Exciting Tips If You Want to Start a Business or Grow a Business
When we are young we act impulsively and are so excited to be in the game that
we sometimes make bad decisions. We spend money impulsively and don't save
enough for a rainy day. If we want to start a business or grow a business then
we need to keep our money. What would experienced business people tell us about
succeeding?
Who do you go to when you have a tough decision to make? Do you talk with your
grandfather or dad? Do you have a mentor that can help you noodle out the right
choice?
Lessons from Businesses that Have Survived Multiple Generations
Inc magazine recently had some great profiles of businesses that have survived
multiple generations. I think most of the companies were started in the mid
1800's. They were still being run by the same family that originally created
the business.
It was an interesting read as they had to survive the great depression. The
companies weren't always in the same industry they started in. When industries
change sometimes you have to be flexible and find new opportunities. The
follwoing is a quote from the article that really struck me.
The most important
thing I have learned from the fourth generation is that their almost fanatical
committment to financial conservatism is very valuable when the business and
industry are faced with challenges. "A big cushion of cash is a tremendous
advantage."
I have been contemplating this quote for a week now. It is so very true for
business and also for families and home budgets. Have you ever gone through a
challenging time in your life? Maybe you lost a job? Your spouse lost a job or
you wanted to change careers to a lower paying career. Or you wanted to go back
to school?
How did you handle the lost of income? Did you have a store house of money in
the bank to ride the wave until a new opportunity presented itself? Were you in
over your head just barely surviving before the problem cropped up?
Troubles With a Dot Com Start Up Company
A few years back my wife and I were working for the same company. It was a
start up company with an opportunity to make it big. The company needed sales.
Revenue was dropping off and our business to business model was drying up like
a small pond during a hot dry summer. Our sales people were talking the talk,
but they weren't walking the walk and a recession was beginning.
Our potential customers were holding off on spending the million or so dollars
needed for our software. Things were at the breaking point and our CEO knew
that he needed to reduce costs. But, it was a small company and the people
involved were like family to him. So, he was hesitant to just put them out on
the street.
A Bold Decision and 35% Salary Reduction
The CEO made a bold decision. Instead of reducing costs by laying people off he
decided to reduce everyone's salary. We were all relieved to hear that we
weren't going to be out of a job until he told us how much money we were going
to have to give up to make it happen. We all were going to give up 35% of our
salary.
Of course, we all said, "we are programmers, it will be easy to find a new
job." But, the market for programmers was not good. Motorola and Lucent had
been laying off workers in the Chicago area and there was a glut of unemployed
desk jockies sending out resumes.
This was rough for a number of workers. Mary and I had moved into a new home a
couple of years previous. When we were looking at homes the mortgage company
kept telling us they were willing to give us more money than the size home we
were looking at. They wanted us to upgrade another $100,000. But, we knew our
spending habits. We held our ground. We didn't want to be at the mercy of a
large mortgage.
Our daughter was at a marrying age and we wanted to give her a nice wedding. We
were about ready to start doing some serious traveling and that required money.
Learned Some Serious Lessons
The 35% cut in pay only lasted 6 months until the CEO was able to get some
venture capital to keep us afloat. At that time he took us back to our full
salary. But, we learned some serious lessons. We survived, but we learned that
the house wasn't that necessary. We were fully prepared to sell the house and
move back into a more affordable home. We learned the importance of a nest egg
to handle being off work for 6 months or more. We learned to live within our
means and if we can't pay cash for something right now, then we can't afford
it.
The 6th generation family members learned something from their forefathers that
started a business and kept it going for over 150 years. One of the things they
learned was:
We only own two
things. We own our inventory and we own our reputation.
Reputation. Merriam Webster dictionary defines it as, "Overall quality or
character as seen or judged by people in general. A place in public esteem or
regard : good name."
When you cheat customers they remember you. When you take care of customers and
do what is right they also remember you. And they will come back and take care
of you. When you are faced with a couple of choices and one of those choices is
dicey at best, then choose the high road. You might lose a couple of bucks, but
you will retain what is much better than money. Your reputation and good name.
Control Costs, Control Costs, Control Costs
As business persons we need to remember that we can't control everything. So we
have to control the things we can. That includes controlling costs. Brian Tracy
in the audio cassette program, "Fast Track to Business Success", say's,
"Control costs, control costs, control costs. Do everything you can everyday to
control costs."
As you start earning some money in your online business your first inclination
might be to buy that fancy car you've always wanted. I would say, "hold off on
that purchase - you aren't ready yet." So often we want to show the signs of
success before we have earned them. Can you pay cash for the car right now? If
there is an immediate down turn in the economy or specifically your industry
can you ride it out for 6 months or 2 years? Is there a capital expenditure
that may be expiring soon that will require an outlay of cash?
Is It a Business or a Hobby?
I have a brother that for years has run a paper route. He has earned a nice
additional income to help his family have some of the nicer things in life. The
only problem is he only took the cash earned and used it for living expenses.
He never treated the route as a business. He never budgeted and saved for new
tires and brakes. He never figured the car would ever break down. The car broke
down often. It needed new fuel filters, oil changes and mufflers. But, it was
always a struggle for him because these things were never "expected" or planned
expenditures.
I challenge you today to plan for the future. Plan for the unplannable future.
If you want to do business from a position of strength then save your money. In
my twenties I worked for the US Postal Service. At the post office I was
assigned to there was a full time janitor named George. Now George never seemed
to have much ambition. But, the truth was that George was a prolific saver.
Many times the Postmaster would have to ask George to cash his checks. He just
kept them in a locker at the office. If he needed some money he would grab a
check and cash it. George was very frugal and would eat at friend's homes. He
never married and even though he could afford any car he wanted he drove a
station wagon that was 20 years old. We all estimated his total assets at over
one million dollars.
Saving Money Makes You Confident
You don't have to be that frugal, but you may want to live on 25% less income
than you do today. Try it. You will develop great confidence when you pay cash
for things. You will be confident when you go out to eat and don't worry about
going over your charge card limit on a $25 meal. You can make some really
exciting decisions when you have 6 months of workable income in the bank. I
just had a friend, William, where I work today that made the jump to being his
own boss. He has some exciting software ideas and because he has been saving
and planning last week he made his dream come true.
Make Your Dreams Come True
Take it from the lessons learned through experience and see if you can make
your dreams come true!
|