what make the world go ‘round!
I want to be clear that networking is not the same as relationship building. I’ve met hundreds of people at different conferences, but there are fewer than 10 who I regularly interact with. Do not confuse thousands of LinkedIn or Twitter followers for people who care about you or your business.
I realize this is going to be particularly challenging for people just entering the workforce since in-person meetings aren’t happening right now. Let me just share that I became known for my contributions in the SEO industry because of my participation in the Moz blog community. It wasn’t in-person meetings, but rather my consistency of thoughtful questions and insights that captured the attention of influential SEOs. And once you have their attention, do something to make yourself memorable and worth investing in (time, not money). This leads into my next point...
Mentors and Role Models Come in All Forms
I used to believe that you need a dedicated mentor to be successful in business, but I’m proof that it’s simply not true or practical. While I wish I had time to regularly meet with someone more experienced, successful, and wise than me to help guide our business, the season of life I’m in doesn’t allow it. That absolutely means we’ve made mistakes that could have been avoided, but you live and learn. On the flip side, it’s pushed me to become fairly fearless in reaching out to people for their expertise and wisdom on certain topics.
Fortunately I’ve met a handful of kind and smart people at SEO conferences (remember those?!) who are always generous with their time. Marie Haynes, Cyrus Shepard, John Doherty, Ronell Smith, Ryan Charles, Jeff Saur, and several others.
These people probably don’t think they’ve helped us much, but they have. Whether it was giving feedback on our business, sharing what’s working for them, connecting us with other agency owners, referring business our way, helping us navigate tricky SEO scenarios, or simply cheering us on, these people have provided an invaluable sense of community that combats the loneliness of entrepreneurship. And that might just be more important than a traditional mentor.
Helping Others is Still What It’s All About
Think about what really matters in life. It isn’t how big of a home you can buy or how much money you can bank. It’s not even about how many stages you can get on or how many followers you have. What really matters are the relationships and connections you make, and the impact you have on others. We all experience hardship and painful moments in life, and I believe it’s our responsibility to give those trials purpose by connecting with people going through similar challenges and giving them hope. You’ve made it through, it’s made you stronger, and you’ve learned that you’re not alone.
This applies easily in our personal lives, but what about in business? As consultants for various brands, we get to work alongside a lot of different teams. The only thing better than kicking butt on a project or campaign is hearing the client’s stoke and appreciation for us helping them look good to their principals. Beyond that, many of our clients have become personal friends of ours, which leads to more opportunities to serve.
Constantly Prioritize and Evaluate What’s Important to You
I love what we’ve built over the last five years and I’m proud of the work we’ve done for our clients. Their success really is our success. I’m also incredibly grateful for a career and business that’s allowed my husband and I to work independently, from home (or wherever), more efficiently than ever, and, especially, for allowing us to be a part of our three kiddos’ everyday life. We’ve both witnessed each baby’s first steps and words, have taken the family to some incredible places for client on-site meetings, we rarely miss a family meal together, and feel blessed to truly parent equally.
For years I’ve had a vision of growing our small consultancy into a larger agency, but I’d say that’s changed as a result of 2020. I know we can do it and for a long time I’ve said “we just need to get through this baby phase so we can refocus on our business”–but I’m no longer of that mindset. I don’t want to just get through it. I want to enjoy and savor every moment with my family, from the early years and well into their future. And I know, at least for me, that the complexity of building a larger agency would limit the freedom and flexibility that allows us to be with our family so much.
So our vision of growing our business into a large agency is no mas, at least for now. I like where we’re at as a business and love the brand-side people we get to work with. It fits the season of life we’re in exactly and, while there’s absolutely room for our business to mature, grow, and take on select new clients, the desire to be in the spotlight or reach seven-figures in revenue has lost its luster. Like I shared earlier, time spent together has become the new measure of wealth.
And you know what? The more I talk with people I consider successful in life and business, the more I’m told that we’re fortunate to have figured this out while we’re still in the early years of growing our business and family. Too many of them look back on the years when their children were little and regret not spending more time with their family than their work.
Entrepreneurship and Being a Mom is Possible–challenging, but doable and incredibly rewarding.
There aren’t many things more difficult than being a new mom while starting a business. But if you put the work in ahead of time, good things happen even when you take time off.
It’s not for everyone, but if you’re called to become a parent, understand that your calling is more important than your potential and embrace it wholeheartedly. And I urge you to not let the fear of your career slipping cause you to push off starting a family.
WRAPPIN’ IT UP
I have to admit that wrapping this letter up has been a struggle for me. So much has happened over the last 5 years, and there’s lots still in motion and being learned every single day. I have a thousand more ‘tips’ and lessons I could share–Anticipate what’s ahead! Specialize! Have a backup plan! Take care of YOU! But I’ll leave you with what I think has been the foundation of our success…
Make generosity a part of your growth strategy. Be generous with your time, ideas, knowledge, skills, product–even if it’s what you make your living off of. To the wrong person, well, you will have avoided an unhealthy relationship and you were a light of positivity and generosity in what’s likely a dark life. To the right people, they’ll recognize it as generosity and be willing to invest in longer-term relationships.
Thank you for taking the time to read this letter and please let me know your reaction!