Are You Using the Lack of Capital As An Excuse?
The lack of capital hurts, virtually, every small business at one time or another. Some, though, use this lack of capital as the justification for why their business is not doing as well as it should. Here are some strategies for how to turn a lack of capital into an advantage.
These have, indeed, been trying economic timesMaybe the worst Yoda has seen since he has been in business, with no capital available from almost any source (regardless of how much your local banker protests that they're lending - a couple of credit line increases a year to their best business customers doesn't constitute lending).
And, while it has spawned some real challenges, it has also provided a "crutch" to some entrepreneurs who believe that they can make all their problems go away with if they can just throw capital at them. It's a takeoff on the old "you can't be thin enough or rich enough" (but that's for another blog), which as we all know is simply a justification for excess...either way.
Small business owners who exhibit this classic symptom may be using it as an excuse for not knowing what it will take to succeed and figure that capital is the solution to getting more sales, becoming more profitable, serving customers better.
Capital won't necessarily solve a company's revenue problemI'm here to tell you that if the basics aren't in place to do each of these, more capital will only provide the same result, more expensively, or worse, provide a little better set of outcomes and hide the real problems.
While virtually all businesses can benefit from having more capital, the truest measure of a successful business is not just bottom line (or top line), but how well the company manages both when the economy is "in the tank." In fact, lean times often help a business get back to basics.
Good times often make companies, like people, get "fat, dumb and happy," drifting into bad spending habits, shortcutting critical processes...just getting sloppy.
How to turn a lack of capital to an advantageSo, use the lack of capital or "belt-tightening" times as a crusade, of sorts, to do more with less, to become leaner, meaner and hungrier.
Use it as an excuse to review every person and step involved in the key processes of the business. The salespeople who deliver and support products for example. From how they get prospects, to how they interact with customers, to how they take care of tools on the shop floor or maintain workstations in their development group.
In short, you're looking to eliminate redundancies (not necessarily people) and wring as much "fat" (that you might have developed in the good times) out of the system.
And make it a company-wide exercise, challenging everyone to make their job more efficient and their roles more effective. That's way better than them having the proverbial "sword of Damocles" hanging over their head as the business slows to a crawl and they worry about their jobs.
What you'll end up with is an operation that understands what it takes to succeed, no matter the economic or capital environment. And a stronger team to make that happen, because you involved the whole company. And lastly, no excuses!
"The Entrepreneur's Yoda knows these things. He's been there. May success be with you!