Your spending to much and your wasting your time.

Starup Your Idea v2

My primary “job” has absolutely nothing to do with mobile sales. It has nothing to do with retail. It is about as far removed from the commercial sector as one can get. My business manufactures and distributes military goods for the US Military, Israeli Military and the Defense Industry in general. So when it comes to trying to save a small business money, like a coffee shop, you would think that I would be out of my element right? I’ll let you decide that.

One of the first things I learned, or actually finally understood about business, is that every business at its core, is the same. Every business has a goal, every business has customers, every business has some sort of process to move from one task to the other. In the end every business is in business for one reason, to make money.

There are several other factors that begin to differentiate companies of course. While a companies stated goal may be to give there customers superior quality or care, in the end they can not do that unless there making a profit. I took a nine week course through the Kaufmann Foundation called “Growth Venture” a few years ago. I was actually invited to attend and was given a scholarship making the cost, free. All I needed to do was agree to attend each Friday morning and actually do the work that was asked of me. The first meeting really set me back, my first impression was that I was in the wrong class. The other business owners in the class (12 in all) were of varying consumer levels. From a printer of business cards, a lawyer, a software developer, a distributor of electronic hardware, a goat milk farmer and two ladies that made gowns for clergy. Just what in the hell could I learn from these people that would help my company? How was this course, that was obviously designed for them, going to help me? Thankfully I stuck with it.

My “enlightenment” came on the second week of the class when the owner of the Roasterie paid us a visit and talked about how he got his start. Even though he was making coffee I began to see some similar issues he had during his start up. If cash is king, then cash flow is a universal problem. Solutions to the problem vary only slightly from business to business. There is a procedure, or as I like to put it, a scientific method that can be applied to every problem. I began to engage in the discussions more and started asking specific questions about each of the others businesses. The class became very useful.

As we moved into the next few weeks things really began to click. I started making analogies between there business and mine. I even got to the point where I could understand my own P&L and balance sheet. I always looked at it, weekly and monthly in fact, but it was greek until this class. I started to see that I had more issues with the company than I thought, scary. The easy thing to spot was that I was spending to much money per month, whether I compared that to income or not, didn’t matter. I knew I was spending alot of money, I had large projects in the works, it was to be expected. It was the forecasting over the next six months that made my heart stop. Looking around the class I realized I wasn’t the only one to be shocked by the huge numbers. I envied there numbers, easily one quarter of mine.

I had worked out that I needed an infusion of cash or I needed to cut back on spending, right now. The biggest problem had now become, planning. Turns out I wasn’t alone in that problem either. How can a small business owner find the time out of a busy day “running” the company in order to “plan” for the company? This was the hardest thing for me to come to grips on. I had five employees back at the shop, working on a quarter million dollars worth of equipment, making very precise parts. One mistake could cost me thousands of dollars, I had to keep an eye on them and keep those spindles turning. Turns out the two ladies that owned the clergy gowns company had the same thought. Before I could say this out load they beat me to it. One saying to other, “How do we keep our production girls turning the spindles and sewing while we sit and plan all day?” My eyes darted right to them, “Me to” I added.

Eventually I came to a decision to spend at least an hour a day on “forecasting” (planning). The time was usually spent over lunch, sometimes meeting with new customers, sales people and even a few owners of other machine shops. The time was well spent over that first year and opened my eyes to new possibilities and new problems.

I still use most of what I learned during that nine week course and enjoy looking over my notes as well. One thing that really stuck with me was to always be looking at new ways to do the same thing. I even spend 2 hours every other week throwing ideas off a colleague of mine, hashing things out as it were. The time is well spent, in the end I can not even begin to calculate how much money it has saved me, but I would wager that it has at least saved my lively hood. It also instilled a need to share what I have learned with others. Ever time I see a business using one of those small units that you swipe your card on I just have to say something. My wife has learned to put up with me when I start talking to the owner about how much money he could be saving by using Square or even PayPal instead. I just can not help but to ask, “How much was that little unit anyway?” I’ll save that whole conversation for another post. What it comes down to is that you can never stop learning, nor can you know from whom or what that knowledge will come from. Everything has a connection that is relevant to you, you just have to look.

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