Cashflowing a Startup

January 27, 2012

in Business

Cash flow your business

What does it take to turn a small company into a large, successful company? As a startup (since September) I’m finding that I have to go back to the drawing board and go back to basics in order to answer this question.

Fortunately I’ve been keeping up on this topic for years (of small business entrepreneurship) and have a great library of books that I refer to. There are a lot of elements involved, perhaps too much for any sane person (hence why successful business owners also have no lives, they are working 15+ hours a day) but I’m of the strong belief that I can build this company so that it does become efficient and where everyone is happy to be there because the job/company is so awesome.

We’re certainly not there yet, however, that reality is probably many months away.

The one major challenge we have at the moment is our sales team, or rather our lack of a dedicated sales team. I’m a great salesperson, and I always sell the value of what I am offering to those who can benefit most from it (if you don’t need it, I won’t sell it to you)so that makes it easy for me to do so. But our sales team is basically me by default and as I’m trying to work on building the company, I’m not able to spend the appropriate amount of time working in the company. And vice versa. You get the idea.

I made the fundamental mistake when I started that I thought I could find a sales team, i.e. people to fill in all specific roles in the business, but the reality is as a small business/startup, everyone needs to be contributing to everything. And the onus is especially on myself as owner to work on business development. Several of my books state that the business owner should spend 60% to 80% of their time on sales, or get a dedicated sales team.

It makes sense as the business is coin-operated. In fact, from my estimation, we need to have a minimum of two clients at any one time, one client pays for our hard costs (office and recurring/one time costs) and the second pays our staff. Anymore and it goes to additional expenses. I’d love to be in the situation similar to where Microsoft and Google are, where they have billions of dollars of cash in the bank…just sitting there. That’s where I’m aiming my company to be.

The question is how do I get there? A bit help was the new insight I had over the last week (see “New Insight for our new Marketing Agency“) which makes be believe that we can be that million dollar company in 5 years, but I’m aiming for within two.

And the addition of more revenue, i.e. more clients, means we’d have to grow our team and manage our activities efficiently, something that I’m paying a lot of attention to what other agencies are doing for this.

But at the end of the day, I’m going to have to pause my company development activities to work on sales until I can hit a certain threshold and get back to working on the company again. To even get to that part, I have to still do some things on our marketing collateral to step forward with the right foot forward.

Now, the challenge is I still have to oversee our actual work that we’re doing now, there are a lot of client activities that I have to take care of as no one else can (the building the internal processes is part of the company development that is on hold right now). So I better start hitting the gym or think smarter about some things pretty fast here.

The good thing is we’re pretty agile and I think our situation will be a lot better by the end of February, in a month’s time.

Stay tuned.

Ronald Lee

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