Entrepreneurs! Do You Want To Make $1,000,000 pr/yr or $20,000,000??#entrepreneurship#mybusiness#owningyourownbusiness
I am so proud to be a part of this number!(Don't you hear the keyboard?)
Oh No I am on the wrong blog, or maybe not.
When people start their own businesses, it is usually in some organic fashion. Now whether that is making stuff in your garage, identifying the need for a unique service, to outsourcing through sites like alibaba, that's how it starts. Obviously with an idea at the root, but I am talking about whether it is worth attaining critical mass here!
The real question becomes, how successful do you really need to be? And I worded that in a very personal way. I included the word "need" in the question. Now that is for many reasons, but the chief reason is obvious to some, and oblivious to others. It is very rare, that a business can grow past a certain Annual Gross Sales number, without needing outside help.
Most company's that are run by a sole proprietor or startup based, never even reach $ 1 million in sales, never mind make a million dollars, and unfortunately many never succeed at all, and that's a fact.
But what if you had the "big idea" and you could risk it all for the $20 million salary? Would you be ready to make all the sacrifices necessary to do that? Sacrifices? Yes, don't forget, there is always a price to be paid to grow a business and get to the next level. As the founder/owner of a company, are you willing to do that?
You are going to have to give something up, to get to your goal! Are you willing to dilute your stock? Are you willing to take on venture capital partners in order to attain the liquidity needed to exponentially grow your business? Often times, they will want stock, warrants, options to buy more of your stock at the initial valuation, which will further dilute your equity. These are huge decisions, but like everything else in business, there is a price to be paid. You have to ask yourself is this what you really want?
Anytime a business wants to make the jump from being a small successful business. I would categorize this as a business doing $5 million-$20 million in revenue annually, to say a business that gets above that $50 million mark annually, there are very tough decisions to make.
This gets complicated. Are you willing to answer to a board? Are you ready to build an infrastructure to get to the next level? Are you ready to relinquish your complete control of your business and just be one of the voices heard? I was in this very position back in 2006. We had grown from about $4 million in sales to $18 million within 4 years. I was the sole owner, but it was getting more and more complicated. I ended up having an asset based credit line from a bank(something I swore I would never do!), and we went from 14 employees to 50. I was making in excess of $1 million per year but the explosive growth is addictive! At least it was for me. But then you start hearing words that sound good, but really are not. Like economies of scale and incremental profits! I say baloney! All that means is your margins are ultimately decreasing, but because your volume has grown the business is still profitable. But it wasn't as profitable percentage wise as it was at say $8 million. Also, it wasn't as much fun either. Obviously our bottom line in $$ had increased, but not by as much as you think. It is very hard to maintain say a 55% gross margin when you are aggressively growing your revenues.
We topped out at $24 million and it was decision time. I had taken it as far as I felt comfortable. I knew if I wanted to get to the next level, I would need help. I knew I would probably have to hire a CEO/President, put together a plan and start raising capital, put my fundraising hat on. I guess I felt lucky enough to realize these things, some business owner's don't see that. BEWARE! Just because you were the guy whose ideas got you there, and maybe you even founded the business, it doesn't mean you don't have limitations!! You have to be able to be honest with yourself in this stage. You have to be brutally honest, and a lot of founder's/owners I have met can't or won't do this! Take my advice, you must do this!!#businessadvice
My decision was to hold! I even went the other way and looked at some larger accounts that were actually dragging my gross margin dramatically down. We ended up dropping them! I ended up downsizing! Yup, and guess what? I was happier. I was more engaged, and focused on making our company culturally better and more collaborative. It was MY right decision.
Do I look back and wonder? You bet I do, who wouldn't? But for me, the decision was more about my initial vision and really drilling down to get the most out of who we were. Could I have made $15-$20 million a year? Maybe, but I wouldn't have been happier. I know that for a fact.#freebusinessadvice
So as an entrepreneur, who has a healthy, profitable small business, you will have to make these decisions someday. Hopefully you will get to that time. My choice was right for me! Your choice will hopefully be right for you. Just remember what is really at stake, and always listen to other opinions.
Really as many as you can get. Hey, you got to where you are because of a great idea, or you fill a need or have a unique product or service. Be confident, be honest and most of all, be open minded!
Have a Great 2015 Everyone!!
As always, if you are in need of consulting for your business, please contact me either through Linkedin, or email me @firstname.lastname@example.org