The good news about most people who start their own business is that they are driven. They have both a vision and desire. If this is coupled with a willingness to work hard– and not just be an owner – the future is promising. The bad news is that this type of person isn’t usually patient. And patience is key for managing sustainable growth. Organic growth.

I’ve worked in a few companies where organic growth was simply too slow to meet the demands of shareholders. If you’ve got deep pockets, you can grow effectively with acquisitions, mergers and purchase accounting. But eventually, the patience required for organic growth proves necessary. For an owner-manager, it’s critical.

It’s important to understand the phases of a new company, and manage those effectively:

1)    Get going. Set up a bare bones operation which matches what you promise to deliver, and find customers.

2)    Aggressive business development. Build the customer base to acceptable income levels. Don’t worry about profitability yet.

3)    Start removing risk. Establish infrastructure and process which allow for continuity of sales and operations. Diversify customer base to be able to withstand the loss of large clients. Shore up financing to remove monthly cashflow pressure.

4)    Add capacity. Give yourself room to grow with added resources, space – whatever is required to allow you to fulfill the needs of more customers.

5)    Get profitable. The last thing you should have worried about up to now is paying yourself what you believe you are worth. Key employees are another matter, but as the owner you need to make that investment.

Until there are shareholders, or you are thinking about selling, profitability should not be a major concern. Sustainability is far more important. You can sell an unprofitable business which can get by without you – there are many, many businessmen who know the levers to tweak margins & costs to turn around a viable business. But if the business is a non-starter without you selling or executing work, it won’t be saleable.

Now there are limits to how unprofitable you can be – losing money hand over fist can’t work, but breaking even year after year can, if you are moving along the other steps in making the business more sustainable. And frankly, breaking even always has a bright side in tax season. It isn’t great for ego – breaking even doesn’t really come with bragging rights, and that’s where lack of patience hurts many owners. Be patient. Build. Add customers. Add resources. Remove risk. And don’t be in a hurry to report to the government that you’re wildly successful – no matter how pleased they may be to receive that cheque.

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