Simple Scales



I still remember putting together one of my first “business plans”.

A friend and I were going to start a security guard company. We planned on hiring our friends and taking over the security services for some bars we frequented in the area.

The plan was nearly one page long… we also double spaced to make it seem more official. The business seemed straightforward …

We would secure contracts at $15 an hour and pay our staff $10.


We were going to be rich.


The very thought of that company makes me laugh to this day.


Many years later and several businesses (great and not so great) under my belt I continue to reflect on some of the core lessons learnt that I believe all company founders eventually come to appreciate.


PROJECTIONS ARE A BEST GUESS


After reviewing countless business opportunities I’ve yet to see an entrepreneur execute their business exactly in line with their forecasts.

The road to success is littered with “could have been great” businesses and founders that underestimated expenses and overstated earning potential.


Projections are just that. Projections.


No one expects the numbers to be perfect however many entrepreneurs end up learning the hard way that you cannot use those excel spreadsheet projections to pay bills.

Keep it simple; don’t glorify all the “other” potential revenue opportunities.

What are you selling, how much does it cost to make/provide and how often will it sell?

Significantly overestimate expenses and throttle back on revenue projections.

If you’re still excited about the business - great, at least you’re going into it with your eyes wide open.

CASH FLOW IS KING


If you’ve ever run a business on a shoestring budget, you know what I’m talking about.


That jittery feeling you get around payroll time… It’s the worst.

Even if your projections are relatively conservative you still need to watch your cash flow.

Some clients will not pay on time and some of your vendors may demand payment on delivery.


Stock will go bad. A bad shipment. Theft.

New costs creep up into your business: such as higher taxes, increased labor costs or new regulations within your industry (that almost always create additional costs).

Always look for multiple ways to access capital quickly.

Especially when you don’t need it.

Keeping cash on hand is best but even accessing higher interest money is preferred to giving away equity or selling personal property to cover the shortfall.

Most businesses that fail do so because they run out of money before their venture has built enough momentum.

Always know what your capital options are.

SIMPLICITY SELLS


Launching a company with multiple products or services from the start a sure way to burn through lots of your money.


Think about some of the most recognizable brands today, chances are they got their start by mastering one thing before broadening their scope.


Think Phil Knight, creator of Nike who poured rubber on the family waffle iron to create a lighter shoe. Today Nike sells nearly “all things sports”.

Do you think they would have been as successful if Phil Knight tried to take on the entire sports world with tracksuits, hoodies and hockey equipment all from the start?

Can you image the amount of chaos that would have created?

Most great companies start with a simple core idea. Simplicity sells because it’s relatable.


We buy into what we understand.


To Your Success


Marcin Drozdz



Marcin has been instrumental in building several businesses including commercial & multi family real estate investment partnerships, a consulting practice and a smart home security business serving customers nationwide. Marcin has secured over $100MM in growth capital for various businesses and has collectively spoken in front of thousands of entrepreneurs, business owners, investors and those just starting to explore living life on their own terms. Outside the office Marcin can be found at the gym lifting heavy things, skiing or on the road zipping along on an extended bicycle ride.


www.marcindrozdz.com


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