We all know the cost of business is very high. This is not unique to Kenya, but an issue businesses grapple with around the world. If we think our labour cost is expensive, imagine the problems facing a small startup in the States or Switzerland. Stretching every cent you have is key to the long term success of your business.
Whether you get an investor or not, managing your resources is key to your business. Nothing makes investors happier than seeing businesses that can maximise what they have for optimal performance.
Many startup entrepreneurs have cash constraints. How you manage what you have little will dictate how you manage when you have more. If you can show great stewardship and signs of growth when there was little money, success will follow you. Here are some tips and examples I’ve come across.
Keeping overhead costs low. This is the most basic tip. An uncomfortable reality that every startup entrepreneur has to address. The cost of renting office space can be very high. When faced with this challenge, you need to maximise the use of every square foot you have. If you find you aren’t effectively using all the space you have, you are wasting resources, whether your company is large or small. Yes, it’s important to have an office space, but make sure it is practical for the situation you find yourself in.
What are you spending your money on? I learned from a young age not to spend unnecessarily. Do not print pages if you do not need to, if texting a reply costs less than calling back – text. Do you need to buy your furniture from that large store when you can get it cheaper from other places – same goes for the IT infrastructure, computers etc. I developed an extremely scrooge-like attitude for extra expenses (that irritating ‘miscellaneous’ tab on proposals) so that more money could be diverted to actually growing my business. Remember, a big office with 100 staff doing very little is NOT success – it’s a recipe for disaster. Always make the most of your resources.
I’m always inspired when I see young people bootstrapping their way up the success ladder. Just because you are short on funds does not make you investor-ready; investors very rarely jump onto sinking ships. When you learn to grow your business with what you have access to, you’ll realize that the majority of businesses that NEED investors are those aiming to bridge the gap from Middle to Large.
So how do you get to that level? The unfortunate truth is that many businesses will not survive to get there. Entrepreneurs will face challenges that they may not be able to deal with, or some people will find that they weren’t really entrepreneurs to begin with. Always remember, revenues are key to your success. Not the furniture you have or the car you drive. ‘Every time is selling time’ is a phrase I connect with. If you are not working on growing, you are flat lining. Do not be oblivious to the problems your business is facing – and do not think that throwing money at the problem will fix it.
If it is not growing your revenues, it’s an unnecessary expense – that lesson has saved me many a time, I hope it does for you too.