Tips for Entrepreneurs – #3
Most small businesses have one overwhelming need: cash to grow. It’s better by far to work with what you’ve got than to bite off more than you can chew. Plan your growth in stages, to match your cash reserves. Slow and steady often wins the race. As you develop a proven track record, it is easier to raise additional funds—making each successive phase of your business plan easier to finance.
Scale your business plan to fit your ability to finance it. If funds are limited, carry out your plan in stages.
Featured as Tip number 12 in my book, The Evolution of an Entrepreneur.
From the Jack Nadel Archives
Most of our catalog sales in direct mail for Jack Nadel International were based on a picture of a single sample of a given product. We did not inventory the merchandise until the sale was made. We simply ordered it after we received orders through the catalog and made sure the delivery time was within the promised window. That way, we never depleted our cash reserves, and we never had an inventory problem.
How Does This Tip Apply Today?
The restaurant business is one of the toughest in the world, especially in New York City. Therefore, it is especially important to pay attention to your costs and keep an eye on the road to profit. To see this at work, look no further than the war of two meat vendors in Manhattan. In 2011 and 2012 respectively, Currywurst Bros. and Meatball Obsession opened within blocks of each other. Currywurst Bros. sold currywurst, a German fried pork sausage dish, from a high- priced storefront. Meatball Obsession sold meatballs in a cup from a stall right near a train entrance.
Not surprisingly, Currywurst Bros., which had a monthly rent of $16,000, didn’t even make it a year before it had to close its doors due to cash-flow problems. Meatball Obsession, meanwhile, was still going strong months after opening—and if sales continue, who knows? The business might just expand to a nearby empty storefront.
Tips for Entrepreneurs
This post is part of my regular “Tips for Entrepreneurs” blog post series, featuring shared experiences and wisdom from my career as a global entrepreneur that I outline in an easy to understand tip format with a brief story/snippet from my own business experience, as well as a current anecdote about how this tip applies in today’s business environment. These entrepreneurial tips are also featured in my award-winning book for entrepreneurs, The Evolution of an Entrepreneur, featuring 50 of My Best Tips for Surviving and Thriving in Business.
Referenced for How Does This Tip Apply Today? materials:
Jon Burgstone and Bill Murphy Jr., “Sausage vs. Meatballs: A Study in Start-ups,” Inc., April 3, 2012, http://www.inc.com/jon-burgstone/the-epicurious-case-of-currywurst-bros.html?nav=next