Posted: Thu 10th Nov 2011
John Sollars, managing director of Stinkyink.com, has started three businesses, so he knows more about the challenge of getting an enterprise off the ground than most. In his third article about start-up challenges, John considers three of the dilemmas every business owner will face. The most exciting times of owning a business are the early days. I have always said that I didn't want to sit in an office looking at reports, I wanted the hands-on action, the buzz, the excitement of being involved in every aspect of the business. At the start every order you take is important, and often hard earned against established vendors; the highs and lows that you go through can be very extreme. As an entrepreneur, the most attractive word in your vocabulary is growth. You want high growth because in your mind, that denotes a successful business. It makes perfect sense - if you were unsuccessful you definitely wouldn't grow... so the opposite must be true!
To hire or not
One pitfall (or opportunity) in continuous growth is that at some point you will run out of capacity to handle everything personally, so you have to decide whether this is an ongoing trend or just a spike. Do you take on people to help or do you 'get through' the blip and continue to manage by yourself?
Choosing where to focus
Often a fast-growing business has more profitable options to pursue than it has resources and a decision has to be made as to which options should be pursued. One way to determine which avenues offer the best opportunities for success is to select those with the highest return on investment (ROI).
Balancing the books
The other big issue facing a fast-growing business is managing cashflow. Â As you grow, you will almost automatically have a lag between spending money and generating funds to put back into the business, and the faster the growth, the bigger the gap. Ensuring that you have the cash to back your growth is a major challenge for many new businesses, but it is something that you ignore at your peril. Done right, starting your own business is as good as it gets, but be aware that the highs are very high and the lows ... Â need I say more? Keep an eye on your cashflow, manage your resources and enjoy what you do.