Friday October 9, 2015
Few people would claim that starting and growing a new business is easy. In fact, the growing pains for small businesses typically test entrepreneurs’ willpower and ingenuity to their limits. 5 inspiring entrepreneurs shared how they overcame the growing pains that threatened to topple their businesses, and the lessons they learned along the way.
“My biggest lesson would be: profit is an opinion, cash is a fact,” said Victor Clarke, founder of Clarke, Inc., a marketing firm that has been in business since 1955.
"Profit is an opinion, cash is a fact" [Tweet this]
Countless small businesses struggle with sustainable cash flow as they grow—even profitable businesses can find themselves scrambling at the of the month.
“Too many times I got caught up in a cash flow issue because of employee problems, late receivables and ignoring the checking account warning signs,” Victor said.
Victor’s advice is to “watch your checking account like a hawk,” and get a good understanding of the cash inflows and outflows of your business.
“Don't let accounts receivable become delinquent and don't ever do a job at a loss,” he suggests. “Get a good handle on your exact operating costs. Don't guess. Measure, refine and sharpen your expense review every month.”
In time, you’ll understand the finances and cash needs of your business well enough to spot trouble brewing, while you still have time to adjust.
Entrepreneurs often feel that they need to do it all, especially when they’re starting out. Cindy Jones, CEO of Colorado Aromatics, certainly felt that way.
“When first starting a business I thought it was my job to do everything. And in reality, it was,” she said. “But for a business owner, doing everything should last for only a short time.”
"When first starting a #smallbiz I thought it was my job to do everything" [Tweet this]
The problem with doing it all is, you end up spending your time and energy on tasks that don’t utilize your strengths. As an entrepreneur, you need to focus on growth, not daily operations.
“Once I began realizing what sort of things I could delegate to others, it freed my time to really work on growing the business,” said Cindy. “Early on I contracted out website support and bookkeeping. What a relief that was. Then I started hiring people to help make and label our skin care products and finally to do some administrative and marketing work.”
Like many entrepreneurs, Cindy initially resisted giving over control to her employees. “Delegating was very hard for me because one reason I went into business was to have some control over what I do. But I learned that hiring others also brought in a new skill set to solve problems.”
Don’t be afraid of hiring employees. If you make the right hires, you end up with a dynamic team that can problem-solve, expand the reach of your business, and free up your time to do what you really love.
When you’re first getting started, it’s hard to know exactly what software you’ll need to run your business. It’s even more difficult to predict what software you’ll need once your business starts to grow.
Ron Sinai, founder and CEO of Nova Legal Funding, emphasizes the importance of CRM (Customer Relationship Management) software in particular.
“My biggest mistake was failing to implement a CRM that could help us efficiently manage leads and relationships from day one of my business,” Ron said. “Once our volume picked up, we were forced to get it done, but it was a complete headache to do so.”
Many small businesses fall into that same trap. When your business is small, it’s easy to manage your prospects and customers with just your smartphone or spreadsheets. The problem is, you can inadvertently stunt the growth of your business by being unprepared.
It’s much easier to grow into software that’s right for the kind of business you want to become, rather than outgrowing a system that can’t scale up.
“Lesson learned:” said Ron. “Adopting a CRM from day one (of any business) is key—leaving it for later is asking for trouble.”
“Pay close attention to your work-life balance,” suggests Lior Krolewicz, founder and CEO of Yael Consulting.
This is a reminder that many entrepreneurs need, especially when they’re first starting out. It’s easy to get caught up in a cycle of overextending yourself—not ultimately sustainable for growing a business.
“It's common to think that you ‘need to give your business your all,’” said Lior, “but not balancing it out and just pushing as hard as you can is like trying to jam an oversized balloon through a small opening.”
Entrepreneurs need to remember that “working harder” and “staying busy” are not the answers to all problems in a business. As Lior suggests, sometimes the key is “taking a step back, letting out some air and going at it at another angle - this is a perspective you cannot get if you don't balance yourself.”
"Working harder and staying busy are not the answers to all problems in a business" [Tweet this]
Even businesses that are well-established can experience growing pains, as Alan C. Fox, founder of ACF Property Management discovered after over 40 years running his business.
“Three days after a mortgage payment was due my Controller and Loan Administer walked into my office and confessed that through their fault of taking shortcuts of our processing procedures a mortgage payment failed to be made and that I was receiving a daily $4,000 penalty on top of the $134,000 bill,” Alan said.
“History had proven that these two were more than competent, reliable and loyal to their jobs. What I had not realized was that over the many years of business I as a manager failed to explain the complications from not following the procedures I had established years before,” he said. “A failure that left me with an expensive problem not to mention a possibility of harming my credit and reputation with my clients.”
Alan realized from that crisis the importance of not just having systems and procedures in place, but of explaining the importance of those systems and processes clearly to employees. This is true for any size company, no matter how long you’ve been in business.
“Even after 40+ years of trust and day-to-day monotony, communication is still critical and essential between employees and managers,” Alan concluded.
Having growing pains is a normal, unavoidable part of running a business. But if you respond to those growing pains the way these 5 entrepreneurs did, you can overcome them and emerge with a stronger, more resilient business. And hopefully you can avoid some mistakes by learning from people who have gone before you!
What growing pains did you experience while growing your business? Let me know in the comments!