Friday, April 23, 2010

Are you an Expense or an Income Stream?

When a business is in its early stages of growth, I say that we should spend our resources focusing on generating MORE money inflow for the business. 

What this means is we shouldn't be spending money on things that are an expense not directly related to generating more sales. Expenses related to generating more sales are salespeople, client lists, marketing efforts, etc.

Expenses that add no value right now include: redesigning your business cards just because, adding/fixing minor details on your system/software that you can do without and are nice to haves, hiring on more developers than you need, hiring more of anything that you don't need...the list goes on.

So when we have consultants or other service providers approaching us to sell us stuff, the first thing I ask is whether they are an expense or an income stream for my business.  Usually its the former, and I send them on their way. 

I'm also constantly surprised by the quality of work provided by tech developers and designers.  I say I'm surprised because sometimes a really good one goes for cheap (ie.$40 or $50 an hour) and then you find one that really sucks and they are charging $80 an hour.  Yet there's still a market for them.  Totally got sidetracked there.

Point is, in an early growth phase I am only interested in growing sales.  What things do you worry about as a start up owner?

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