Nurturing your small business

Nurturing your small business

I love small businesses. Talk to any small business owner about their product or service, and you’ll see how passionate they are. Many of them aren’t even in it to “make millions,” but simply to earn a comfortable living doing what they love. Most small business owners take good care of their employees, even when they aren’t exactly “striking it rich” themselves.

Running a business takes a lot of time

We had a client once (we’ll call them client “ABC”) who had a wonderful product. It was pretty much the only product of its kind, reasonably inexpensive to produce, and solved a specific problem. The folks who owned the business had struggled along for a few years before hiring us, and right away we could see the reasons for the struggle. The main problem was that the business owners didn’t have the time to spend required to make their business thrive. They weren't always responsive to customers or potential customers, and therefore, opportunities (and sales) would simply slip away. Questions from potential customers would go unanswered for several days or weeks – and those customers would usually end up looking elsewhere.

If your business is expected to become a main source of your livelihood, you need to be prepared to put in the time. Running your own business is not a 40-hour-per-week endeavor – there are 168 hours in a week, and most of the hours you’re not sleeping will be spent doing some activity related (either directly or indirectly) to your business. If you have a truly great business idea, but not the time to devote to it, make sure you have the capital to hire someone you trust to take care of it for you. But remember that, no matter how much you’re paying someone, they will never be as invested in your business as you are.

Overnight success is rare, and patience is necessary

This same client was incredibly impatient to “set the world on fire.” I blame TV shows like “Shark Tank,” where someone goes on the show, gets funding, and becomes an “overnight success.” The problem is that, even though some of these companies look like their sales skyrocket, that “overnight success” likely took several years. But I digress.

Six months into our working relationship with client ABC, their revenue had more than doubled, sales had grown 10-20% per month and were continuing on an upward trend. But the ABC folks were unsatisfied with what they thought were inadequate sales. After all, their expenses had increased when they hired us to do their marketing – but this was being offset and more than covered by the overall revenue increases - they were making more money each month and were, after only six months, firing on all cylinders and ready to take-off.

It’s important to grow at a manageable pace

But client ABC wanted to grow even faster. In our opinion, too rapidly. We'd already observed growth-related issues... leads from potential distributors and retailers were coming in on a weekly basis, but no one was responding to them. And when they did it was brief and lacked follow through long-term. More concerning, customers who were ordering products were starting to complain it was taking too long to receive their orders – it was taking a few days just to ship them. Moreover, client ABC wasn’t managing inventory properly, so they ended up paying fees to expedite raw materials and packaging in order to fulfill the orders they did have. The mere doubling of sales had strained their small operation - and yet they wanted even more sales – with no plan in place as to how to manage those sales when they did come in.

Know your limits

Running your own business is not for the faint of heart: it can be grueling – it’s definitely time consuming – and it can be scary at times. But don't let your ambition and desires out pace your capabilities or you'll simply make your situation worse. Manageable growth is good, explosive growth can be devastating - this is especially true of boot-strapped start-ups such as our ABC client example. Too frequently we've seen a business owner's joy turn instantly to horror when they realize what it will take to fulfill their first large distributor or retail order. It's great to get an order for 100,000 units - but if you can only make 100 per day - how are you gong to deliver that first order? Can you afford to buy the raw materials? To create the packaging? To ramp up production? To scale up your staff and business in weeks?

Entrepreneurship is wonderful and it can be very profitable. But if you’ve started or are considering starting a small business, read and learn everything you can about your industry and running a business. Be willing to listen to all the advice you can get – from those who’ve both succeeded and failed. Know your business inside and out, and be prepared for any question that comes your way. Most of all, make sure you enjoy what you’re doing – it’s going to consume a large portion of your life.

Jul 28, 2015

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