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Author: FlashPoint | Total views: 22 Comments: 0
Word Count: 1089 Date: Sat, 17 Jan 2009 6:03 AM

How to Get Beyond the Start Up Stage of Your Company

The honeymoon is over. You have your start up capital, you ramped up to 4 -- 6 employees pretty quickly and now the fun begins. Getting out of the gate with a new company isn't easy but it's a cake walk compared to creating a consistently profitable business that you can run and not have it run you.

As companies grow, the complexity level of their organization increases. That complexity level doesn't increase because of revenues or profits or equity growth. The complexity level increases because of the one factor in a company that you can't control: People!

In James Fischer's research (author of the 7 Stages of Growth and the book Navigating the Growth Curve) he discovered that as companies add more people to their equation, the dynamics change.

This model allows you to look at the Past, the Present and the Future in order to better understand what hidden agents are impacting your ability to grow. Once you identify those hidden agents, put a name to the underlying issue, you can then solve it and move on.

A Stage 1 company has 1 -- 10 employees and at this stage of growth, it's all about survival. A Stage 1 company, (there are 7 Stages that cover companies up to 500 employees) or Start Up has unique challenges and understanding them will help you manage this stage of growth more effectively.

A Stage 1 company is really designed to innovate very quickly; it is not designed to be locked into any one specific focus at the beginning. It is meant to quickly discover, explore, experiment and find the right product or service that the company intends to bring out into the world.

As a Stage 1 leader, don't worry about hitting the bulls-eye -- just hit the target! You have to figure out how to generate income because Cash Flow is your number one challenge! At this stage of growth, trial and error is the name of the game. Your RISK is HIGH because of so many unknowns.

The Top 5 Challenges for a Stage 1 Company, in this order, are:

#1. Continual cash flow challenges
Cash is cash and revenue is revenue. They are not the same thing. More than one company has folded its doors drowning in revenue and unable to pay their bills. Cash flow is simply understanding how much money you have every day or every week to pay bills which is critical in keeping your company afloat.

In fact, understanding your cash flow can help you make better decisions up to 6 months in advance. By really paying attention to how cash is flowing in and out of your business, you can leverage even a small amount of cash, and sometimes, in the early stages of any business, that's all there is!

#2. Chaotic periods destabilize the company
Do you love chaos? Are you a good learner? Have you put your ego aside? Are you ready to learn from your mistakes? Better yet, are you willing to allow that you may make the same mistake more than once?

If you answered NO to any of these questions, you may be better off working for someone else. The reality of running a business is YOU, the business owner, HAS to embrace chaos, especially in the early years. If you try and control that chaos, you will be miserable and you will make everyone that works for you miserable also.

#3. Too slow getting new products/services to market
You could interpret this challenge as saying you need to move faster to get your products or services to market and you would be right. However SPEED, moving faster isn't always better. I prefer that you use this challenge to help you identify the Problem you are Solving for your Clients and become VERY clear on how you let your customers know you can solve their problem.

If you aren't getting your product or service to market, it could have everything to do with a lack of attention to why anyone should care!

#4. Limited capital to grow
As a Stage 1 owner who needs capital to grow, you have to start with where you want the company to be at a specific time frame. Not just in terms of reaching specific indicator targets such as the number of clients/customers, revenues, profits -- but in the longer view that takes your company beyond your immediate vision.

This challenge hampers many business start ups because they think too narrow or they underestimate how much money it will take to gain the traction they need to build a business. Having started and run three businesses with no outside capital, I know it is feasible. However, if you have a time sensitive product or service that must get out and into the market immediately, you should take the time to research outside funding options.

#5. Challenge expanding sales
A typical challenge for a start up company is expanding sales. If everyone is so aware of that issue, why do so many small businesses go by the wayside? I tend to think it's because there is a lack of Vision, a lack of Commitment for Success and a lack of Future Planning.

Expanding sales starts with a clear vision of what problem you are solving for whom. Expanding sales starts with a belief that your product or service is so good, so much better than your competitors that you are just dying to create proof of concepts with anyone who will buy what you offer.

Expanding sales is, as a Stage 1 company, one of the biggest roles for a business owner. You are the best promoter of what you offer and it's that passion and enthusiasm that makes people buy from you in these early stages of developing your company.

If you have between 1 -- 10 employees, focus on these five challenges and you will gain the traction you need to move into your next stage of growth.
#1 Continual cash flow challenges
#2 Chaotic periods destabilize the company
#3 Too slow getting new products/services to market
#4 Limited capital to grow
#5 Challenge expanding sales

By having these challenges identified and called out, you don't have to worry about where to devote your time. You have an outline of how to take your stage 1 company and get it ready for stage 2!