As you can imagine, we did some research before we opened a business. But you know that no matter how well-prepared you are, there will likely be some unknown unknowns that will surprise you.
These are the 4 things that surprised us, and I’m sharing them in the hope that they will help someone else when they embark on an entrepreneurial journey. We’re based in Slovenia, Europe – some of the experiences are location-specific.
1. The amount of spam you receive
When you open a business in Slovenia, you have to list an email address that goes into the publicly available databases. Of course, we listed our info mail, the one we were actually using.
Big mistake. The amount of spam that started coming in the moment the email was published is incredible.
I am not sure if this email was ever used by some official institution, or for something relevant – I suspect not. So if we started over, I would seriously consider creating another email address to be listed, check it once per month, just to be sure, and keep our actual email address clean.
The same goes for the physical address, however, the spam quantity there is not so extreme. But we did get more than one envelope from a person claiming to be disabled, and asking for a donation. They all looked suspiciously similar. Considering that they had to pay a postage fee, I wonder how many people and companies actually pay the donation for this business model to be viable.
The physical spam stopped after a few months, though – I guess it’s too expensive to keep sending stuff that gets ignored, but the email spam is still ongoing, with new senders appearing every month. I suspect changing an address now wouldn’t help, and the spam filter catches a good deal. Still, it’s an unnecessary noise.
2. It’s easy to look like a serious business
We opened a company, a d.o.o., in 2021. It was before the Kickstarter, while we both still worked our regular jobs, and did SnowBoardGames in the afternoons or on weekends. So we were definitely not something I would call ‘a serious business’.
However, it’s easy to appear to be, as the world is only judging you by your web page and the signature in the email address. We realised this when we started signing contracts, for example, at a bank or for software services. They were always asking who would sign the contract, and a lot of them were surprised to hear that it’s the same person they’re talking to.
After the Kickstarter, we ordered one of the game components from China, and they sent over the invoice and told me to forward it to our accounting division. It made me smile. What division? We were still just 2 people, doing it 1 day a week!
Speaking of Chinese, our experience is that they are expecting large businesses on our side too. Possibly because they work for one, or because their business culture is different from ours, where small and family-owned businesses are very common.
When we were attending at a fair, and we were exchanging name cards with a potential manufacturer from China, mine stated our info email, and the person on the other side wanted a different card, the one with my actual email. But at the time, the info email was the only one we had. We discussed having multiple email addresses, but it seemed like an unnecessary expense.
Then we learned that Google has something called an email alias. Thank me later. 🙂
3. The stock cost is not an expense
I’m not an accountant, so bear with me.
We knew from the start that we wanted to order more games than we sold on Kickstarter. We knew the difference between cost (= the actual money you pay) and expense (= the amount that the accountant can take into account to offset the profit). What we didn’t know, however, coming from physics and engineering, was that the cost of the stock is not an expense.
It only becomes an expense when you sell that stock. Which means that if you receive a large stock in November, with plans to sell a good portion of it next year, but you had a lot of revenue this year, you’re paying profit taxes on the money you don’t have anymore.
Which, to me, being a physicist, is just dumb.
It’s clearly some sort of artificial accounting construct that works well in many cases, but I can tell you from experience that for a startup, with a spike in income in the first year, and very low income the following year, it does not work well. I advise you to get a good financial consultant if you plan to do something like this.
4. It’s super easy to open a business
We have a d.o.o., which I believe is similar to an LLC (US) or an Ltd (UK). You need an upfront investment of 7500€, and, if you have multiple co-founders, you go to a lawyer (notar) to open it. And that’s it.
I remember asking someone more experienced if there’s anything special that we need to be aware of when we’re choosing a lawyer, and he said that no, opening a company is basic. Everybody knows how to do it. Which was really reassuring.
Once you open it, you need a bank account, and you want to have a good accountant right from the start, and that’s it. You can start doing business and spending the money right away (just note that the money belongs to the company now, you can’t take it out for yourself – that would be a loan). And until you actually hire someone (probably yourself), you have no other expenses. Apart from the government-mandated bureaucracy, which comes in the second year, and is the reason you want to have a good accountant.
For the first half a year, we had a company without employees, so we were able to have contracts and use the bank account for the Kickstarter, and after the Kickstarter, I got a 20% employment, and Blaž followed a few months after, too.
If you’re from Slovenia, you might ask, why a d.o.o., not an s.p. or even popoldanski s.p. Keep in mind that I’m not a lawyer, and this is our subjective experience, but for us, this was the reasoning. First, a d.o.o. is pravna oseba, and we wanted to have that. Second, popoldanski s.p. goes to full s.p. if you quit your job, and we knew that I would likely do it. Third, without employees, your costs are lower than on the s.p. And with 2 co-founders and possible future employees, the d.o.o. structure just worked better for us and for future-proofing.
So, those are the 4 things that, looking back, surprised us, and I think would be helpful to know from the start. I hope you find some of it useful. If you have some experience that you wish to share, feel free to share it in the comments!
And if you’re thinking about starting your own business, good luck!