You need some things to create and develop a large business. Things like skill, hard work, willingness to learn, emotional support form those close to you, perseverance, eventually money from outsiders, the ability to hire and manage people.
There is one key item, though.
Consider these businesses:
- Lotus Motorcars
The common factor is all of them started in a garage, but that does not mean that you should buy a garage.
I suppose you could make a case that Lotus and Harley-Davidson had to start there, but it does not diminish the point. All of them started in garage because that kept costs down They did not start in fancy quarters.
In the beginning, successful business are ruthless about spending only on those things that matter. A fancy office will not provide the same value as a machine or an instrument or a skilled associate. Does advertising matter more than air-conditioning? Would a good website matter more than a prestigious address?
What becomes a large successful business begins lean. The founders value innovation and customer service more than the trappings of success. They take very little, if anything, from the business to support their lifestyle. Jets and Porsches and yachts come much later. Successful business people learn very early on what expenditures contribute most to cash flow and then they act on that.
Every startup should address the question of how to get the greatest return for every dollar spent. The ancillary question is what should I buy that I am presently doing myself? It is a hard concept in business. The idea of comparative advantage.
The idea is to find not only what you are good at, but also what you are bad at, and what you are best at. It is easy to see that you must hire people to do the required things that you are bad at, but hiring to replace what you are good at is more challenging. It is especially true when you are better at the task than the new employee.
Carry on anyway. Your aim is to do what you are best at doing and let others do what you are good at. You will not be a better salesperson by as wide a margin as you are a creative engineer. Spend your time only where you get your best-best return and as soon as you can support the cash flow, hire people, even less-skilled than you, for everything else.
In a new business the margin between success and failure is quite tiny. You cannot succeed if the appearance means more than the substance, or if you use your time on less valuable tasks.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
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